Eighth Circuit Examines Circuit Split In Approaches To Foreign Antisuit Injunctions

In Goss Int’l Corp. v. Man Roland Druckmaschinen Aktiengesellschaft, 491 F.3d 355 (8th Cir. June 18, 2007), the district court enjoined a Japanese company within its jurisdiction from pursuing certain claims in Japanese courts. On appeal, the Eighth Circuit reversed the injunction as outside the scope of permissible grounds.

In considering the merits, in a matter of first impression for that jurisdiction, the court examined a split in the over the level of deference that should be afforded to international comity in determining whether a foreign antisuit injunction should issue. Under the “conservative” approach, adopted in the First, Second, Third, Sixth and D.C. Circuits, the movant must demonstrate both that the contemplated action in a foreign jurisdiction would prevent U.S. jurisdiction of threaten a vital U.S. policy, and that the domestic interests outweigh concerns of international comity. In contract, the “liberal” approach, adopted in the Fifth and Ninth Circuits and referenced with approval by the Seventh Circuit, only modest emphasis is to be placed on international comity, and an injunction may be issued when necessary to prevent duplicative and vexatious foreign litigation and to avoid inconsistent judgments.

The Eighth Circuit concluded that the “conservative” approach had the better argument, and particularly emphasized the importance of international comity in the new globalized economy.

Forum-Selection Clause In International Contract Must Be Interpreted Pursuant To Choice-of-Law Clause

In a matter of first impression, the Tenth Circuit recently held that “when an international commercial agreement has both choice-of-law and forum-selection provisions, the forum-selection provision must ordinarily be interpreted under the law chosen by the parties” instead of the law where the suit is pending.

In Yavuz v. 61 MM, Ltd., 465 F.3d 418 (10th Cir. Sept. 20, 2006), plaintiff Turkish citizen entered into a contract with a Swiss corporation to receive funds in resolution of a dispute involving Oklahoma real estate. It contained a paragraph stating, “This convention is governed by the Swiss law. . . . Place of courts is Fribourg” (Switzerland).

When plaintiff sued in Oklahoma state court, defendants removed and then moved for dismissal on the grounds of improper venue. The district court granted the motion, and in doing so implicitly interpreted the contract according to United States law, holding that the forum selection clause was enforceable and meant that the dispute was required to be litigated in Fribourg, Switzerland.

Noting that the issue of forum selection clauses in international agreements “has received virtually no attention from the federal courts or even scholars,” the Tenth Circuit looked to several Supreme Court cases arising in the international context. Concluding that the parties’ chosen law should govern the whole contract, including the forum selection clause, it held that the district court should have looked to Swiss law to interpret whether the apparently permissive language “Place of courts is Fribourg” required the claims to be brought in Swiss courts.

American Subpoena In Connection With European Proceedings Quashed As Attempt To Circumvent Foreign Rules

Microsoft Corporation recently attempted to use a subpoena issued through Massachusetts federal court under 28 U.S.C. § 1782(a) to obtain certain documents from competitor Novell Inc. for use in connection with European antitrust proceedings. In re Application of Microsoft Corp., No. 06-10061-MLW (D. Mass. Apr. 17, 2006).

The European regulator found that Microsoft failed to comply with an earlier order, and it provided a set of documents to Microsoft in support of its finding. Microsoft subpoenaed Novell to obtain additional documents not provided by the regulator, but the subpoena was quashed.

The federal court relied heavily on the views of the European regulator, who took the position that the use of American third-party discovery techniques circumvented the balance struck under the European system designed to avoid a chilling effect on third-party cooperativeness in antitrust investigations. Finding that § 1782(a) was designed to aid foreign tribunals, not interfere with them, the court refused to enforce the subpoena.

Ninth Circuit Upholds Long-Arm Jurisdiction From Obtaining Foreign Court Orders

A recent Ninth Circuit opinion considered whether long-arm jurisdiction can be triggered through a party’s bringing foreign court proceedings against an American citizen.

In Yahoo! Inc. v. La Ligue Contre Racisme et L’Antisemitisme, No. 01-17424 (9th Cir. Jan. 12, 2006), the popular Internet company Yahoo! brought an action in California federal court seeking a declaration that several orders entered against it in France were of no force and effect. The defendants had obtained orders from a French court finding that Yahoo! had permitted its users to use the site to sell Nazi memorabilia in violation of French law, and requiring Yahoo! to set up filters to prevent users in France from browsing the offending pages.

Eight of the eleven judges on the Ninth Circuit panel agreed that the district court had personal jurisdiction over the French defendants. Applying principles of long-arm jurisdiction, the majority concluded that the defendants “purposefully availed” themselves of the privilege of conducting activities in California and/or “purposefully directed” activities with a California party by bringing proceedings against that party in the French courts.