Originally from Dispute Resolution Journal

In the United States, because arbitration agreements generally are enforceable, a party who commences litigation 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 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, 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.