A recent decision of the Southern District of New York illustrates enforcement of arbitral awards under the New York Convention in situations when there are competing decisions issued by an arbitration tribunal and a foreign court.
In Ocean World Lines, Inc. v. Transocean Shipping Transportagentur GesmbH, No. 19 CIV. 43 (AT), 2020 WL 3250734, at *2 (S.D.N.Y. June 16, 2020), Petitioner sought to enforce an arbitral award issued by the Society of Maritime Arbitrators, Inc. against Respondent. At the same time, Petitioner sought to enjoin Respondent from enforcing a competing Austrian Judgment, which concerned same agreement between the parties and was issued in Respondent’s favor. Petitioner also asked the Court to issue a judgment declaring that the Austrian Judgment is invalid.
The Court quickly confirmed the arbitral award finding that none of the seven defenses under the New York Convention apply. The Court, however, refused to grant an injunction or issue a judgment declaring the Austrian award to be invalid. The Court distinguished this case from a situation “where the same parties attempt to litigate the same underlying dispute in multiple fora, often in a so-called ‘race for res judicata.’…By contrast, where a foreign court has already rendered a judgment, and a party seeks an injunction preventing that judgment’s enforcement, what is sought is not an anti-suit injunction but ‘an anti-enforcement injunction.’” Id. at *4.
The anti-suit injunction against a foreign litigation may be imposed in certain situations when such litigation is ongoing between the same parties and resolution of the case before the enjoining court is dispositive of the action to be enjoined. See China Trade & Dev. Corp. v. M.V. Choong Yong, 837 F.2d 33, 35 (2d Cir. 1987). If the foreign litigation affects proceedings in the enjoining court in a negative way, the injunction may be granted. Id. (“five factors are suggested in determining whether the foregoing action should be enjoined: (1) frustration of a policy in the enjoining forum; (2) the foreign action would be vexatious; (3) a threat to the issuing court’s in rem or quasi in rem jurisdiction; (4) the proceedings in the other forum prejudice other equitable considerations; or (5) adjudication of the same issues in separate actions would result in delay, inconvenience, expense, inconsistency, or a race to judgment.”)
In contrast, Ocean World Lines Court found that an anti-enforcement injunction is rarely available because “such an injunction threatens international comity” as “the court risks disrespecting the legal system not only of the country in which the judgment was issued, but also those of other countries, who are inherently assumed insufficiently trustworthy to recognize what is asserted to be the extreme incapacity of the legal system from which the judgment emanates. The court presuming to issue such an injunction sets itself up as the definitive international arbiter of the fairness and integrity of the world’s legal systems.”
In situations when there are competing proceedings in multiple forums, it is prudent to evaluate a possibility of an anti-suit injunction early in the proceeding when no judgment has been issued. It is unlikely that a court will grant an anti-enforcement injunction and declare a foreign judgment to be invalid.