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The Year in Review

International Legal Developments Year in Review: 2021

International Litigation - International Legal Developments Year in Review: 2021

Aaron Marr Page, Jonathan I Blackman, Carmine Daniel Boccuzzi Jr, Theodore Folkman, Phillip B Dye Jr, Matthew David Slater, Mark Edward McDonald, Ari MacKinnon, Igor Victor Timofeyev, and Joseph R Profaizer


  • This article reviews some of the most significant developments made in international litigation in 2021.
  • Foreign states are presumptively immune from suit, and their property is presumptively immune from attachment and execution, unless an exception in the Foreign Sovereign Immunities Act (FSIA) applies.
  • Several U.S. courts addressed vexing applications of Article 10 of the Hague Service Convention.
International Litigation  - International Legal Developments Year in Review: 2021
Roberto Moiola / Sysaworld via Getty Images

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This article reviews some of the most significant developments made in international litigation in 2021.

I. Foreign Sovereign Immunities Act

Foreign states are presumptively immune from suit, and their property is presumptively immune from attachment and execution, unless an exception in the Foreign Sovereign Immunities Act (FSIA) applies.

A. Expropriation Exception

In Republic of Germany v. Philipp, the U.S. Supreme Court held that the FSIA’s expropriation exception, which confers U.S. courts with jurisdiction over some expropriations in violation of international law, does not extend to expropriations by a state from its own citizens—specifically, claims of art confiscated by Germany’s Nazi government—even if such takings violate other customary international law norms. Writing for a unanimous Court, Chief Justice Roberts observed that when the FSIA was enacted in 1976, the international law of expropriations incorporated the domestic takings rule, which generally bars claims arising out of a state’s taking of the property of its citizens, and that “[t]hese restrictions would be of little consequence if human rights abuses could be packaged as violations of property rights and thereby brought within the expropriation exception.” The Court’s decision in Philipp narrows the scope of the FSIA’s expropriation exception and is consistent with the approach the U.S. Supreme Court has recently taken in other cases, as under the Alien Tort Statute (ATS), involving human rights claims premised on violations of international law.

Notably, the Supreme Court did not reach a second question presented in Philipp regarding whether the FSIA displaces common law international comity defenses—an issue more generally addressed by three Courts of Appeal this year, as discussed below. The Court also declined to reach this question in Hungary v. Simon, a related case brought by heirs of Holocaust survivors against Hungary, and instead remanded the U.S. Court of Appeals for the District of Columbia Circuit’s decision in that case for further proceedings consistent with Philipp.

In another decision that also narrows the scope of the expropriation exception, the U.S. Court of Appeals for the Second Circuit in Beierwaltes v. Federal Office of Culture of the Swiss Confederation held that routine law enforcement seizures do not fall under the expropriation exception unless the seizure has no rational relation to a legitimate public purpose. Accordingly, the Second Circuit affirmed the lower court’s decision dismissing claims based on seizure of art by Swiss authorities.

B. Common Law Defenses

The U.S. Court of Appeals for the Second and Ninth Circuits joined the D.C. Circuit in holding that FSIA displaces common law sovereign immunity defenses. In United States v. Turkiye Halk Bankasi A.S. (Halkbank), the Second Circuit held, inter alia, that the FSIA categorically precludes common-law sovereign immunity defenses. The Ninth Circuit similarly rejected common-law immunity in WhatsApp Inc. v. NSO Group Technologies. Ltd, finding that “the FSIA’s text, purpose, and history demonstrate that Congress displaced common-law sovereign immunity doctrine as it relates to entities.”

C. Jurisdiction over Criminal Cases

In Halkbank, the Second Circuit reviewed FSIA’s application to criminal proceedings and affirmed the denial of a Turkish state-owned bank’s motion to dismiss an indictment charging violations of U.S. sanctions against Iran. The Second Circuit avoided the issue of whether the FSIA, which confers immunity to sovereigns from civil actions (subject to its enumerated exceptions), also confers immunity in criminal cases. The court held that even assuming the FSIA conferred immunity in a criminal action, the complained-of conduct—fraudulent transactions intended to launder approximately $20 billion in Iranian oil and gas proceeds—would fall within the FSIA’s commercial activity exception since sanctions violations or money laundering were a “type of activity” that “literally any” bank could do. It is notable that both the Second Circuit and the D.C. Circuit have now expressly declined to reach the legal question of whether FSIA sovereign immunity (and exceptions thereto) applies to criminal cases at all.

II. International Service of Process

Several U.S. courts addressed vexing applications of Article 10 of the Hague Service Convention, which, among other things, preserves “the freedom to send judicial documents, by postal channels, directly to persons abroad . . . [p]rovided the State of destination does not object.” An important question, on which the appellate courts have not given guidance, is whether this provision allows for service via email, and if so, whether it does so in states that have objected.

In, Inc. v. Robojap Technologies. LLC, Amazon sought leave of court to serve process by email on two defendants who resided in India. The company had also attempted service via the Hague Service Convention’s central authority mechanism, but it noted that it had taken more than a year for the Indian central authority to serve process on another defendant earlier in the case. Amazon “argue[d] that because the Hague Convention says nothing express about email service and India only objected to service by postal channels, the Convention does not prohibit service by email.”

The court recognized the many recent cases—all at the district court level—that had permitted service by email in similar circumstances. It nonetheless held that Amazon’s argument “gets things backwards,” finding that since the list of methods of service the Hague Service Convention authorizes or permits is exclusive, any form of service “not expressly permitted by the Convention” is “impermissible and prohibited.” The court stated that “[t]o conclude otherwise would mean that the Hague Service Convention’s forms of service are not exclusive, contrary to the U.S. Supreme Court’s clear pronouncement on this subject.” Although many courts have given weight to states’ failure to object expressly to service by email, the Amazon court took the view that “[b]ecause the Convention does not expressly permit email service, India had no reason or need to affirmatively reject it for it to be considered prohibited.”

The holding in Amazon is contrary to the holding in a line of cases, beginning with Gurung v. Malhotra, on similar facts in which the state of destination had objected under Article 10(a) and did not provide an effective central authority mechanism for one reason or another, but in which courts nonetheless allowed service by email. Until there is progress on delays—and in some cases overt state intransigence—in the operation of central authorities, U.S. courts will continue to face pressure from plaintiffs anxious to effect service of process to authorize service by email, notwithstanding the clear limitations of the Hague Service Convention.

III. Personal Jurisdiction

In Bristol-Myers Squibb Co. v. Superior Court of California, the U.S. Supreme Court held that, as a matter of constitutional due process, a plaintiff’s suit seeking to maintain specific personal jurisdiction against an out-of-state defendant in state court must arise out of or relate to the defendant’s contacts with the forum. The Court emphasized the need for a “connection between the forum and the specific claims at issue” and found none where the plaintiffs were not residents of the forum nor claim to have been injured there. Though the Court expressly disapproved of California’s former “sliding scale” approach, it declined to clearly describe the nature of the causal connection required to properly assert specific jurisdiction.

In Ford Motor Co. v. Montana Eighth Judicial District Court, the Supreme Court again reviewed the relatedness requirement of Bristol-Myers but in the context of injuries to forum residents occurring within the forum state. The Court first rejected Ford’s argument that the connection required by Bristol-Myers to support specific jurisdiction was causal in nature, finding that a “causation only approach” had no support in the Court’s relatedness requirement jurisprudence. Instead, the Court held that the exercise of specific jurisdiction over Ford, a non-resident manufacturer, in a product liability action was appropriate where the manufacturer conducted systematic and substantial business in the forums even though it did not design, manufacture, or sell the specific products to the plaintiffs there. Significantly, the Court held that the “arise out of or relate to” language in specific jurisdiction precedent is disjunctive in nature. While the former is principally concerned with causation, the latter “contemplates that some relationships will support jurisdiction without a causal showing.” Therefore, Ford’s numerous related contacts which systematically served a market for its vehicles in the forums, including the same type of vehicles as those at issue, made the relationship between the plaintiff’s claims and Ford’s forum-contacts “close enough to support specific jurisdiction.” The Court emphasized that the plaintiff’s claims were a direct result of injuries received within the forums by forum residents. As a result, the Court was unpersuaded by Ford’s attempted analogy to Bristol-Myers, where the plaintiffs were not injured in nor were residents of the forum state.

In the context of collective actions under the Fair Labor Standards Act (FLSA), by contrast, Bristol-Myers recently has proven to be a powerful shield for corporate defendants. In Canaday v. Anthem Cos., Inc., the Sixth Circuit upheld the dismissal of non-resident opt-in plaintiffs in a FLSA collective action where the non-resident plaintiff’s claims were not connected to the defendant’s activities in the forum. The claims in Canaday were brought in Tennessee by a forum resident-employee against a company both incorporated and headquartered in Indiana. The court analogized Bristol-Myers to demonstrate that only opt-in plaintiffs from Tennessee could show the required connection between their FLSA claims and the forum. The fact that the claims of the resident and non-resident plaintiffs were similar was held to be an insufficient basis for exercising specific jurisdiction.

The U.S. Court of Appeals for the Eighth Circuit issued a nearly identical opinion in Vallone v. CJS Solutions Group, LLC. As in Canaday, the Eighth Circuit upheld the dismissal of FLSA claims brought by non-resident plaintiffs in Minnesota against a Florida-based company for actions taken exclusively in Florida. The court similarly relied on Bristol-Myers to conclude that specific jurisdiction was improper where there was “no in-state injury and no injury to residents of the forum State.”

Taken together, these cases suggest that the presence of forum residents who have been injured within the forum state is a potentially significant factor in how rigorously the court will apply the relatedness standard.

IV. The Act of State Doctrine

The act of state doctrine is a prudential limitation on the exercise of judicial review, requiring U.S. courts to refrain from judging the validity of acts of a foreign sovereign taken within its own territory.

In Republic of Germany v. Philipp, the U.S. Supreme Court examined the expropriation exception of the Second Hickenlooper Amendment to the Foreign Assistance Act of 1964. The Amendment was adopted to allow adjudication of claims of expropriation of American-owned property abroad by prohibiting U.S. courts from applying the act of state doctrine to takings “in violation of . . . international law.” The Court held that the expropriation exception applies only to expropriations that violate international law. At the time of the Amendment’s adoption, a sovereign’s expropriation of its own nationals’ property was not considered internationally wrongful. Thus, the expropriation exception did not apply to claims by the heirs of German Jewish art dealers compelled to sell property during the Nazi regime, which were therefore barred by the act of state doctrine.

In Celestin v. Martelly, the U.S. District Court for the Eastern District of New York corrected and superseded a prior ruling (examined in last year’s Year in Review) which had held that the act of state doctrine prevented review of Haitian presidential orders that allegedly enabled a price-fixing scheme on money transfers, food remittances, and international calls made to and from Haiti. The court previously had reasoned, in part, that the doctrine applied because the sovereign actions all took place in Haiti. In its updated opinion, the court recognized that even when the sovereign actions are taken within the state’s territory, the act of state doctrine would not apply to expropriations of property located abroad. The court nonetheless granted defendants’ motion to dismiss on act of state grounds after finding that the prospective tax on future transfers did not effect a seizure of property held in the United States.

In Caballero v. Fuerzas Armadas Revolucionarias de Columbia [sic], the U.S. District Court for the Western District of New York held that the act of state doctrine applied to a motion to substitute counsel for Petroleos de Venezuela (PDVSA), the national oil company of Venezuela. The dispute arose because of competing appointments of counsel by the regime of Nicolás Maduro and the interim government of Juan Guaidó, which was officially recognized by the United States in 2019. The Maduro regime argued that hiring counsel is a private commercial activity rather than a foreign governmental act and therefore is outside the scope of act of state. However, the court took an expansive view of “public” or “official” acts and held that the act of state doctrine broadly applies to “acts regarding the management of Venezuela’s state-owned corporations.” The court further reasoned that the act of state doctrine applies to official acts taken by recognized sovereigns, and since the United States had recognized Guaidó’s Interim Government, only the Ad Hoc Board appointed by Guaidó could retain counsel on behalf of PDVSA. Accordingly, the court approved the motion to substitute counsel with counsel appointed by the Guaidó government.

In Oppenheimer v. ACL LLC, the U.S. District Court for the Western District of North Carolina concluded that the act of state doctrine did not apply to the alleged infringement of a photographer’s copyright in a photo of the Cherokee Casino Resort, which the Cherokee Nation allegedly provided to defendants for marketing an event. In reasoning that the doctrine did not apply because the connection to a sovereign action was too attenuated, the court implicitly recognized the applicability of the act of state doctrine to American Indian nations—an approach inconsistent with previous federal court decisions.

V. International Discovery

A. Obtaining U.S. Discovery for Use in Foreign Proceedings

In 2021, the U.S. Supreme Court was expected to answer the question whether 28 U.S.C. § 1782 can be used to obtain discovery for use in private international arbitration proceedings. However, the case before it, Servotronics, Inc. v. Rolls-Royce, settled before oral argument and was dismissed.

The question has divided the U.S. Courts of Appeals and remains relevant. In Luxshare, Ltd. v. ZF Automotive US, Inc., the U.S. District Court for the Eastern District of Michigan upheld a magistrate judge’s order authorizing discovery requested under 28 U.S.C. § 1782 for use in a German Arbitration Institute (DIS) proceeding. The discovery target has appealed this decision to the U.S. Court of Appeals for the Sixth Circuit, which is likely to affirm, consistent with its decision in Abdul Latif Jameel Transportation Co. Ltd. v. FedEx Corp., in which it became the first Court of Appeals to hold that Section 1782 applies to private international arbitrations.

In In re Fund for the Protection of Investor Rights in Foreign States v. AlixPartners, the Second Circuit addressed a related question: whether 28 U.S.C. § 1782 can be used to obtain discovery in investor-state arbitrations. Applying a “functional approach” based on four factors it identified in In re Application of Hanwei Guo, the Second Circuit found that an arbitral panel constituted pursuant to a bilateral investment treaty has sufficient “affiliation with the foreign States” and “closely resemble[s] the sort of arbitral body” that would qualify as a “foreign or international tribunal,” such that 28 U.S.C. § 1782 applies. In so holding, the Second Circuit joined other courts which have concluded that a tribunal constituted pursuant to an investment treaty (as opposed to a commercial contract) is a “foreign or international tribunal” under 28 U.S.C. § 1782, although this view is not universal.

B. Obtaining Discovery from Abroad for Use in U.S. Proceedings

U.S. courts frequently compel the production of documents located abroad for use in U.S. proceedings using the multi-factor comity analysis set forth in Société Nationale Industrielle Aérospastiale v. U.S. District Court for the Southern District of Iowa. In the three years since the European Union’s General Data Protection Regulation (GDPR) has taken effect, U.S. courts have continued to apply this test and find that GDPR’s privacy constraints do not outweigh U.S. interests in discovery. In a recent case, AnywhereCommerce, Inc. v. Ingenico, the court made particular note of the fact that the parties had agreed to a protective order limiting the dissemination of confidential information, which the court found to be “[c]onsistent with the [privacy] objectives of the GDPR.”

VI. Extraterritorial Application of United States Law

A. Alien Tort Statute

In Nestlè USA, Inc. v. Doe, the Supreme Court held that allegations of corporate oversight in the United States are insufficient to overcome the extraterritoriality presumption and establish domestic application of the Alien Tort Statute (ATS), 28 U.S.C. § 1350. Plaintiffs were former child slaves in the Ivory Coast who contended that the defendants, U.S. food producers, aided human rights abuses on the cocoa plantations where they worked. The Ninth Circuit allowed the suit to proceed, reasoning that plaintiffs’ aiding and abetting allegations “had pleaded a domestic application of the ATS . . . because the ‘financing decisions . . . originated’ in the United States.”

The Supreme Court reversed. The Court held that plaintiff’s complaint “would impermissibly seek extraterritorial application of the ATS because “[n]early all the conduct that they say aided and abetted forced labor—providing training, fertilizer, tools, and cash to overseas farms—occurred in Ivory Coast.” As the Court explained, “allegations of general corporate activity—like decisionmaking—cannot alone establish domestic application of the ATS.”

B. Environmental Law

In City of New York v. Chevron Corp., New York City sued five multinational oil companies for damages caused by greenhouse gas emissions. Addressing whether the presumption against extraterritoriality applies to federal common law claims, such as nuisance, the U.S. Court of Appeals for the Second Circuit observed that, although the presumption is a tool of statutory interpretation, the principle is also premised on “broad concerns over separation of powers.” The Second Circuit therefore affirmed the dismissal of the city’s claims, because to hold otherwise would “affect the price and production of fossil fuels,” “bypass the various diplomatic channels,” “sow confusion and needlessly complicate the nation’s foreign policy,” and “clearly infring[e] on the prerogatives of the political branches.”

C. Antitrust

The U.S. Court of Appeals for the Second Circuit in In re Vitamin C Antitrust Litigation considered whether U.S. purchasers of vitamin C could sue sellers in the People’s Republic of China (PRC) for price-fixing in violation of U.S. antitrust law. The Second Circuit previously held, deferring to the PRC government’s construction of its law, that the sellers were required by law to fix the price and quantity of exports. The U.S. Supreme Court vacated, instructing that a foreign state’s interpretation of its own law is accorded only “respectful consideration,” not deference. On remand, the Second Circuit again affirmed dismissal of the antitrust claims. The panel majority determined that PRC law required the challenged price-fixing and, therefore, the sellers in the PRC could not have complied with both PRC law and U.S. antitrust law. The majority then held that the principles of international comity prohibited the extraterritorial application of U.S. antitrust law. Although the PRC’s export controls foreseeably harmed American commerce, other comity factors—including that the anticompetitive conduct took place in the PRC, that the United States would expect a PRC court to recognize the same defense, and that the U.S. judiciary is ill-equipped to assess the foreign relations at stake—counseled against extraterritoriality.

D. Communications Decency Act

In Gonzalez v. Google, the U.S. Court of Appeals for the Ninth Circuit considered whether family members of victims of terrorist attacks could sue Twitter, Facebook, or Google under the Anti-Terrorism Act, 18 U.S.C. § 2333, for providing material support to ISIS. Gonzalez alleged that ISIS terrorists used YouTube, for example, to recruit members, plan attacks, and issue threats. The U.S. District Court for the Northern District of California ruled that Section 230 of the Communications Decency Act, 47 U.S.C. § 230, largely immunized Google and the other companies from liability arising out of third-party material on their platforms. The Ninth Circuit held, however, that Section 230 need not overcome the presumption against extraterritoriality because “the relevant conduct occurs where immunity is imposed . . . i.e., at the situs of this litigation,” not where the claims arose.

VII. Recognition and Enforcement of Foreign Judgments

In U.S. courts, the U.N. Convention on the Recognition and Enforcement of Foreign Arbitration Awards (the Convention) governs the recognition and enforcement of most foreign arbitral awards. State law, however, governs the recognition and enforcement of foreign court judgments.

A. Foreign Arbitral Awards

In Beijing Shougang Mining Inv. Co. v. Mongolia, the U.S. Court of Appeals for the Second Circuit considered a challenge to an International Centre for Settlement of Investment Disputes award in which the New York-seated tribunal found it lacked jurisdiction to reach the merits of the claim. Shougang filed a petition to vacate the jurisdictional award in the U.S. District Court for the Southern District of New York, arguing the parties had not consented to submit questions of arbitrability to the tribunal and the tribunal’s award on jurisdiction therefore exceeded its powers. The district court denied Shougang’s petition and granted Mongolia’s cross-motion to confirm the jurisdictional award.

The Second Circuit affirmed the district court’s finding that “the question of arbitrability was clearly and unmistakably put before the arbitral tribunal” due to the parties’ agreement “that the tribunal will hear jurisdictional issues in the first phase of the arbitration,” which was memorialized in a procedural order issued by the tribunal. In reaching this conclusion, the Second Circuit expanded on prior judicial decisions that used evidence other than arbitration agreements narrowly defined, such as separate agreements between parties during arbitration or contractual incorporation of institutional arbitral rules, to identify intent to arbitrate arbitrability and explicitly noted that such evidence need not be limited to “arbitration agreements” alone.

In CLMS Management Services Ltd. Partnership v. Amwins Brokerage of Georgia, LLC, the U.S. Court of Appeals for the Ninth Circuit held that state laws subject to the McCarran-Ferguson Act, which provides that state insurance laws preempt conflicting federal laws, could not bar the enforcement of arbitration agreements under the Convention. The Ninth Circuit found that Article II, Section 3 of the Convention is self-executing and therefore not a federal law subject to the Act. As a result, parties can be compelled to arbitrate certain insurance disputes subject to arbitration agreements despite state laws prohibiting such arbitration.

B. Foreign Court Judgments

In Banca di Credito Cooperativo v. Small, the U.S. Court of Appeals for the Second Circuit addressed the enforceability of foreign bankruptcy orders under New York law. An Italian bankruptcy court had issued two orders recognizing Banca’s claims as a creditor in Italian bankruptcy proceedings, and Banca filed suit in the U.S. District Court for the Southern District of New York to recognize and enforce the two orders. The district court denied recognition and enforcement because the two orders did not meet the requirement under New York law that the foreign judgments were “final, conclusive and enforceable where rendered.”

The Second Circuit affirmed. Examining Italian law, which governed whether the orders were “enforceable where rendered,” the Second Circuit found that Italian bankruptcy orders are unenforceable outside of the bankruptcy framework, unless an Italian commercial court converts the orders into generally enforceable orders. Since Banca had obtained no such conversion, the orders were enforceable only within the Italian bankruptcy proceedings. While Banca argued that the phrase “enforceable where rendered” merely required that the orders were enforceable by the specific court that issued them, the Second Circuit rejected this argument because it would require U.S. courts to enforce foreign orders that could not be generally enforced in the issuing jurisdiction.

New York has since amended its law on the recognition of foreign judgments, and it remains to be seen whether Banca di Credito Cooperativo will persist despite the amendments.

VIII. Forum Non Conveniens

A guiding principle of the forum non conveniens doctrine is that a “plaintiff’s choice of forum should rarely be disturbed.” This year, courts have discussed how this doctrine might be impacted by the virtual platform, the timeliness of a motion to dismiss for forum non conveniens, and whether the doctrine applies to antitrust actions.

COVID-19 propelled the legal field to utilize technology in extraordinary ways. A Canadian court provided a particularly striking discussion and illustration of what forum non conveniens analyses might come to look like in world of routine virtual proceedings. In Kore Meals LLC v. Freshii, the Ontario Superior Court asked broadly whether “[i]n the age of Zoom, is any forum more non conveniens than another? Has a venerable doctrine now gone the way of the VCR player or the action in assumpsit?” The dispute was filed in Ontario, but there was an arbitration agreement requiring arbitration in Chicago under the American Arbitration Association (AAA). The court first noted that in deciding whether to stay an arbitral proceeding, a court must undertake a forum non conveniens analysis to determine if the arbitral tribunal is unfair of impractical. But, in setting aside the parties’ arguments regarding what was required under the arbitration agreement versus what would be most convenient, the court simply asked where the AAA was located. When neither party could identify the location of the AAA, but both were certain that submissions would be made online and the hearings would likely be virtual, the judge began to analyze whether litigation in this virtual setting could truly be “inconvenient.” The court determined there is no location “any more or less convenient than the other” because “a digital-based adjudicative system with a videoconference hearing is as distant and as nearby as the World Wide Web.” In enforcing the arbitration agreement, the judge took a strong stance against forum non conveniens by stating that judges “can now say farewell to what was until recently a familiar doctrinal presence in the courthouse.”

This year, the U.S. Court of Appeals for the Eighth Circuit addressed, for the first time, the timeliness requirement of a motion to dismiss for forum non conveniens. The court explained that the forum non conveniens analysis involves looking at both private and public-interest factors, but it is unclear where the issue of timeliness falls. The Fifth Circuit considers timeliness as a private-interest factor, while the Third Circuit categorizes it as a factor for both private- and public-interest, and, uniquely, the Sixth Circuit analyzes timeliness as an independent hurdle. But, declining to categorize timeliness, the Eighth Circuit simply found that timeliness is a relevant inquiry in the forum non conveniens analysis and that filing eighteen months after the complaint “belies the claim that the forum is truly inconvenient.”

The Sixth Circuit this year also clarified its stance on whether the forum non conveniens analysis applies to antitrust actions. The plaintiff, a shell company set up primarily for bringing suit within the United States, claimed that antitrust actions could never be dismissed for forum non conveniens. The plaintiff relied on a case from the Fifth Circuit, Industrial Development Corp. v. Mitsui & Co., which held that because of a broad venue provision in the Clayton Act, forum non conveniens would not apply to antitrust actions. The Sixth Circuit criticized the Fifth Circuit precedent and affirmed the dismissal for forum non conveniens. The Sixth Circuit noted the Fifth Circuit’s opinion that the Clayton Act actually “says nothing at all about case transfers” and “simply adds to the number of courts empowered to hear a plaintiff’s claim.” Agreeing with the First and Second Circuit, the Sixth Circuit confirmed that an antitrust action can be dismissed for forum non conveniens.

IX. Parallel Proceedings

A. Anti-suit Injunctions

In Alfandary v. Nikko Asset Management, the U.S. District Court for the Southern District of New York denied a motion for an anti-suit injunction (ASI), finding that the plaintiffs had not shown that resolution of the case would be “dispositive” of the foreign proceeding. The case was brought by former executives of a Japanese investment advisory company who alleged that the company had intentionally undervalued their stock acquisition rights. The Japanese company subsequently sued one of the executives in the Tokyo District Court, arguing that the former executive had breached a covenant in his separation agreement. In response, the executives sought an ASI in the U.S. district court to enjoin the Japanese company from pursuing its Tokyo action.

Applying the test developed by the Second Circuit in China Trade & Development Corp. v. M.V. Choong Yong, the district court observed that “two threshold requirements [must be] met” to grant an ASI: “first, the parties must be the same in both proceedings, and second, resolution of the case before the enjoining court must be dispositive of the action to be enjoined.” Applying the second prong of this test, the district court noted that the Second Circuit “has not articulated precisely what it means for an action to be dispositive,” but that the relevant initial inquiry was “whether the ‘substance’ of the claims is the same in the two actions.” The court noted that, while “related,” the claims in the U.S. and Japanese proceedings did “not share the same ‘substance’ because they concerned different contracts,” and would therefore “turn on different issues, arguments, and evidence.” Finding that the plaintiffs had otherwise failed to satisfy their burden of demonstrating that resolution of the case would be dispositive of the Tokyo action, the U.S. district court denied the motion for an ASI.

B. International Abstention

Under Colorado River Water Conservation District v. United States, a federal court may stay or dismiss a lawsuit in light of parallel proceedings only if the court first determines that the actions in question are indeed parallel, and then that there are exceptional circumstances such that abstention would promote “wise judicial administration.” To promote international comity, U.S. courts may abstain in light of parallel foreign proceedings after considering each government’s interests and the adequacy of the foreign forum.

In HEK, LLC v. Akstrom Imports, the U.S. District Court for the District of Minnesota refused to apply the doctrine of international abstention where the party invoking that doctrine demonstrated apparent bad faith in filing a parallel foreign proceeding. Akstrom, a Canadian distributor, contracted with HEK, a Minnesota-based company (doing business as Kinneberg Management Group (KMG)), for KMG to serve as Akstrom’s sales representative with certain U.S. retailers. Akstrom agreed to pay KMG a portion of its sales as a commission. After KMG performed the contract for several weeks, Akstrom refused to pay the accrued commissions and instead sought to terminate the contract. After KMG issued a demand letter, Akstrom asked KMG to “keep th[e] matter in abeyance,” and indicated that it wanted “to discuss settling the dispute.” Instead, Akstrom filed an action against HEK/KMG in Canada seeking a declaratory judgment that the contract was null and void. HEK/KMG then sued Akstrom in Minnesota, seeking damages for contractual breaches, statutory violations, and unjust enrichment.

In response, Akstrom moved to dismiss or stay the Minnesota case pending resolution of the Canadian action. The U.S. district court observed that “[d]eferring to a foreign proceeding is a form of abstention,” and that “staying or dismissing a case based on international comity is . . . a rule of practice, convenience, and expediency rather than of law, and does not have the force of an imperative or obligation.” The relevant test, the court noted, involved consideration of “multiple factors,” namely: “the similarity of parties and issues, the adequacy of the alternative forum, the convenience of the parties, the promotion of judicial efficiency, the possibility of prejudice, and the temporal sequence of filing.” The court, however, found that consideration of those factors was unnecessary given “Akstrom’s apparent bad faith” being the “reason there is a parallel suit in Canada in the first place.” Applying the international comity doctrine, the court observed, “would permit Akstrom—who convinced KMG to hold its claim in abeyance while it filed suit in Quebec—to benefit from its deception and manipulation.”

The article was edited by Aaron Marr Page. Jonathan I. Blackman and Carmine D. Boccuzzi, authored Sections I and VII, with assistance from Katie Gonzalez, Leila Mgaloblishvili, Abigail Gotter-Nugent, and Nicholas Maisel. Theodore J. Folkman, authored Section II. Phillip B. Dye, Jr. authored Sections III and VIII, with assistance from Kylie Terry and Austin L. Turman. Matthew D. Slater and Mark E. McDonald authored Section IV, with assistance from Ms. Mgaloblishvili and Sata Watson. Ari MacKinnon authored Section V, with assistance from Ms. Gonzalez and Paul Kleist. Igor V. Timofeyev and Joseph R. Profaizer authored Sections VI and IX, with assistance from Matthew K. Morantz and Robert M. Overing.