Judge Maintains Jurisdictional Harmony and Refuses to Block Foreign Company’s Suit in France.
In a recent post, I wrote about the “F-Cubed” securities class action trial currently underway in New York federal court. The class action lawsuit, In Re: Vivendi Universal, S.A., alleges Vivendi made material misrepresentations and omissions concerning the firm’s liquidity position. The truth about its financial health emerged in 2002 when Vivendi announced several asset sales and credit-ratings agencies downgraded its debt.
You can read more about the trial on the Bloomberg website in the article Vivendi Ex-Chief Messier to Testify at Fraud Trial and in the Wall Street Journal article Messier: I Never Committed Fraud as Vivendi’s Chief Executive.
The Anti-Suit Injunction
The Plaintiffs in the trial recently filed an “anti-suit” injunction to prevent French media giant Vivendi from petitioning the Tribunal de Grande Instance de Paris to enjoin two individual French class members from participating in the New York trial. An anti-suit injunction is an order issued by a court or tribunal that prevents an opposing party from commencing or continuing a proceeding in another jurisdiction or forum.
In an effort to maintain jurisdictional harmony and avoid dueling anti-suit injunctions, Judge Richard J. Howell issued an Order denying the injunction to force Vivendi to withdraw the French lawsuit. Judge Howell ruled that he would not encroach on the Paris court’s jurisdiction, even though the plaintiffs in the U.S. suit met the qualifications for an injunction. In deferring on the principle of comity, the Court wrote:
[F]oreign anti-suit injunctions technically operate only against the parties, in effect they restrict the jurisdiction of the courts of a foreign sovereign…Consequently, foreign anti-suit injunctions should be “used sparingly . . . and granted only with care and great restraint.”
While the Court’s ruling was a setback for the plaintiffs’ case given that they satisfied all the necessary conditions, it is an instructive lesson on how to lay a solid foundation for the issuance of an anti-suit injunction.
Requirements for Seeking Anti-Suit Injunction
A party seeking anti-suit relief in the U.S. federal court against foreign litigation generally needs to show:
- The foreign proceedings involves the same issue and parties;
- The case before U.S. courts will be “dispositive” of the issue in the foreign tribunal; and
- International comity and equitable consideration favor anti-suit relief.
Absent such a showing, courts generally will allow local and foreign litigation to proceed in parallel, on the basis that final judgment in one will have res judicata effect on the other.
If seeking to commence parallel non-U.S. proceedings, consider whether asserting different parties and issues in the U.S. and non-U.S. proceedings will help to ward off an anti-suit injunction.
If, on the other hand, you are intent on trying to set up a motion for an anti-suit injunction, consider how closely you can draft your pleading to mirror the facts, claims, and issues in the other jurisdiction.
Party Opposing Anti-Suit Injunction Should Consider Pre-Emption
While difficult to obtain, a party that wants to avoid the issuance of a foreign anti-suit injunction designed to stop a U.S. litigation should consider pre-empting the non-U.S. injunction by seeking an “anti-anti-suit injunction” from the U.S. court. These injunctions have been granted, albeit rarely, where the applicant has shown that the other party will seek to frustrate enforcement of the parties’ judgment.
Trend to Watch: The Use of Anti-Suit Injunctions Will Continue to Rise as International Mega-Deals Become More Prevalent