agreements generally are enforceable, a party who commences litigation

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1 NAVIGATING Muddy Waters Anti-Foreign Suit Injunctions in Aid of Compelling Arbitration By Chris Karagheuzoff and Eric Epstein Chris Karagheuzoff and Eric Epstein are, respectively, partner and associate in the Trial Group of the New York office of Dorsey & Whitney LLP. The focus of their law practice is on corporate litigation and arbitration, with particular emphasis on commercial disputes, class action and products liability defense, insurance and antitrust litigation and counseling. In the United States, because arbitration agreements generally are enforceable, a party who commences litigation A look at the liberal and conservative approaches to anti-foreign suit injunctions, the recent case law, and drafting suggestions to prepare for the possible need for such an injunction. of a dispute subject to an arbitration agreement typically can be compelled by a court not only to arbitrate, but also to cease litigating. The party seeking to preclude the litigation from going forward generally can secure a stay of the action from the court in which the Reprinted with permission from the Dispute Resolution Journal, vol. 63, no. 2 (May-July 2008), a publication of the American Arbitration Association, 1633 Broadway, New York, NY , ,

2 action was filed, or an anti-suit injunction from a court in the jurisdiction in which the arbitration is seated. 1 However, different and more complex legal issues arise when a party who commences an arbitration proceeding in one country seeks to enforce the arbitration agreement to stop a parallel lawsuit commenced in another country by the adverse party. Below, we discuss the legal issues involved when a party who commences arbitration of a dispute that is arbitrable under the parties agreement seeks to stop a non-u.s. litigation commenced by the adversary regarding the same dispute. Specifically, the question is, under what circumstances may U.S. courts issue an anti-foreign suit injunction in aid of arbitration? In answering this question, the courts have adopted varying approaches. This article discusses these approaches, and considers their implications from a legal, find that there is no simple way to prevent the foreign party from commencing a lawsuit outside the U.S. to resolve the parties dispute. The foreign party may have any number of reasons for commencing a lawsuit in a jurisdiction outside the U.S. For example, it may have determined in good faith that the subject matter of the dispute is not within the scope of the arbitration clause. Or it may believe that the outcome in the foreign court is likely to be more favorable. The foreign party also may have a tactical purpose in commencing litigation, such as multiplying costs and/or causing procedural confusion and delay that inures to the greater detriment of its opponent. Assuming the foreign court does not deem the dispute to be arbitrable and permits the litigation to go forward, the only means available to the U.S. party to halt the foreign litigation is to petition a U.S. court in the jurisdiction where the Karaha Bodas suggests that, even in a liberal circuit, considerations of international comity may have significant weight in regard to a requested anti-foreign suit injunction in aid of arbitration, and, in some cases, may trump pro-arbitration policy considerations. policy, and contract drafting perspective. With respect to the latter, we propose contract provisions that, if included in arbitration agreements with foreign parties, may aid U.S. parties who seek to enforce those agreements and preclude foreign court litigation of arbitrable disputes. What Is the Problem? A U.S. party to an arbitration agreement who seeks to preclude foreign court litigation of a dispute within the scope of that agreement faces a two-fold problem: first, the lack of consistent laws or policies in foreign jurisdictions regarding the interpretation and enforcement of arbitration agreements; and second, the absence of any international entity empowered to interpret an arbitration clause, decide upon its enforceability, and implement its determination. 2 Indeed, as arbitration clauses have become more widely used in international contracts, courts in different countries sometimes have developed significantly different views of the validity, scope and permissible subject matter of arbitration clauses. 3 As a result, a U.S. party to an arbitration agreement with a non-u.s. party may be surprised to arbitration is seated to issue an anti-foreign suit injunction. This injunction would enjoin the non-u.s. party (as opposed to the foreign court itself), on penalty of contempt, from continuing to litigate disputes within the scope of the arbitration clause. However, the question of when U.S. courts will issue an anti-foreign suit injunction in aid of enforcing an arbitration clause has not been answered in a uniform manner. Split in the Circuits All U.S. federal circuit courts agree on the two threshold requirements that must be satisfied by the party seeking an anti-foreign suit injunction in aid of arbitration: (1) the parties to the arbitration and the foreign lawsuit must be the same, and (2) the issues must be the same in both matters, so that the resolution of one matter would be determinative of the other. Sometimes the party who commences a foreign litigation names other parties as defendants in an attempt to evade the first requirement. However, in determining whether the parties to the arbitration and the foreign lawsuit are the same, courts will look beyond the captioned party names to see whether there is sub- 2 MAY/JULY 2008

3 stantial similarity and affiliation among them. 4 Beyond these threshold requirements, however, courts diverge in the standards they use for issuing an anti-foreign suit injunction in aid of arbitration. Their disagreement lies principally in the varying weight that they accord to the principle of international comity, that is, the degree to which a U.S. court should refrain from interfering with the jurisdiction of a foreign national court. In general, the 5th, 7th and 9th Circuits have taken the so-called liberal approach under which, it has been said, a court will grant an antisuit injunction when necessary to prevent duplicative and vexatious foreign litigation and to avoid inconsistent judgments. 5 This approach generally gives less weight to principles of international comity and greater weight to the need to prevent duplicative litigation and/or to minimize the burden on the party seeking to arbitrate. The 1st, 2nd, 3rd, 6th, 8th and District of Columbia Circuits have adopted the conservative approach, which generally weighs comity concerns more heavily. The Liberal Approach A leading case applying the liberal approach to anti-foreign suit injunctions in aid of arbitration is Affymax, Inc. v. Johnson & Johnson. 6 The district court issued an anti-foreign suit injunction against the prosecution of a German patent suit upon finding that a pending U.S. arbitration dealing with the underlying contract issues was indistinguishable from the German proceeding and were premised on the same set of facts. The court explained that an anti-foreign suit injunction in aid of arbitration should issue when allowing the two suits to proceed would be gratuitously duplicative. In this particular case, the court concluded that allowing the arbitration and the foreign litigation to proceed simultaneously would have resulted in an unfair burden on the party seeking to arbitrate. The district court noted that the determinative gratuitously duplicative standard that it applied differed from courts that have adopted the conservative approach, but posited that the differences between the two standards may be semantic and not substantive. 7 Another instructive arbitration case that implicates the liberal approach Karaha Bodas Co., LLC v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara 8 did not involve a foreign-suit injunction in aid of enforcing an arbitration agreement, but rather involved a party s motion for an anti-foreign suit injunction against proceedings commenced in a foreign court to annul an arbitration award and enjoin the enforcement of that award. Specifically, Karaha Bodas involved a completed arbitration that led to a final arbitration award, a foreign lawsuit commenced to annul the award, a decision by the foreign court annulling the award, and an anti-arbitration injunction issued by the foreign court enjoining enforcement of that award. Karaha Bodas Co. (KBC), the prevailing party in a Swiss arbitration, obtained an order from a district court in Texas confirming the award. The losing party, Pertamina, a company wholly owned by the Indonesian government, appealed. While the appeal was pending, Pertamina filed a lawsuit in the courts of Indonesia seeking to annul the award. KBC petitioned the Texas federal court to enjoin Pertamina s annulment lawsuit. The district court granted a temporary restraining order enjoining the Indonesian litigation. However, that litigation continued, resulting in an order by the Indonesian court annulling the award. The Indonesian court also enjoined enforcement of the arbitration award (the antiarbitration injunction). After the Indonesian court s annulment ruling, the district court issued a preliminary injunction prohibiting Pertamina from enforcing the Indonesian court s injunction against enforcing the arbitration award. The 5th Circuit, in a highly fact-specific decision, vacated the district court s preliminary injunction. The court based its decision largely on the fact that the Indonesian proceedings concerned the enforcement of the award, not enforcement of the arbitration agreement (this meant there was no threat of a potentially duplicative lawsuit on the merits. 9 ) However, in so ruling, the court relied on the not insubstantial interests in preserving international comity. Comity was implicated for the following reasons: (1) the arbitration took place in a non-u.s. forum (Switzerland), (2) Pertamina was wholly-owned by a foreign government, and (3) the requested injunction would have the practical effect of showing a lack of mutual respect for the judicial proceedings of other sovereign nations and demonstrate an assertion of authority not contemplated by the New York Convention. Thus, Karaha Bodas suggests that, even in a liberal circuit, considerations of international comity may have significant weight in regard to a requested anti-foreign suit injunction in aid of arbitration, and, in some cases, may trump proarbitration policy considerations. In sum, in courts following the liberal approach, an anti-foreign suit injunction in aid of enforcing an arbitration agreement will not necessarily be granted as a matter of course. This is DISPUTE RESOLUTION JOURNAL 3

4 particularly so given that some courts may, like Affymax, view the liberal and conservative approaches as functional equivalents. 10 The Conservative Approach The 1st, 2nd, 3rd, 6th, 8th and District of Columbia Circuits have adopted what some commentators have deemed the conservative approach, which applies a strong (but rebuttable) presumption against the issuance of anti-foreign suit injunctions based largely on deference to international comity. The U.S. district court for the Southern District of New York explained, [P]rinciples of comity counsel that injunctions restraining foreign litigation be used sparingly and granted only with care and great restraint... because an anti-suit injunction, though directed at the litigants, effectively restricts the jurisdiction of the court of a foreign sovereign. 11 The cases that adopt a conservative approach to anti-foreign suit injunctions to aid enforcement of arbitration agreements come chiefly from the 2nd Circuit. We have identified three different ways that the district courts in the 2nd Circuit, and the 2nd Circuit Court of Appeals itself, approach the issue. (i) Balancing the China Trade Factors Some courts balance the notion of deference to international comity against the strong public policy in favor of arbitration, particularly in international disputes. 12 The factors to be weighed under the balancing approach include: (1) the potential frustration of a policy in the enjoining forum; (2) the vexatiousness of the foreign litigation; (3) a threat to the issuing court s jurisdiction; (4) any prejudice caused by the foreign litigation to other equitable considerations; and (5) any delay, inconvenience, expense, inconsistency or unseemly race to judgment created by adjudication of the same issues in separate actions. 13 These five factors are the same factors set forth in the landmark China Trade case in regard to anti-foreign suit injunctions generally. 14 For example, in Smoothline Ltd. v. North American Foreign Trading Corp., the district court Courts diverge in the standards they use for issuing an anti-foreign suit injunction in aid of arbitration. Their disagreement lies principally in the varying weight that they accord to the principle of international comity. enjoined a pending proceeding in the courts of Liechtenstein that involved the same parties and covered the same subject matter as the New York arbitration, where the parties agreement called for New York law to govern. 15 The court held that the foreign court proceeding threatened the strong federal policy favoring arbitration. In Ibeto Petrochemical Industries Ltd. v. M/T Beffen, the district court granted an injunction against the prosecution of a Nigerian lawsuit in favor of arbitration in London under English law after determining that the federal policy of promoting arbitration may be frustrated by the foreign litigation. On appeal, the 2nd Circuit upheld the district court s injunction after analyzing the propriety of the injunction under the China Trade balancing test. 16 The court found that permitting parallel litigation in the Nigerian courts would risk widely disparate results because the English arbitrator would respect certain liability limitations that were incorporated into the contract, but the Nigerian courts would not. Moreover, the court noted that considerable inconvenience would occur in the movement of witnesses between the two venues. (ii) Need for Irreparable Harm Other cases have emphasized that an anti-foreign suit injunction in aid of arbitration is a form of injunctive relief and, therefore, is an extraordinary and drastic remedy that should not be routinely granted. It should issue only [w]here necessary to prevent irreparable harm. 17 This standard can be hard to meet. In Comverse, Inc. v. American Telecommunications, Inc. Chile S.A., 18 the party seeking the injunction failed to show irreparable harm and was denied an injunction. Comverse sought to enjoin a competition claim filed by ATI with the Chilean Competition Tribunal, the body charged with enforcing Chilean competition law. The court denied the injunction for three reasons. First, it concluded that because the Chilean tribunal was not a party to the arbitration agreement, the Chilean action did not involve the same parties and thus did not 4 MAY/JULY 2008

5 deprive Comverse of any contractual right to arbitration. Second, the court found that any potential harm to Comverse had been nullified by the Chilean tribunal s decision not to issue preliminary injunctive relief against Comverse. Thus, Comverse could not show irreparable harm. Finally, the court noted that the Chilean tribunal was charged with safeguarding free competition in the Chilean markets, so Comverse s requested injunction would have had significant public interest implications. This case was unusual in that ATI had not refused to arbitrate. To the contrary, it had actively furthered the arbitration while pursuing its competition claim in Chile. Thus, ATI had not attempted to evade arbitration, a factor further emphasized in the cases discussed immediately below. (iii) Presence of Good Faith /Choice-of-Law Other cases in the 2nd Circuit have accorded significant weight to two additional factors not previously mentioned: (1) whether the party pursuing parallel litigation abroad appears to be doing so in good faith or simply to evade arbitration, and (2) whether the dispute is governed by the law of the foreign national court or the law of the arbitral forum. These factors sometimes dwarf the importance placed upon the China Trade factors and irreparable harm standard discussed above. In the cases discussed below, anti-foreign suit injunctions in aid of arbitration were issued based on the good faith and/or choice-of-law approach. In Paramedics Electromedicina Comercial, Ltda. v. GE Medical Systems Information Technologies, 19 GE Medical commenced arbitration against Paramedics (known as Tecnimed) before the Inter-American Commercial Arbitration Commission (IACAC). Tecnimed asserted that the claims were not arbitrable and refused to participate in the arbitration, even to adjudicate the issue of arbitrability. Instead, it commenced a lawsuit in the Brazilian national courts, contending in its complaint that the claims were not arbitrable and that it was not required to arbitrate the issue of arbitrability. In the meantime, the IACAC ruled that the dispute was arbitrable and the district court reached the same conclusion after finding that the arbitration clause was valid. Accordingly, the court compelled Tecnimed to arbitrate. It also entered an anti-foreign suit injunction requiring Tecnimed to take all steps necessary to dismiss the Brazilian lawsuit. But Tecnimed effectively ignored the anti-suit injunction. 20 The district court then held the company and its president in contempt for noncompliance with its orders. On appeal, the 2nd Circuit upheld the injunction. It characterized bringing the Brazilian action as a clear tactic to evade arbitration. But this was not the sole basis for the court s decision. The 2nd Circuit concluded that the anti-suit injunction was necessary to protect the district court s judgment on arbitrability. The court stated: We need not decide categorically whether an attempt to sidestep arbitration is alone sufficient to support a foreign anti-suit injunction because [t]here is less justification for permitting a second action, as here, after a prior court has reached a judgment on the same issues. [citation omitted] An anti-suit injunction may be needed to protect the court s jurisdiction once a judgment has been rendered. This case illustrates, in addition to the significant weight accorded to perceived bad faith, the utility of having a positive ruling on arbitrability by the arbitrator before seeking an anti-suit injunction. In Newbridge Acquisition I, LLC v. Grupo Corvi, S.A. de D.V., the district court enjoined arbitration claimants Grupo Corvi and Hervicor from litigating in a foreign court the same issues they raised in arbitration. 21 The district court declined to permit them to prosecute a litigation in the Mexican courts where they themselves previously submitted disputes arising from the same nexus of facts to arbitration. The court also emphasized that the parties had not yet taken any substantial steps to advance the foreign litigation. It noted that the result might have been different if the Mexican court already had reached the question of arbitrability. Newbridge involved arbitration claimants who wanted to have it both ways by commencing an arbitration and a concurrent parallel court proceeding, as opposed to respondents who, in good faith, protested arbitrability while preserving their rights in a foreign court. In Storm LLC v. Telenor Mobile Communications, 22 good faith was the key factor in the decision to grant an anti-foreign suit injunction. 23 The district court enjoined Storm, a Ukrainian company, from prosecuting a collusive litigation that it had deliberately engineered in the Ukraine in order to frustrate arbitration proceedings: Attempts to interfere with arbitration of international disputes are so powerfully disapproved that the 2nd Circuit has suggested, albeit not decided, that an attempt to sidestep arbitration might be sufficient to support a foreign anti-suit injunction. [citation omitted] DISPUTE RESOLUTION JOURNAL 5

6 not arbitrable. In the meantime, Telinor commenced a lawsuit against LAIF in a Mexican court. In response, LAIF asked the district court to enjoin the Mexican lawsuit before the AAA ruled on whether the dispute was arbitrable. The district court denied the injunction. The 2nd Circuit affirmed, noting that Telinor never refused to arbitrate. It suggested a possible different result if Telinor ignored an arbitral order to suspend or discontinue the suit in Mexico. The 2nd Circuit also found that the United States had a limited policy interest in the matter because Mexican law governed. Thus, Telinor s decision to seek recourse in the Mexican courts was not unreasonable. The court stated: [W]here foreign law governs an issue that bears on standing to arbitrate, the submission of that issue to the competent foreign court, without more, does not constitute a refusal to Parties should bear in mind that the law they choose to govern their agreement has many implications and thus should not be considered solely in connection with the potential need for an anti-foreign suit injunction. Where this factor is present, little else is required to authorize an injunction. The court found that the foreign litigation was being conducted in the most vexatious way possible and that, as for an unseemly race to judgment, unseemly and race [did] not begin to describe the situation here. In Suchodolski Associates, Inc. v. Cardell Financial Corp., the choice of law was a key factor in the decision to grant an anti-foreign suit injunction. 24 Here the court enjoined Suchodolski from prosecuting an action in the Brazilian courts where Cardell had commenced an arbitration of the same dispute and Suchodolski had filed both an answer and a third-party demand for arbitration. In addition, the parties called for New York law to apply. The district court emphasized this choice-of-law issue as a central point in distinguishing LAIF X SPRL v. Axtel, S.A. de C.V, discussed below, where the claim was governed by Mexican law. Another distinction was that in LAIF, the respondent protested the arbitrability of the claim while preserving its rights in a foreign court, whereas in Suchodolski, the respondent effectively acknowledged the arbitrability of the dispute by answering and filing a third-party demand for arbitration, while simultaneously litigating in a foreign court. Thus, Suchodolski is consistent with Newbridge in showing disfavor to parties who participate in arbitration while simultaneously hedging their bets by commencing a foreign litigation of the same dispute. Two good faith cases in which anti-foreign suit injunctions were denied provide a useful counterpoint to the cases discussed above, especially Paramedics. LAIF involved a shareholder agreement that required arbitration before the American Arbitration Association. 25 The arbitration clause provided that Mexican substantive law would govern. LAIF commenced an arbitration proceeding against Telinor. Telinor did not refuse to participate in the arbitration. Instead, it filed an answer and argued before the AAA that the dispute was arbitrate. As an investor in a Mexican company, governed by Mexican law, LAIF X cannot claim to be disadvantaged by a Mexican court s decision regarding LAIF X s shareholder status under Mexican law. Empresa Generadora de Electricidad ITABO, S.A. v. Corporacion Dominicana de Empresas Electricas Estatales is similar to LAIF in that the respondent did not refuse to participate in the arbitration. 26 CDEEE filed an answer in the arbitration contending that the dispute was not arbitrable and simultaneously commenced a parallel litigation in the Dominican Republic. Before the arbitrator ruled on whether the dispute was within the scope of the arbitration agreement, ITABO sought an anti-suit injunction. As in LAIF, the district court declined to issue the injunction, explaining that the respondent s lawsuits in the Dominican Republic did not appear to be materially delaying, or even directly interfering with, the ongoing arbitration, since both were proceeding simultaneously. The court concluded, The possibility of an embarrassing race to judgment or potentially inconsistent adjudications does not outweigh the respect and deference owed to independent foreign proceedings. 6 MAY/JULY 2008

7 Both LAIF and Empresa can be distinguished from Paramedics by the conduct of the parties Telinor s and CDEEE s perceived good faith versus Tecnimed s perceived bad faith. LAIF can be further distinguished by the fact that U.S. law did not apply. 27 In Pepsico Inc. v. Oficina Centro de Asesoria y Ayuda Tecnica, the choice of law issue emerged as the principal factor in the denial of an anti-suit injunction. 28 In this case, the contract called for the question of arbitrability to be decided under Venezuelan law. The district court declined to enjoin a Venezuelan litigation that was running parallel to an arbitration between the parties, deferring instead to a forthcoming ruling from the Venezuelan courts regarding whether the dispute was subject to the arbitration agreement. The court cited considerations of legal economy and international comity, and the choice of Venezuelan law. The court explained that deference to comity was consistent with the parties reasonable expectations because they expressly agreed that these contracts (which mainly involved Venezuelan activities and Venezuelan parties) would be governed by Venezuelan law except as to disputes submitted to arbitration. Thus, in the court's view, the parties plainly anticipated that arbitrability disputes would quite likely be submitted to a Venezuelan court. Drafting Suggestions Since courts take different approaches when determining whether to issue an anti-foreign suit injunction in aid of arbitration, how can a party plan for the contingency that this type of injunction might be needed in aid of enforcing an arbitration agreement? Because the law regarding the enforceability of arbitration clauses in the international context continues to develop, parties entering into international contracts might want to consider several additions to the arbitration clause that they use. First, they can prepare for the possibility that there will be disputes over the scope of the arbitration clause by expressly stating in the arbitration clause who should determine the arbitrator s jurisdiction an arbitrator or a court. Under U.S. law, questions regarding the arbitrator s jurisdiction are considered not subject to arbitration unless the contract says otherwise. 29 Failing to clarify this issue in the contract could lead to parallel judicial proceedings and concomitant delay and confusion. Who should determine threshold jurisdictional issues cannot be answered categorically. On the one hand, placing issues concerning the scope of the arbitration clause in the hands of the arbitrator could lay the groundwork for later obtaining an anti-foreign suit injunction in aid of enforcing the arbitration clause. For the court to be favorably disposed to issue the injunction, the arbitrator must promptly rule that the dispute is arbitrable. This ruling may shift the focus of the court s attention away from the issue of international comity to the need to give judicial deference to an arbitrator s decision. 30 On the other hand, if the arbitrator does not immediately rule on the jurisdictional question, the issue could remain in limbo while the parallel foreign litigation continues to proceed toward judgment. On balance, we believe it is usually advantageous to provide that jurisdictional issues shall be determined by the arbitrator in at least the following two situations: (1) when the contract contemplates a long, ongoing relationship, such that there is a greater potential for disputes to arise during the course of the contract, and/or (2) when the arbitration agreement provides for arbitration under the rules of an established arbitration provider organization. With respect to the later, an arbitrator appointed to hear the dispute under these rules is more likely to view a jurisdictional conflict with a foreign court as an important threshold issue and thus, all else being equal, may be more likely to rule swiftly on the issue. Second, in an arbitration agreement with a non-u.s. party, it is crucial to specify whether all disputes arising out of or relating to the parties agreement will be subject to arbitration. If not, the parties need to clearly carve out any exceptions to arbitrability. As the cases discussed above show, any ambiguities could lead to the situation in which an anti-foreign suit injunction might be needed. Third, to reduce the likelihood of foreign litigation, the parties could incorporate into their agreement a provision that explicitly forbids bringing parallel litigation in a foreign court. If violated, this provision might convince a U.S. district court to issue an anti-foreign suit injunction. Fourth, since some courts consider the governing law in deciding whether there is a comity issue in enjoining foreign litigation, it would probably help to specify that the law of the seat of the arbitration applies to both the substance of any disputes and to the interpretation of the arbitration agreement. The cases discussed above indicate that U.S. courts may be more inclined to enjoin foreign litigation of an arbitrable dispute when the arbitration agreement specifies that U.S. law governs the interpretation of the arbitration clause and other issues. Ultimately, however, parties should bear in mind that the law they choose to govern their DISPUTE RESOLUTION JOURNAL 7

8 agreement has many implications and thus should not be considered solely in connection with the potential need for an anti-foreign suit injunction. This is particularly so because the efficacy of this type of injunction depends largely on the other party s compliance with it, as well as the foreign court s deference to it. Conclusion When it comes to drafting an arbitration clause, there is no one-size-fits-all model. Parties drafting an arbitration agreement for an international transaction should be aware that the arbitration clause may not ensure smooth sailing should future disputes arise. The potential for jurisdictional disputes is always there, along with the possible need to seek the aid of a court in order to enforce the arbitration clause. U.S. courts will entertain motions for anti-foreign suit injunctions in aid of arbitration, but grant them only in limited circumstances, which vary depending upon the circuit and the particular court in which the motion is brought. 31 It may be impossible to draft an ironclad arbitration clause that ensures that parallel foreign litigation will never be undertaken. Thus, in negotiating an international arbitration agreement, parties should realistically assess, among other things, (1) the likelihood that jurisdictional disputes may arise, (2) the policy toward enforcement of arbitration agreements in the country or countries where the other party is located, and (3) the policy toward issuing anti-foreign suit injunctions in the circuits in which the arbitration might be seated. Based on these assessments, the parties can negotiate the seat of arbitration, the applicable law and who should decide arbitrability disputes. 1 The Federal Arbitration Act requires a court to stay court proceedings and compel arbitration upon its determination that a dispute falls within the scope of a valid arbitration agreement. See Houlihan v. Offerman & Co., Inc., 31 F.3d 692, 695 (8th Cir. 1994). 2 The Convention on Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) and the Inter-American Convention on International Commercial Arbitration (the Panama Convention), while deeming written arbitration agreements to be valid generally, contain no policies for construing the scope of such agreements, and do not compel member States to recognize an arbitration agreement if the subject of the dispute is not arbitrable under the State s national law. 3 See 1 Domke on Commercial Arbitration 22.7 (3d ed. 2007) ( [c]ourts abroad have taken divergent attitudes towards stays of actions brought before them in favor of arbitration in the United States, as provided for in the agreement between the parties. ) 4 Paramedics Electromedicina Comercial, Ltda. v. GE Med. Sys. Info. Tech., Inc., 369 F.3d 645, 652 (2d Cir. 2004). 5 Goss Int l Corp. v. Man Roland Druckmaschinen Aktiengesellschaft, 491 F.3d 355, 360 (8th Cir. 2007) (describing but not adopting the liberal approach ) F. Supp. 2d 876, 883 (N.D. Ill. 2006). 7 Id F.3d 357 (5th Cir. 2003). ENDNOTES 9 For example, the court found that the New York Convention specifically contemplated that an arbitration award would be enforced through concurrent proceedings in multiple forums. Id. at Affymax, supra n. 6, 420 F. Supp. 2d at Comverse, Inc. v. American Telecommunications, Inc. China S.A., No. 06 Civ. 6825, 2006 WL (S.D.N.Y. Oct. 23, 2006). 12 SG Avipro Fin. Ltd. v. Cameroon Airlines, No. 05 Civ. 655, 2005 WL (S.D.N.Y. Jun. 8, 2005). 13 Storm LLC v. Telenor Mobile Communications ASA., 06 Civ , 2006 U.S. Dist. LEXIS 90978, at *22-23 (S.D.N.Y. Dec. 15, 2006). 14 China Trade & Dev. Corp. v. M.V. Choong Yong, 837 F.2d 33, (2d Cir. 1987). 15 No. 00 Civ. 2798, 2002 WL , at 6 (S.D.N.Y. Feb. 27, 2002) F.3d 56, (2d Cir. 2007). 17 E.g., Empresa Generadora de Electricidad ITABO, S.A. v. Corporacion Dominicana de Empresas Electricas Estatales, 05 Civ. 5004, 2005 U.S. Dist. LEXIS 14712, at *16 (S.D.N.Y. Jul. 18, 2005). 18 See n. 11 supra. 19 See n. 4 supra. 20 Tecnimed failed to dismiss the Brazilian lawsuit, and instead had it placed on the suspense calendar. It subsequently also failed to comply with the district s direction that it sign a joint petition to dismiss the foreign suit. 21 No. 02 Civ. 9839, 2003 WL 42007, at *3 (S.D.N.Y. Jan. 6, 2003). 22 See n. 13 supra. 23 In Ibeto, supra n.16, the 2nd Circuit recognized the principle that an anti-suit injunction may be proper where a party initiates foreign proceedings in an attempt to sidestep arbitration. However, on the facts before it, the court affirmed the issuance of an anti-suit injunction while finding that the district court s holding that the respondent had attempted to sidestep arbitration was not warranted, thus indicating that good faith is an important but not always dispositive factor. 24 No. 03 Civ. 4148, 04 Civ. 5732, 2006 U.S. Dist. LEXIS (S.D.N.Y. Nov. 16, 2006), aff d, 2008 U.S. App. LEXIS 1402 (Jan. 25, 2008) F.3d 194, 199 (2d Cir. 2004). 26 See n. 17 supra. 27 In Empresa, New York law applied pursuant to the arbitration clause, but the court focused on the fact that CDEEE had not refused to arbitrate F. Supp. 69 (S.D.N.Y. 1996). 29 First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 938 (1995); Telenor Mobile Communications v. Storm LLC, 524 F. Supp. 2d 332, 351 (S.D.N.Y. 2007). 30 See, e.g., Telenor, 524 F. Supp. 2d at Under the laws of some countries, such injunctions are always available, for example the English Arbitration Act, 1996, ch. 23, 44 (Eng.). 8 MAY/JULY 2008