C. Jurisdiction over Criminal Cases
The Supreme Court is poised to weigh in on whether the FSIA applies to criminal prosecutions. The Court has granted certiorari to review of the Second Circuit’s decision in United States v. Türkiye Halk Bankasi A.S., which—assuming arguendo that the FSIA applied—affirmed the denial of a Turkish state-owned bank’s motion to dismiss claims of U.S. sanctions violations, finding that the complained-of conduct fell within the commercial activity exception. The Court’s decision on this issue will decide a circuit split between the Sixth Circuit, which has held that the FSIA’s grant of jurisdiction is limited to civil actions, and the D.C. and Second Circuits, which have applied the FSIA in criminal cases.
D. Commercial Activity Exception
Courts have continued to refine the parameters of the FSIA’s commercial activity exception. In Wye Oak Technologies, Inc. v. Republic of Iraq, the D.C. Circuit analyzed the exception’s infrequently invoked second clause: claims “based upon” an “act performed in the United States in connection with a commercial activity of the foreign state elsewhere.” The D.C. Circuit rejected a ruling previously issued in the same case by the Fourth Circuit that this exception could be satisfied by the administrative acts of the plaintiff, an American contractor, performed in the United States in connection with its contract with Iraq, finding instead that “the act at issue [must] be one that the foreign state has performed in the United States.” The D.C. Circuit also reasoned that the contractor’s claim was not “based upon” its own activities, but upon Iraq’s nonperformance of its contractual obligations, which occurred in Iraq.
In Blenheim Capital Holdings Ltd. v. Lockheed Martin Corp., the Fourth Circuit analyzed whether South Korea’s purchase of military satellite equipment was “commercial” activity under the FSIA. The Fourth Circuit reasoned that although the purchase of goods is generally “commercial,” the military purchase transaction was of an exclusively sovereign nature, and undertaken based on regulations for sales “in furtherance of U.S. public policy and mutual military cooperation between countries.” Accordingly, the purchase was not “commercial” for purposes of the FSIA’s commercial activity exception.
II. International Service of Process
The Foreign Sovereign Immunities Act prescribes the methods that a plaintiff must attempt to serve process on a foreign state or its subdivision, as well as the order in which the plaintiff must attempt them. Because the first method, a special arrangement for service, is uncommon, plaintiffs typically must begin by seeking to serve foreign states under the Hague Service Convention, if the foreign state in question is a party to it. Convention states have opportunities not available to other litigants to delay or frustrate service, because the Convention’s main channel of transmission gives the foreign state the obligation of serving process on itself. The Convention state designates a central authority to receive requests for service, which is typically a government ministry or a court official. A competent authority in the requesting state forwards the request for service to the foreign central authority. The central authority then arranges for service of the summons on the defendant, using a method of service prescribed by the foreign law, unless the plaintiff has requested another method. That is, one department of the foreign government arranges for delivery of the paper to another department. If all goes well, the central authority returns a certificate that serves as proof of service.
In Saint-Gobain Performance Plastics Europe v. Bolivarian Republic of Venezuela, Saint-Gobain, a French company, owned a majority stake in NorPro Venezuela, C.A., which produced components for hydraulic fracturing. In 2011, President Chavez ordered the expropriation of Saint-Gobain’s interest. Saint-Gobain brought an International Centre for the Settlement of Investment Disputes (“ICSID”) arbitration, prevailed, and in 2018 sought enforcement of the award in the U.S. District Court for the District of Delaware. It sent a request for service to the Venezuelan central authority, which did not respond in any way. Venezuela moved to dismiss for improper service of process and improper venue. The court agreed that venue was improper and that the case should be transferred to the District of Columbia. But it rejected Venezuela’s service argument, reasoning that the Convention “does not permit a foreign sovereign to feign non-service by its own failure to complete and return the required certificate,” and that service was complete when the documents were received by the Venezuelan central authority. After the transfer to the District of Columbia, Saint-Gobain moved for summary judgment while Venezuela moved to dismiss for lack of jurisdiction, which the D.C. federal district court treated as a motion for reconsideration of the Delaware decision on service. The court then granted summary judgment and denied Venezuela’s motion. Venezuela appealed.
The D.C. Court of Appeals reversed. It held that because Saint-Gobain had not requested the use of an alternative method, the Convention required that service be effected under Venezuelan law, which required service of the documents on the Attorney General, and it was undisputed that this had not happened. As to Saint-Gobain’s argument that service on the central authority was meaningful because the central authority is the foreign state, the D.C. Circuit held that the Convention is clear that service is not complete on transmission to the central authority. The central authority merely receives a request for service, and has authority to refuse to execute requests for any number of legitimate reasons, for example, if the foreign state concludes that executing the request would infringe its sovereignty or security, or if the request does not comply with the Convention for other reasons. The court disregarded Saint-Gobain’s claims that Venezuela had acted in bad faith: “Even when the equities of a particular case may seem to point in the opposite direction, the Supreme Court has required courts to adhere to the plain text of the FSIA and the Hague Convention in view of the sensitive diplomatic implications.”
Saint-Gobain had also argued that under Article 15 of the Convention, a default judgment was proper because no response had been received from the Venezuelan central authority and more than six months had passed. But the Court of Appeals held that Article 15 applies only when the defendant has not appeared. Venezuela did appear, to challenge service. Thus, even though Venezuela’s central authority had not responded to the request for service, Article 15 did not apply.
Venezuela threaded the needle expertly by neither executing the service request nor affirmatively asserting that it would not execute it, and then making a limited appearance in court sufficient to avoid a default judgment under Article 15. That said, it may only have bought some time. Service via the diplomatic channel, while slow, is always available as a last resort when service under easier methods proves impossible.
III. Personal Jurisdiction
In Douglass v. Nippon Yusen Kabushiki Kaisha, the U.S. Court of Appeals for the Fifth Circuit considered the limits of a federal court’s exercise of personal jurisdiction. The suit arose from a 2017 collision between a Japanese container ship owned by Nippon Yusen Kabushiki Kaisha (NYK) and a U.S. Navy destroyer in Japan’s territorial waters. Personal representatives of sailors killed and injured in the collision brought claims in federal court under the Death on the High Seas Act against NYK which is incorporated and headquartered in Japan. The plaintiffs sought to proceed under a general personal jurisdiction theory without satisfying the traditional Fourteenth Amendment minimum contacts analysis, which requires showing that a defendant’s contacts are “so continuous and systematic as to render it essentially at home” in the relevant forum. Rather, plaintiffs argued that, especially in an admiralty case, general jurisdiction could be found based on Federal Rule of Civil Procedure 4(k)(2), where the defendant maintained “substantial, systematic and continuous contacts with the United States as a whole” and had “fair notice” that it could be subject to a suit.
On appeal, an en banc panel rejected plaintiffs’ argument that Rule 4(k)(2) was substantive source of personal jurisdiction. The court explained that Rule 4(k) is inherently a procedural rule about issuing summons, incapable of expanding the scope of a court’s exercise of personal jurisdiction. Additionally, Rule 4(k)(2) was “expressly subservient to the constitutional limits of due process.” The appeals court then reasoned that the Fifth and Fourteenth Amendment due process clauses “use the same language and serve the same purpose” such that the standards governing due process limits on the exercise of personal jurisdiction under the clauses must also “mirror each other.”
Within days of the Douglass decision, the U.S. Court of Appeals for the Eleventh Circuit came to the same conclusion in Herederos De Roberto Gomez Cabrera, LLC v. Teck Res. Ltd. In Herederos, the Eleventh Circuit considered a federal claim under the Helms-Burton Act that a Canadian-headquartered and incorporated company had illegally trafficked in property confiscated by the Cuban government. Similar to Douglass, the plaintiff contended that the exercise of personal jurisdiction over the foreign defendant was “consistent with the . . . Constitution” under Rule (4)(k)(2). The plaintiff argued that the Fifth Amendment’s due process test for personal jurisdiction was an even more lenient “arbitrary or fundamentally unfair” standard than the “fair notice” standard rejected in Douglass. In affirming the district court’s dismissal for lack of personal jurisdiction, the Eleventh Circuit explained, as the Douglass court had, that the language of the Fifth and Fourteenth Amendment due process clauses were materially identical and that it would make little sense to treat a jurisdictional analysis under each differently.
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 Caballero v. Fuerzas Armadas Revolucionarias de Colombia, discussed in last year’s Year in Review, the U.S. District Court for the Western District of New York applied the act of state doctrine to a dispute between two competing sets of counsel who sought to represent the Venezuelan national oil company, Petroleos de Venezuela (PDVSA), one appointed by the regime of Nicolás Maduro and the other appointed by the interim government of Juan Guaidó. In the decision discussed last year, the court reasoned that the appointment of counsel was an “official” “act[] regarding the management of Venezuela’s state-owned corporations” by the Guaidó government—the government recognized by the United States.
In early 2022, the district court denied a motion for reconsideration by the Maduro regime. The regime argued that Kirkpatrick established that federal courts should not invoke the act of state doctrine unless “the outcome of the case turns upon—the effect of official action by a foreign sovereign,” but the court had applied the doctrine to a non-dispositive motion. The court rejected the argument, holding that the focus Kirkpatrick was on whether the issue “require[d] deciding the effect of an official act by a foreign sovereign” or could have been decided without such a finding. Because the court could not avoid making such a finding in resolving the counsel dispute, the doctrine was properly applied.
But in a related proceeding, the District Court for the District of Connecticut declined to apply the act of state doctrine and denied the Guaidó government’s motion to substitute its own counsel to represent an El Salvadoran subsidiary of PDVSA, in place of counsel retained by the subsidiary’s authorized representative. The court reasoned that, even assuming the Guaidó government had validly decreed it would make decisions for all of PDVSA’s subsidiaries, because this subsidiary was incorporated in El Salvador, the law of El Salvador applied and the act of state doctrine “[did] not apply extraterritorially to allow Venezuela to override the basic corporate law principles of El Salvador.”
In United States v. Trabelsi, the U.S. Court of Appeals for the D.C. Circuit applied the act of state doctrine to defer to an extradition decision of Belgium’s executive branch, notwithstanding conflicting decisions by Belgium’s judiciary. The defendant, a Tunisian national extradited from Belgium to the United States, sought dismissal of his case based on intervening decisions by Belgian courts finding he could not be prosecuted for certain acts in the United States. The D.C. Circuit held that these judicial decisions did not affect the extradition because under the applicable extradition treaty, the Belgian executive’s decision controlled (not the Belgian judiciary’s), and the act of state doctrine required deference to that decision.
The U.S. Court of Appeals for the Second Circuit issued two decisions addressing the types of claims covered by the act of state doctrine. In Celestin v. Caribbean Air Mail, the court held that the act of state doctrine did not bar U.S. antitrust claims based in part on acts of Haitian government officials, reversing a district court decision which had held that the doctrine prevented review of a price-fixing scheme involving money transfers, food remittances, and international calls to and from Haiti that had alleged been enabled by Haitian presidential orders. The appeals court reasoned that because the antitrust claims did not hinge on the validity of the Haitian government’s orders but on whether the elements of an antitrust cause of action were met, the act of state doctrine did not apply. Similarly, in Petroleos de Venezuela S.A. v. MUFG Union Bank, N.A., the Second Circuit applied Celestin to claims challenging the validity of a bond swap by PDVSA allegedly executed in violation of an official act of the Venezuelan government. The court observed that whether the doctrine applied depended on the “antecedent” question of whether the validity of the bond swap was governed by Venezuelan or U.S. law—if the latter, the act of state doctrine would not apply. The court reserved judgment on the act of state argument pending its certification of the choice of law question to the New York Court of Appeals.
V. International Discovery
A. Obtaining U.S. Discovery for Use in Foreign Proceedings
In the consolidated cases of ZF Automotive US, Inc. v. Luxshare, Ltd. and AlixPartners, LLC v. Fund for Protection of Investors’ Rights in Foreign States, the U.S. Supreme Court issued a much-anticipated decision on whether 28 U.S.C § 1782 (Section 1782), which allows U.S. federal courts to compel discovery for use before “foreign or international tribunal[s],” can be invoked in aid of international arbitration proceedings. Resolving an entrenched split among multiple courts of appeal, the Supreme Court held that private international arbitrations do not qualify under Section 1782 because the term “foreign or international tribunal” is limited to adjudicatory bodies that exercise governmental authority.
Under this interpretation, the Court found it “straightforward” that private international arbitration tribunals, like the German Arbitration Institute (DIS) panel at issue in ZF Automotive, do not qualify under the statute. The Court acknowledged that whether public international arbitration tribunals, like the ad hoc panel constituted under the UNCITRAL Rules pursuant to a Russia-Lithuania Bilateral Investment Treaty in AlixPartners, present a “harder question.” Although the Court ultimately concluded that the ad hoc panel in that case did not qualify as a “foreign or international tribunal,” noting that the panels in both cases “derive[d] their authority from the parties’ consent to arbitrate,” rather than the exercise of “official authority.”
The Court did not mention arbitrations conducted by the ICSID, which many courts had previously found could rely on Section 1782. At least one district court has already grappled with whether an ICSID tribunal is still within the ambit of Section 1782 following the Supreme Court’s decision. In In re Application of Alpene, a magistrate judge in the District Court for the Eastern District of New York noted that “[t]he Supreme Court did not set out any test or provide any guidelines for lower courts to follow in making this determination,” but considered five factors that it dubbed as “persuasive elements” in indicating whether the states at issue intended to “imbue” the ICSID facility with the kind of governmental authority that the Supreme Court was looking for. While noting both the “number of similarities” and “significant differences” between the ICSID tribunal and the ad hoc panel in AlixPartners, the court found “insufficient support for the argument” that the ICSID tribunal was imbued with governmental authority. The court found unpersuasive the argument that comity considerations underlying Section 1782 weighed in favor of permitting discovery, noting that “ICSID arbitral tribunals have no authority to provide reciprocal discovery assistance for United States proceedings.”
B. Obtaining Discovery from Abroad for Use in U.S. Proceedings
U.S. courts may compel the production of documents located abroad for use in U.S. proceedings using the multi-factor comity analysis established by Société Nationale Industrielle Aérospastiale v. U.S. District Court for the Southern District of Iowa. They may do so even in the face of foreign “blocking” statutes or other foreign legislation purporting to limit disclosure, such as the European Union’s General Data Protection Regulation (GDPR). In Kashef v. BNP Paribas S.A., however, the District Court for the Southern District of New York found that the presence of French bank secrecy laws and blocking statutes which “demonstrated a strong interest in data privacy” weighed against a wholesale de-pseudonymization sought by the plaintiffs in that case.
VI. Extraterritorial Application of United States Law
A. Wire Fraud Act
In United States v. Elbaz, the Fourth Circuit construed the Wire Fraud Act, 18 U.S.C. § 1343, to apply to a foreign defendant whose fraudulent messages were received in the United States. The defendant and her co-conspirators had been convicted of federal wire fraud for a multimillion-dollar scheme involving binary options that targeted unsophisticated victims worldwide. Defendant challenged her conviction on the ground that the statute has no extraterritorial application and thus did not apply to her conduct, which originated outside the United States. Applying the familiar two-step test for extraterritorial application, the Fourth Circuit first agreed that the statute does not apply extraterritorially. At step two, however, the court determined that the charged conduct was not extraterritorial, looking specifically at “the conduct relevant to the statute’s focus.” Aligning itself with the First and Ninth Circuits, the Fourth Circuit emphasized that the focus of the wire-fraud statute was the defendant’s “use of wire communication to execute the scheme,” rather than the defendant’s devising of the scheme, which occurred abroad. Because the defendant used internet and phone wires in Maryland to execute the scheme, the conviction was a permissible domestic application of the statute.
B. Commodity Exchange Act
In Laydon v. Cooperatieve Rabobank U.A., the Second Circuit affirmed the dismissal of Commodity Exchange Act (CEA) claims on extraterritoriality grounds because the alleged conduct was predominantly foreign. The court explained that under Section 22 of the CEA, a claim must involve both a “domestic transaction” and “sufficiently domestic conduct by the defendant.” In Laydon, the plaintiff had traded a derivative, not listed on a domestic exchange, that was tied to the value of a foreign asset. The derivative contract’s value was determined, at least in part, by interest rates set by foreign entities in foreign countries. The defendant’s alleged manipulative conduct and communications occurred almost entirely abroad on foreign trade desks. Aside from some communications by employees merely traveling inside the United States, the complaint focused on foreign individuals working in foreign offices. The court concluded that these particular “CEA claims are impermissibly extraterritorial because the conduct [alleged] is ‘predominantly foreign.’”
C. Money Laundering Control Act
In reviewing the conviction of a Bulgarian man who operated a cryptocurrency exchange in Bulgaria, the Sixth Circuit considered whether the lower court’s application of the federal money laundering and RICO statutes was impermissibly extraterritorial. The Money Laundering Control Act (MLCA) expressly provides that:
[t]here is extraterritorial jurisdiction . . . if: (1) the conduct is by a United States citizen or, in the case of a non-United States citizen, the conduct occurs in part in the United States; and (2) the transaction or series of related transactions involves funds or monetary instruments of a value exceeding $10,000.
Although the defendant never set foot in the United States, the court of appeals concluded his money-laundering conspiracy satisfied the first prong—occurring in part in the United States—because it targeted victims in the United States, accepted and converted payments in the United States, and laundered funds in the United States. Consequently, the Sixth Circuit held that the prosecution did not run afoul of the RJR Nabisco framework.
The defendant also raised an extraterritoriality argument under the Fifth Amendment’s Due Process Clause, arguing that if the MLCA and RICO statutes reached his conduct, they were unconstitutional as applied. Despite the absence of on-point circuit law, the Sixth Circuit rejected the defendant’s constitutional claim on the ground that even if the Fifth Amendment limited the federal power to criminalize extraterritorial conduct, there was no arbitrariness or fundamental unfairness because the ties between the defendant’s offense and the United States were “numerous and compelling.”
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 Tatneft v. Ukraine, the D.C. Circuit enforced an arbitration award won by a Russian company against Ukraine in proceedings under the Russia-Ukraine Bilateral Investment Treaty, rejecting arguments that the action should be dismissed as forum non conveniens and that enforcement of the award violated public policy. The D.C. Circuit held that “forum non conveniens is not available” in enforcement proceedings because there is no adequate alternative forum to attach assets in the United States. It also rejected the argument that the Convention’s public policy exception was triggered by the claim that the award was in violation of Ukrainian law, noting that “the U.S. does not have a policy against enforcing arbitral awards predicated on underlying violations of foreign law.”
In Reddy v. Buttar, the Fourth Circuit rejected arguments that the district court lacked jurisdiction to enforce a Singaporean award because the petitioner had failed to produce a written arbitration agreement. In accord with precedent from the Second and Ninth Circuits, the Fourth Circuit concluded that the Convention’s “written-and-signed” requirement “speak[s] to the merits of a plaintiff’s enforcement action,” not to the subject-matter jurisdiction of U.S. courts.
In Esso Expl. & Prod.Nigeria Ltd. v. Nigerian Nat. Petroleum Corp., the Second Circuit considered an action to enforce an arbitral award set aside in the primary jurisdiction. It clarified that “district courts are not limited to the four considerations” the court had earlier laid out in Corporación Mexicana de Mantenimiento Integral, S. de R.L. de C.V. v. PEMEX-Exploración y Producción. Rather, district courts should consider all relevant factors bearing on whether “the foreign judgment setting aside the award is . . . repugnant to the fundamental notions of what is decent and just in the United States.”
B. Foreign Court Judgments
In De Fontbrune v. Wofsy, the Ninth Circuit clarified that California’s public policy exception to the recognition of foreign judgments depends in part on the merits of the defense sought to be asserted. A French court had entered judgment on de Fontbrune’s claims against Wofsy for copyright infringement of photographs, granting de Fontbrune an astreinte, pursuant to which Wofsy would be liable for damages for further use of the photographs. In subsequent proceedings to collect on the astreinte, Wofsy did not appear, and the French court entered a default judgment.
In de Fontbrune’s recognition suit in California, the Northern District of California granted Wofsy’s motion for summary judgment because French law did not allow for a fair use defense to copyright infringement, making the astreinte judgment “repugnant to U.S. public policy favoring free expression” and subject to non-recognition under the California Recognition Act. The Ninth Circuit reversed. The fair use defense under U.S. copyright law consists of four factors, and the Ninth Circuit substantively examined each of these factors with respect to the Wofsy’s use of the photographs. Because in the Ninth’s Circuit view, none of the factors weighed in favor of the fair use defense, the court concluded that the inability to assert the defense in the French proceedings “does not place the French judgment in ‘direct and definite conflict with fundamental American constitutional principles.’” The Ninth Circuit expressly left open the question of whether the inability to assert a meritorious fair use defense in foreign proceedings would result in a judgment triggering the public policy exception to recognition.
VIII. Forum Non Conveniens
In the traditional forum non conveniens analysis, the court first considers the degree of deference awarded to the plaintiff’s choice of forum, then considers whether the alternative forum is adequate to adjudicate the dispute and balance the private and public interests factors relating to convenience. This year, the appellate courts looked at the interplay between this analysis and application of both the FSIA and the United Nations Convention Against Corruption (UNCAC).
In Aenergy, S.A. v. Republic of Angola, the Second Circuit addressed whether the standard principles of forum non conveniens apply when a suit is brought against a foreign state under an exception to the FSIA. The plaintiff in Aenergy sued Angola under two FSIA exceptions: the exception for commercial activity carried on in the United States, and the exception for property taken in violation of international law where that property, or property exchanged for such property, is present in the United States. Citing the Supreme Court’s decision in Sinochem Int’l Co. v. Malay. Int’l Shipping Corp., the district court conditionally dismissed the complaint after finding that Angola would be a more convenient forum, without addressing whether there was jurisdiction under the FSIA. On appeal, the plaintiff argued that dismissal under forum non conveniens was improper where a claim was brought against a foreign state under an exception to the FSIA or, alternatively, that the standard for dismissal must be higher. The plaintiff argued that because Congress already expressly considered the convenience—or lack thereof—to foreign states in crafting the FSIA, applying forum non conveniens inquiry in a FSIA context would “upset the careful balance struck by Congress.”
In stark contrast to the plaintiff’s argument, the Second Circuit held that not only did forum non conveniens still apply to suits brought under an exception to the FSIA, but it might apply “in some cases perhaps with greater weight.” The court opined that “the forum non conveniens doctrine remains useful in the FSIA context as a ‘tool that helps prevent this country’s judicial system from becoming the courthouse to the world, or an international court of claims.’”
Similarly, in Instituto Mexicano del Seguro Social v. Zimmer Biomet Holdings, Inc. and in Instituto Mexicano del Seguro Social v. Stryker Corporation, plaintiffs argued that the UNCAC precluded dismissal for forum non conveniens. The UNCAC is a multilateral treaty intended to prevent international corruption, requiring that State Parties “[t]ake such measures as may be necessary to” make its courts available for parties to initiate an action under the UNCAC. The Sixth and Seventh Circuits did not answer whether the UNCAC would have any relevance to the forum non conveniens analysis, but both circuits found that because the treaty was not self-executing the UNCAC is not binding federal law and cannot foreclose the forum non conveniens analysis.
IX. Parallel Proceedings
A. Anti-suit Injunctions
In In re Zetta Jet USA Inc., the U.S. Bankruptcy Court for the Central District of California granted a motion to enjoin a U.S. company’s Chapter 7 Trustee from pursuing claims in Singapore against parties to the original proceeding initiated in Singapore. The Trustee argued that, after the court had dismissed the case and the Trustee had filed a notice of appeal, the court lacked jurisdiction to issue the injunction. The court found that it had power to enforce its own orders while appeals are pending, as necessary to “‘to protect the federal judgment from being undermined or vitiated in foreign proceedings by a party before’ the Court.” The Trustee also argued that an anti-suit injunction would offend international comity and would unfairly deny the trust’s beneficiaries the protections of Singapore insolvency law, in particular due to certain exclusivity provisions in Singapore law that required the Trustee to bring suit in Singapore. The court rejected these arguments as well, concluding that Singapore law had no bearing on the U.S. court’s jurisdiction, which was a matter of U.S. law and (in this case) the Bankruptcy Code. Dispatching these threshold matters, the bankruptcy court determined that res judicata principles barred the Trustee’s Singapore action.
In Ganpat v. Eastern Pacific Shipping, PTE. LTD., the U.S. District Court for the Eastern District of Louisiana gave careful attention to “the extent to which the foreign suit is duplicative of the litigation in the United States,” one of the anti-suit injunction factors. In the Fifth Circuit, the “duplicative factor is about legal not factual, similarity.” The court found that even though the allegedly vexatious and duplicative suit in India was filed by the defendant in the U.S. action, and primarily sought an injunction against the plaintiff’s pursuit of the U.S. action, the two suits share the same legal bases and satisfied the factor favoring an anti-suit injunction.
B. International Abstention
The Colorado River doctrine gives federal courts a “virtually unflagging obligation” to exercise jurisdiction in the face of parallel state proceedings, absent “exceptional” circumstances. But different federal circuits apply Colorado River’s analysis of parallel state proceedings to parallel foreign proceedings in a variety of different ways. In HSBC Bank (Uru.) S.A. v. Seaboard Corp., the U.S. District Court for the District of Kansas looked at what it called “a civil procedure battle royale” of different approaches, none of which the Tenth Circuit had adopted. The majority of the circuits — the Fourth, Sixth, Seventh, and Ninth — simply apply Colorado River without any special consideration for international concerns. The Eleventh Circuit follows a modified Colorado River test that accounts for international comity, whereas the Second Circuit has articulated the doctrine of “‘international comity abstention,’” which involves six or more factors. The district court agreed with the minority approaches that international abstention presents “different concerns than the issues of federalism addressed in Colorado River.” The court predicted that the Tenth Circuit would most likely adopt the Second Circuit’s “robust framework for considering abstention issues” in the context of parallel foreign bankruptcy. After applying the six-factor test to the case, however, the court found that two factors weighed against abstention, two were neutral, and two favored abstention, such that, “[a]dded together it’s a wash.” The court concluded that given the close balance of the factors, no “exceptional circumstances” justified abstention.
In another case, the U.S. District Court for the Southern District of New York applied the Second Circuit standard for “adjudicative comity” abstention based on parallel foreign bankruptcy proceedings. The court determined it could exercise jurisdiction over objections based on international comity because the parallel case was sufficiently distinct and there were no “extraordinary circumstances.” Further, the court reiterated that in the Second Circuit, only foreign bankruptcy proceedings have been “singled out” as “often requir[ing] dismissal of parallel district court actions.”
