Anti-Foreign-Suit Injunctions to Enforce Arbitration Agreements

Abstract:     
Despite agreeing that courts should exercise great caution concerning anti-foreign-suit injunctions, the author argues in favor of such a remedy in a particular setting where enforcing an agreement to arbitrate is at stake. That setting occurs when the parties to an arbitration agreement place the arbitration seat in a particular country (F1) and also choose that country's law to govern the arbitration agreement (its existence, validity and scope). Such an agreement should be understood as choosing F1 courts to resolve any differences over the "ordinary arbitrability" of the dispute (existence, validity, and scope of the arbitration clause). Thus, if one of the parties tries to litigate the dispute in a different country (F2), that party acts in breach of the arbitration agreement and may be enjoined from doing so. The author argues that parties wanting a strongly enforceable arbitration clause will favor this remedy and will want to place the arbitration seat in, and choose the law of, a country that will provide it. The author would make an exception where F2 may have a strong public policy reason to treat the subject matter as not capable of settlement by arbitration - a "public policy" challenge to arbitrability, as opposed to a "garden variety" existence, validity, or scope challenge to arbitrability. In a "public policy" case an F1 court should not issue an anti-foreign-suit injunction. The author discusses two recent court decisions in the UK (Through Transport and West Tankers) that exemplify the approach advocated.

Working Paper Series