An American corporation, “USCorp,” is contemplating litigation in the federal courts of New York against “WorldCorp,” a foreign entity. USCorp suspects that, if litigation were to prove necessary, WorldCorp would rather litigate the matter in the courts of its home country. Although USCorp is certain that the contacts with New York are sufficient for its case to survive a motion to dismiss on the basis of forum non conveniens, it is concerned that WorldCorp might commence a parallel foreign proceeding in its home country —one in which it seeks relief in its favor with respect to the same underlying facts. Can USCorp ensure that the foreign proceeding not go forward?

In light of the Sixth Circuit case Gau Shan Co. v. Bankers Trust Co., which reinforced the current trend of placing stricter controls on the granting of antisuit injunctions, the answer is probably not. USCorp must simply file its New York case as quickly as possible, in an effort to obtain a judgment before the foreign tribunal hands down its decision, and then apply the doctrine of res judicata. In other words, it is a “race to judgment” between the two courts.

In transnational litigation, one of the most controversial tactics is the use of the antisuit injunction. In seeking an antisuit injunction to a lawsuit, a party, usually the plaintiff, attempts to freeze, or prevent the commencement of, foreign proceedings by another party to the same lawsuit. The federal circuits are split on the stringency of the test for granting antisuit injunctions. The older cases, in the Fifth and Ninth Circuits, have established a more lenient test, while the more recent cases in the D.C., Second and Sixth Circuits have erected more demanding standards.

Lenient Test

One of the earliest cases to address the issue of antisuit injunctions in an international context was In re Unterweser Reederei, GmbH, in the Fifth Circuit. There, Zapata, a Delaware corporation, commenced an action against Unterweser, a German corporation, in the Middle District of Florida. Unterweser filed various motions in the Florida proceeding, but then commenced an action in the High Court of Justice in London. Zapata subsequently moved for an injunction in the Florida case to restrain Unterweser from proceeding with its London case. In granting Zapata’s motion, the Fifth Circuit noted that injunctions should be granted wherethe foreign litigation would: “(1) frustrate a policy of the forum issuing the injunction; (2) be vexatious or oppressive; (3) threaten the issuing court’s in rem or quasi in rem jurisdiction; or (4) where the proceedings [abroad] prejudice other equitable considerations.”

The court then went on to state that the injunction was proper because the district court was not in error in ruling that “allowing simultaneous prosecution of the same action in a foreign forum thousands of miles away would result in ‘inequitable hardship’ and ‘tend to frustrate and delay the speedy and efficient determination of the cause.’”