It is our understanding that these issues have been fully argued,
including extensive hearings held on May 23 and 24, 2000, and are
currently under consideration by the Arbitral Tribunal.
E. Proceedings Before the High Court of Justice in England
On April 6, 2000, Deutz filed an application in the High Court
of Justice in England for what was essentially an anti-antisuit
injunction (Doc. No. 72 (Rivkin Aff.) Ex. A). It requested that
the High Court temporarily restrain General Electric from asking
this Court to enjoin Deutz from pursuing its arbitration claim
until after the Arbitral Tribunal has ruled on the issue of res
judicata and jurisdiction (See id.).*fn4 The same day, the
High Court issued the temporary restraining order ex parte,
enjoining General Electric from pursuing its motion for
injunction in this Court until it (the English court) could hold
a hearing on the issue of equitable relief (See id. Ex. B).
The High Court held the hearing on Deutz's application for a
restraining order on April 12 and 13, 2000 (Doc. No. 69 Ex. E).
Deutz contended that High Court should exercise its jurisdiction
to grant the injunction on the grounds that General Electric is
in clear breach of an agreement to arbitrate (See id.).
The next day, on April 14, 2000, the High Court lifted the
previous ex parte order and denied Deutz any further equitable
relief (Doc. No. 72 at 30). In a thorough written opinion,
Justice Thomas explained that in light of Deutz's contentions,
the threshold issue was whether Deutz made out a sufficient case
that there was an arbitration agreement (See id. at 12, 15). He
noted that his standard of review in that regard was "whether
there was a serious issue to be tried." (Id. at 15) Justice
Thomas concluded, "I have come to the view on this extraordinary
short issue of construction that there is no serious issue to be
tried and that Deutz cannot establish a sufficient case that
there is an arbitration agreement." (Id.) He based his
conclusion on the fact that the signature block did not mention
the arbitration provision and the fact that the arbitration
provision mentioned General Electric and MWM but not KHD (Id.).
Alternatively, Justice Thomas concluded that even if there was
a serious issue to be tried, the Court should not exercise its
discretion and issue the injunction (See id. at 16-30). He
relied on several factors to reach this conclusion, including the
fact that Deutz failed to act promptly in filing the arbitration
and that many of the arguments that were being made to the High
Court could be made to this Court for our consideration in ruling
on the instant motion (See id.).
General Electric requests that this Court permanently enjoin
Deutz from participating in the ICC arbitration in London. The
parties make several arguments with regard to the propriety of an
such an injunction. We will address each of these arguments in
A. The Level of Discretion this Court May Employ
Citing PaineWebber, Inc. v. Hartmann, 921 F.2d 507 (3d Cir.
1990), General Electric argues that since the jury determined
that the parties did not agree to arbitrate, we have no
discretion with respect to this motion and are "obliged" to
enjoin the ICC arbitration. In Hartmann, the Hartmanns
maintained several brokerage accounts with PaineWebber under an
agreement which required them to submit certain disputes to
arbitration. See id. at 509. Pursuant to the arbitration
provision, the Hartmanns filed a demand for arbitration with the
New York Stock Exchange Department of Arbitration alleging that
PaineWebber fraudulently mishandled their accounts. See id. In
response, PaineWebber filed a motion for preliminary injunction
in the United States District Court for the Western District of
Pennsylvania to prevent the arbitration of the dispute. See id.
The district court determined that the Hartmann's claim was not
arbitrable and granted the motion. See id. at 514.
On appeal, the Third Circuit set out the general principles
with regard to arbitrability. See id. at 510-11. It began with
the well settled principle that "[a]s a matter of contract, no
party can be forced to arbitrate unless that party has entered
into an agreement to do so." Id. at 511 (citing AT & T Tech.
v. Communications Workers of Am., 475 U.S. 643, 648, 106 S.Ct.
1415, 89 L.Ed.2d 648 (1986)). The court stated:
If a court determines that a valid arbitration
agreement does not exist or that the matter at issue
clearly falls outside of the substantive scope of the
agreement, it is obliged to enjoin arbitration. If,
on the other hand, the court determines that an
agreement exists and that the dispute falls within
the scope of the agreement, it then must refer the
matter to arbitration without considering the merits
of the dispute.
Id. (emphasis added). Following these principles, the Third
Circuit agreed with the district court that the claim was not
arbitrable and affirmed the district court's grant of a
preliminary injunction. See id. at 515.
Deutz argues that the proposition set forth in Hartmann —
that a district court is obliged to enjoin arbitration if it
concludes the parties did not agree to arbitrate — is limited to
domestic arbitrations and inapplicable to international
arbitrations. We agree. The arbitration enjoined in Hartmann
was a domestic arbitration because it was governed by rules
promulgated under U.S. law and it took place in the United
States. In contrast, the ICC arbitration in London is an
international arbitration. It is governed by international
arbitration rules, it will be adjudicated by a panel of
arbitrators from different countries, and their decision will be
subject to review by an English court.
The distinction between a domestic and an international
arbitration is important because of the principle of
international comity, which provides that "a domestic court
normally will give effect to executive, legislative, and judicial
acts of a foreign nation." Philadelphia Gear Corp. v.
Philadelphia Gear de Mexico, S.A., 44 F.3d 187, 191 (3d Cir.
1994) (quoting Remington Rand v. Business Sys. Inc.,
830 F.2d 1260, 1266 (3d Cir. 1987)). Comity "dictates deference and mutual
respect for concurrent foreign jurisdiction", Kirby v. Norfolk
S. Ry. Co., 71 F. Supp.2d 1363, 1370 (N.D.Ga. 1999), and it
"should be withheld only when its acceptance would be contrary or
prejudicial to the interest of the nation called upon to give it
effect." Somportex Ltd. v. Philadelphia Chewing Gum Corp.,
453 F.2d 435, 440 (3d Cir. 1971).
In this case, the principle of comity requires us to pay
respect to the international nature of the Arbitral Tribunal and
the ICC Rules. Therefore, we decline to summarily grant the
injunction as General Electric argues that Hartmann requires
and will instead apply the doctrine applicable to antisuit
injunctions, which necessarily incorporates an analysis of
B. Antisuit Injunctions and International Comity
It is well settled, and the parties do not dispute, that a
district court possesses the authority to enjoin parties subject
to their jurisdiction from pursuing parallel litigation before
foreign tribunals. The general rule, however, is that "parallel
proceedings on the same in personam claim should ordinarily be
allowed to proceed
simultaneously, at least until a judgment is reached in one which
can be pled as res judicata in the other." Laker Airways, Ltd.
v. Sabena Belgian World Airlines, 731 F.2d 909, 926 (D.C.Cir.
The Courts of Appeals follow two different approaches for
determining when a court may exercise its discretion and enjoin a
foreign tribunal in the absence of a judgment which can be pled
as res judicata. The Fifth, Seventh and Ninth Circuits follow
what has been referred to as the "liberal approach". These
circuits place less importance on international comity and hold
that a court may enjoin a foreign proceeding if that parallel
proceeding is vexatious and duplicative.*fn5 See Kaepa, Inc. v.
Achilles Corp., 76 F.3d 624, 626 (5th Cir. 1996); Allendale
Mut. Ins. Co. v. Bull Data Sys., Inc., 10 F.3d 425, 431-32 (7th
Cir. 1993); Seattle Totems Hockey Club, Inc. v. National Hockey
League, 652 F.2d 852, 856 (9th Cir. 1981); In re Unterweser
Reederei, Gmbh, 428 F.2d 888, 896 (5th Cir. 1970), rev'd on
other grounds, 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972).
They reason that "allowing simultaneous prosecution of the same
action in a foreign forum thousands of miles away", Unterweser,
428 F.2d at 896, would result in unnecessary delay and
substantial inconvenience to the parties. See Kaepa, 76 F.3d at
627 (quoting Unterweser, 428 F.2d at 896); Seattle Totems,
652 F.2d at 856. Further, they point out that "separate
adjudications could result in inconsistent rulings or even a race
to judgment." Seattle Totems, 652 F.2d at 856.
The Courts of Appeals for the District of Columbia and the
Second and Sixth Circuits follow what has been referred to as the
"restrictive approach." These circuits "place a premium on
preserving international comity," Kirby v. Norfolk S. Ry. Co.,
71 F. Supp.2d 1363, 1367 (N.D.Ga. 1999), and hold that the fact
that the parallel litigation is duplicative and vexatious is not
enough to warrant an antisuit injunction. See Gau Shan Co., Ltd.
v. Bankers Trust Co., 956 F.2d 1349, 1354 (6th Cir. 1992);
China Trade & Dev. Corp. v. M.V. Choong Yong, 837 F.2d 33, 36
(2d Cir. 1987); Laker Airways, 731 F.2d at 937. Under the
restrictive approach, a court should only issue a foreign
anti-suit injunction when the foreign proceeding (1) threatens
its own jurisdiction over the matter at issue or (2) threatens
strong public policies of the United States. See Gau Shan Co.,
956 F.2d at 1354; China Trade, 837 F.2d at 36; Laker Airways,
731 F.2d at 937.*fn6
The restrictive approach was first adopted by the Court of
Appeals for the District of Columbia in Laker Airways Limited v.
Sabena, 731 F.2d 909 (D.C.Cir. 1984). In that case, the court
rejected the liberal approach; it held that since duplication and
vexatiousness are likely to be present in all concurrent parallel
actions, that approach "is prima facie inconsistent with the rule
permitting parallel proceedings in concurrent in personam
actions." Id. at 928. It also explained that the policies
underlying the liberal approach — preventing unnecessary delay
and substantial inconvenience to the parties and avoiding a race
to judgment — "do not outweigh
the important principles of comity that compel deference and
mutual respect." Id. The court also explained that the issuance
of an injunction to protect the court's jurisdiction or to
protect the public policies of the forum is not inconsistent with
the principles of comity. See id. at 929-31. It indicated that
a court which does so to protect its own jurisdiction is acting
defensively rather than in an offensive manner to disrespect the
proceedings in a foreign court. See id. Further, it noted that
protection of the forum's public policies by issuing an
is similar to the rule that a foreign judgment not
entitled to full faith and credit under the
Constitution will not be enforced within the United
States when contrary to the crucial public policies
of the forum in which enforcement is requested. Both
rules recognize that a state is not required to give
effect to foreign judicial proceedings grounded on
policies which do violence to its own fundamental
Id. at 931.
The Third Circuit has not expressly adopted either approach.
However, in Compagnie des Bauxites de Guinea v. Insurance
Company of North America, 651 F.2d 877 (3d Cir. 1981), aff'd on
other grounds, 456 U.S. 694, 102 S.Ct. 2099, 72 L.Ed.2d 492
(1982), a case that pre-dates Laker Airways, the court
explicitly rejected the liberal approach and implied that more
deference must be paid to the principle of international comity.
See id. at 887. In Bauxites, Compagnie Des Bauxites de Guinea
("CBG"), a company that mines and sells bauxite in the Republic
of Guinea, filed suit in the United States District Court for the
Western District of Pennsylvania seeking to recover from excess
insurers. See id. at 880. Approximately four years later, while
the action in this district was still proceeding, the excess
insurers sued in England to rescind the insurance contract; they
alleged that "CBG failed to disclose material facts relating to
the contract." Id. at 880. CBG then moved to enjoin the excess
insurers from participating in the English action on the ground
that the issues in it were identical to those in the Western
District. See id. The district court granted the motion and
enjoined the action. See id. at 880.
On appeal, the Third Circuit reversed the district court's
order and held that a district court may not issue an antisuit
injunction merely because the foreign suit is duplicative and
vexatious. See id. at 887. The court stated,
We do not determine that the district court lacks the
power to enjoin parties from pursuing an action in
another jurisdiction in every case. It is sufficient
here to hold that the district court abused its
discretion when it enjoined an action seeking a
declaratory judgment in the courts of another
sovereign. In the present case, duplication of issues
and the insurers' delay in filing the London action
were the sole bases for the district court's
injunction, and we hold that these factors alone did
not justify the breach of comity amount the courts of