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.
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. 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 within the U.S. 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 legal, policy, and contract drafting perspectives. With respect to contract drafting, we propose provisions that, if included in arbitration agreements with foreign parties, may aid in the enforcement of those agreements to preclude foreign litigation of arbitrable disputes.