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In case of first impression, English Court of Appeal enjoins English claimants from litigating Indian air crash case in Texas courts, thus effectively barring their chances of obtaining damages
On February 14, 1990, an Airbus A320 aircraft, Indian Airlines’ flight IC 605, crashed near Bangalore, India. The Airlines (IC) operates domestically in India and had bought the French-made plane from Airbus (AB) in 1989. Though most of the casualties were Indian citizens, eight of those injured or killed were English citizens and three were Americans. An Indian board of inquiry concluded that pilot error had caused the crash.
On February 12, 1992, the English claimants sued IC and the airport operator (HAL) in the Indian courts. Along with the American claimants, they also sued AB and others in Texas state court seeking compensatory and punitive damages under Texas product liability principles. They were able to finance the action by virtue of contingent fee arrangements not generally lawful outside of the United States. At the time of filing, Texas law did not allow for dismissals on grounds of forum non conveniens [but see "IN BRIEF" below].
In March 1992, the English claimants settled the Indian litigation with IC. AB, however, secured a judgment against the English claimants from the Indian courts in November 1992 that barred the English claimants from litigating other than in the Indian courts. AB filed assurances with the Indian court that it would waive jurisdictional and limitations objections and would pay an appropriate judgment against it.
In May 1993, AB voluntarily conceded that the Texas courts had personal jurisdiction over it under the Texas long-arm statute, presumably based on a prior sale of aircraft in Texas. AB did succeed, however, in getting the court to dismiss based on sovereign immunity under the FSIA, AB being more than half owned by foreign governments. That matter is presently on appeal.
In November 1995, AB filed suit in the English courts to enjoin the English claimants from pursuing the Texas litigation on the grounds that those proceedings were oppressive and vexatious. The lower court denied the injunction and AB appealed.
In the first reported English case to issue an injunction to protect the jurisdiction of a non-English court, the Court of Appeal (Civil Division) reverses. Noting that the Indian injunction was not binding outside that nation, the Court sees itself as the only court with jurisdiction over the English claimants. Hence it alone can rule definitively on AB’s efforts to have the case tried in the Indian courts. Though the English claimants did not dispute the general appropriateness of the Indian forum, they point (1) to the ten to twenty year delays often seen in Indian civil actions and appeals, (2) to the bar on contingency fees by which alone they can afford to pursue their rights in court and (3) to the requirement of proving fault on AB’s part under Indian law.
The Court finds that India seems the most convenient forum although the courts of France, AB’s headquarters, as well as the place of manufacture and purchase of the A320 aircraft, would also be a natural forum under the Brussels Convention on Jurisdiction and Judgments. There is no significant link, however, between this litigation and the Texas courts or its substantive law. Allowing the Texas suits to proceed would also embarrass AB in any efforts it might have to take to obtain contribution from IC and HAL.
Even though the injunction will, practically speaking, terminate the English claimants’ suits against AB, this is more than counterbalanced by their effort to gain illegitimate and oppressive advantages by suing in an unrelated forum and by invoking ungermane Texas law as to strict liability and punitive damages. The injunction, of course, does not preclude these claimants from suing AB in France.
Citation: Airbus Industrie G.I.E. v. Patel, The Times, 12 August 1996 [Eng. Ct. App. (Civ. Div.) (Smith Bernal Trans.)].
Filed in: 1996 International Law Update, Issue 11
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Fifth Circuit enjoins plaintiff’s parallel action in Japan based on private nature of dispute, parties’ original plan to adjudicate their claims in U.S., and duplicative and vexatious nature of Japanese action
Achilles Corporation was the exclusive Japanese distributor of Kaepa’s athletic shoes. Their contract provided that Texas law governed disputes, that the English language would govern contract interpretation, and that Achilles would consent to Texas jurisdiction over it. Increasingly unhappy with Achilles’ performance, Kaepa sued Achilles in Texas state court in 1994, claiming fraud and negligent misrepresentation. Achilles removed the case to federal court and an arduous discovery process began. Then, in February 1995, Achilles brought its own action against Kaepa in Japan based on claims of fraud and breach of contract.
On Kaepa’s motion, the U.S. district court enjoined Achilles from proceeding with its foreign action. Achilles then took an appeal.
The U.S. Court of Appeals for the Fifth Circuit affirms. Noting that Achilles’ Japanese suit was a “mirror-image” of the American lawsuit, the Court declines Achilles’ invitation generously to grant comity to the Japanese proceeding. In the Court’s view, the antisuit injunction in this private contract suit does not trample upon U.S.-Japan relations. “[T]he dispute has been long and firmly ensconced within the confines of the United States judicial system: Achilles consented to jurisdiction in Texas; stipulated that Texas law and the English language would govern any dispute; appeared in an action brought in Texas; removed that action to a federal court in Texas; engaged in extensive discovery pursuant to the directives of the federal court; and only then, with the federal action moving steadily toward trial, brought identical claims in Japan.” [627]
The dissenter disagrees. He emphasizes that, under rules of concurrent jurisdiction, courts should ordinarily let parallel proceedings go forward at least until one court reaches a final judgment that the prevailing party can plead as res judicata in the other.
The dissenter favors the strict standards used in the Second, Sixth and D.C. Circuits, i.e., that a district court should not issue an antisuit injunction unless (1) the foreign action threatens the jurisdiction of the district court or (2) the party filing the foreign action was trying to evade important domestic public policies. Neither situation is present here.
Citation: Kaepa, Inc. v. Achilles Corp., 76 F.3d 624 (5th Cir. 1996).
Filed in: 1996 International Law Update, Issue 4
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Federal Court of New South Wales enjoins complex, multi-party federal and New York state securities and fraud actions against New York law firm of Skadden, Arps, Slate, Meagher & Flom to permit litigation of all claims in Australian court
In 1988, a group of investors (applicants) bought some $200,000,000 of senior subordinated 13.75% debentures or “junk bonds” issued by Linter Textiles of New South Wales, Australia. Some of these investors were New Yorkers. Contrary to applicants’ understanding, the “Linter Companies” (i.e., Linter, its subsidiaries and the Linter Group Ltd., also of New South Wales) had allegedly arranged with certain banks for the issuance of debentures involving indebtedness to the banks that would be senior to the applicants’ debentures. During 1991, the equity court of New South Wales ordered the Linter Companies into bankruptcy.
Applicants then filed suit in September 1991 in the Federal District Court of New South Wales against fifty-four respondents allegedly involved in the fraudulent scheme. Overall, applicants claimed violations of the Australian Trade Practices Act, common law fraud under New South Wales law, common law fraud under New York law and violations of the American S.E.C. Act of 1933.
Beginning in March 1991, many applicants also sued the Linter Companies in the Southern District of New York, alleging violations of federal Securities law and common law fraud arising out of statements in the prospectus and registration statement (Linter I). The Court, however, dismissed this case out of comity to the bankruptcy proceedings pending in Australia.
In April 1991, applicants brought another action in the same federal court against the Linter Companies and many of the banks involved, all of whom were residents of Australia (Linter II). In response to motions to dismiss similar to those made in Linter I, the district court, in December 1992, dismissed Linter II based not only on comity grounds but also on forum non conveniens. It especially noted that the bank defendants would not be able to pursue their claims for contribution and indemnity in New York federal court. The Second Circuit affirmed both Linter I and II in June 1993 and the Supreme Court denied certiorari.
At different times during 1994, varying groups of applicants brought four different suits against the New-York-based law firm of Skadden, Arps, Slate, Meagher and Flom (Skadden) in New York state courts seeking damages for fraud and aiding and abetting in connection with Skadden’s role in the debenture transactions. Skadden unsuccessfully moved to have the New York state actions dismissed on forum non conveniens grounds and lost its appeals on this point.
Early in 1995, several parties filed cross-claims against Skadden in the Australian federal litigation. Skadden then submitted to the jurisdiction of the Australian court. Having exhausted its efforts to get out of the American lawsuits, Skadden asked the Australian court in September 1995 for an “anti-suit” injunction that would bar its opponents from prosecuting the New York federal and state proceedings against it. At this point, Skadden waived any right to raise limitations defenses in the Australian forum. Skadden did tell the Court, however, that inability to get an injunction would force it to seek the joinder of many parties in the American proceedings to protect its rights.
In a matter of first impression in Australia, the Federal District Court of New South Wales grants the anti-suit injunction in two opinions. The Court finds that any juridical disadvantages applicants might undergo from trial in Australia are either neutral or outweighed by other considerations. As examples, the Court mentions their loss of the right to an American jury trial, the chance of possibly higher punitive damages awards under U.S. law and the availability in Australian law of an award of legal expenses against the losing party. The Court also notes that Australian law does not let parties take discovery depositions of nonparty witnesses.
The Court further points out that it has become the only tribunal in which the manifold claims of the numerous parties have the best chance of being fairly resolved. This is so because Skadden could not join certain important Australian parties in the New York cases. Moreover, the mere filing of the duplicative New York proceedings tends to show the vexatious and oppressive purposes of the latter. The Court also looks upon continued New York proceedings as potentially interfering in its own processes.
Most importantly, the Court is concerned that there is a danger of conflicting results between the U.S. and Australian proceedings that would prejudice Skadden’s claims for contribution or indemnity, e.g., due to res judicata doctrines. The Court finally stresses that applicants could easily have obviated Skadden’s procedural difficulties if they had simply joined Skadden (which has an office in Sydney) as a defendant in the main Australian federal action.
Citation: Allstate Life Insurance Co. v. Australia and New Zealand Banking Group Ltd., Federal No. 73/96 (Fed. Dist. Ct. New S. Wales, January 19/February 21, 1996).
Filed in: 1996 International Law Update, Issue 4
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