Opinion ID: 671506
Heading Depth: 2
Heading Rank: 1

Heading: Whether to Dismiss or Stay the Domestic Litigation: International Abstention

Text: 26 ARD appeals the district court's denial of its Motion to Dismiss or Stay the American Litigation in deference to the parallel German proceedings. 6 In the period since the district court denied the appellants' Motion to Dismiss or Stay the American Litigation, the German court has rendered a decision on the merits of the dispute, although it has not determined the fee to be paid by ARD to Turner. The existence of the German judgment adds new considerations to the decision whether to continue the American litigation. The issue is whether a federal court, which properly has jurisdiction over an action, should exercise its jurisdiction where parallel proceedings are ongoing in a foreign nation and a judgment has been reached on the merits in the litigation abroad. 7 27 Federal courts have a virtually unflagging obligation to exercise the jurisdiction conferred upon them. Colorado River Water Conser. Dist. v. United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 1246, 47 L.Ed.2d 483 (1976). Nevertheless, in some private international disputes the prudent and just action for a federal court is to abstain from the exercise of jurisdiction. Therefore, federal courts have begun to fashion principles that guide courts' actions in cases of concurrent jurisdiction in a federal court and the court of a foreign nation. This circuit has never considered the question of international abstention. In other federal courts, at least two distinct but very similar approaches to international abstention have developed. Both have lifted criteria for analysis from case law concerning concurrent jurisdiction between federal and state courts. 28 One approach has taken the criteria enunciated in Colorado River and applied them to the international context. See Ingersoll, 833 F.2d at 685; Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 926-27 (D.C.Cir.1984). These cases have at times injected the special concerns of international comity 8 into the abstention analysis. See Ingersoll, 833 F.2d at 685. Another line of international abstention cases, developed in the Southern District of New York, applies a similar set of principles, with a clearer emphasis on the concerns of international comity implicated by the exercise of jurisdiction. See Continental Time Corp. v. Swiss Credit Bank, 543 F.Supp. 408, 410 (S.D.N.Y.1982); Ronar, Inc. v. Wallace, 649 F.Supp. 310, 318 (S.D.N.Y.1986); Caspian Investments, Ltd. v. Vicom Holdings, Ltd., 770 F.Supp. 880, 883-84 (S.D.N.Y.1991). These two sets of principles overlap to a large extent, and we find both lines of cases helpful to our analysis. Taking the two approaches together, courts have sought to fashion principles that will promote three readily identifiable goals in the area of concurrent international jurisdiction: (1) a proper level of respect for the acts of our fellow sovereign nations--a rather vague concept referred to in American jurisprudence as international comity; (2) fairness to litigants; and (3) efficient use of scarce judicial resources. 9
29 The ramifications of international comity, in the abstention context, are suggested in the leading Supreme Court case, Hilton v. Guyot, 159 U.S. 113, 16 S.Ct. 139, 40 L.Ed. 95 (1895): 30 Comity, in the legal sense, is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens, or of other persons who are under the protection of its laws. 31 . . . . . 32 The comity thus extended to other nations ... is the voluntary act of the nation by which it is offered, and is inadmissible when contrary to its policy, or prejudicial to its interests. But it contributes so largely to promote justice between individuals, and to produce a friendly intercourse between the sovereignties to which they belong, that courts of justice have continually acted upon it as part of the voluntary law of nations. 33 159 U.S. at 163-64, 165, 16 S.Ct. at 143-44 (quoting Bank v. Earle, 38 U.S. (13 Pet.) 519, 589, 10 L.Ed. 274 (1839). The Supreme Court continued: 34 When an action is brought in a court of this country, by a citizen of a foreign country against one of our own citizens, ... and the foreign judgment appears to have been rendered by a competent court, having jurisdiction of the cause and of the parties, and upon due allegations and proofs, and opportunity to defend against them, and its proceedings are according to the course of a civilized jurisprudence, and are stated in a clear and formal record, the judgment is prima facie evidence, at least, of the truth of the matter adjudged; and it should be held conclusive upon the merits tried in the foreign court, unless some special ground is shown for impeaching the judgment, as by showing that it was affected by fraud or prejudice, or that by the principles of international law, and by the comity of our own country, it should not be given full credit and effect. 35 159 U.S. at 205-06, 16 S.Ct. at 159-60. 36 In the context of international abstention case law, the meaning of international comity 10 is derived from the above-quoted Supreme Court case on the recognition of judgments rendered in a foreign nation. 11 General comity concerns include: (1) whether the judgment was rendered via fraud, see Hilton, 159 U.S. at 206, 16 S.Ct. at 159; (2) whether the judgment was rendered by a competent court utilizing proceedings consistent with civilized jurisprudence, see id.; and (3) whether the foreign judgment is prejudicial, in the sense of violating American public policy because it is repugnant to fundamental principles of what is decent and just. See id.; Tahan v. Hodgson, 662 F.2d 862, 864 (D.C.Cir.1981); Restatement (Second) Conflict of Laws Sec. 117, comment c. 37 Turner does not argue that the decision was rendered by fraud, or that the German court is not a competent court which follows civilized procedures. Germany's legal system clearly follows procedures that ensure that litigants will receive treatment that satisfies American notions of due process. Turner's sole argument is that the German court's decision is contrary to federal or Georgia public policy because it abrogates Turner's freedom of contract. 12 38 Turner has proffered a strained interpretation of the German court opinion in an attempt to portray the decision as something akin to a forced judicial sale of Turner's property. Turner argues that the Agreement clearly limited ARD's right to telecast to the licensed territory, defined in Paragraph 4 of the Agreement, and that the German court decision would force an unwilling Turner to enter into additional contractual provisions widening the defined territory at a royalty fee to be fixed by the court, all of which Turner argues is directly inconsistent with Paragraph 4 of the Agreement which defines the licensed territory. For the reasons that follow, we reject Turner's characterization of the German opinion, and we reject Turner's argument that the German decision violates American or Georgian public policy. 39 Turner's argument is along the following lines. Although conceding that Georgia law and the general common law of contracts provide for gap filling similar to the supplemental interpretation employed by the German court, Turner insists that such gap filling is impermissible when the result is a provision inconsistent with the provisions of the contract as written. 13 Turner relies upon Higginbottom v. Thiele Kaolin Co., 304 S.E.2d at 365, for this proposition. 40 We conclude, however, that the result of the German court decision is not inconsistent with the Agreement. The Agreement expressly gives ARD a right to telecast by all means and methods now or hereafter known including but not limited to ... DBS and/or communication satellite for purposes of so-called home television reception. Significantly, the grant also expressly provides that the telecast can originate any place in the universe for reception only in the Territory as defined in paragraph 4 below (inclusive of legitimate overspill as set forth in p 2(f) below). Thus, to deny ARD the right to utilize the ASTRA satellite would conflict with the provisions of the Agreement. On the other hand, the German court reasonably concluded that the parties did not contemplate an overspill of the magnitude which results from recent technology, including the ASTRA satellites. Thus, the German court employed its supplemental interpretation and filled the gap in the contract in accordance with its determination of good faith dealings by the parties as to unforeseen eventualities. Because we conclude that the utilization of this gap filling methodology under these circumstances is consistent with the contract law of both Georgia and the general common law, we reject Turner's argument that the German court decision is in violation of Georgia public policy or in violation of fundamental notions of decency and fairness. 41 Also relevant to considerations of international comity are the relative strengths of the American and German interests. See Ingersoll, 833 F.2d at 685; Ronar, 649 F.Supp. at 318. In the instant case, the contract was written in English, with an American as one party to the contract, and includes a choice of law and forum selection provision designating this federal court and the applicable law (although the choice of law and forum is concurrent with Germany's). However, the central question in the case--whether the Agreement does or should permit ARD to broadcast via ASTRA--requires a thorough knowledge of European broadcasting technology and markets, and requires reference to European law. Most of the witnesses and experts in the litigation would be European. Furthermore, although an American entity is a party to the contract, there also are German parties and the choice of law and forum provisions also designate the German court and law. More importantly, the Agreement calls for performance of the contract, for the most part, in Germany, and the German interest and connection to the case is much more significant than the American. 42 Although Turner attempts to present the case as a garden variety contract action, there are complicated issues surrounding the case that require extensive knowledge of the European television market. Given exclusive jurisdiction over the matter, the federal forum would without doubt be capable of rendering a just result. However, the German court would seem to be the most sensible venue to determine a just result in this case. There appears to be no clear federal interest in trying this case. Certainly much is at stake in this litigation for both parties. However, the public interest in the litigation is more conspicuous in Germany, because the German parties include the German state broadcasters, and the salient issues in the case are of great moment to the state of television in Germany and the rest of Europe. There is no comparable federal interest in maintaining jurisdiction over the litigation. 43 While courts regularly permit parallel proceedings in an American court and a foreign court, see, e.g., Black & Decker Corp. v. Sanyei America Corp., 650 F.Supp. 406, 408 (N.D.Ill.1986), once a judgment on the merits is reached in one of the cases, as in the German forum in this case, failure to defer to the judgment would have serious implications for the concerns of international comity. For example, the prospect of dueling courts, conflicting judgments, and attempts to enforce conflicting judgments raise major concerns of international comity. 44 In sum, international comity concerns favor deference to the German proceedings in the instant case.
45 With respect to the goal of fairness, relevant considerations include: (1) the order in which the suits were filed, see Colorado River, 424 U.S. at 818, 96 S.Ct. at 1246-47; (2) the more convenient forum, id.; see also Ronar, 649 F.Supp. at 318; and (3) the possibility of prejudice to parties resulting from abstention. Ronar, at 318. 46 The instant lawsuits were filed almost simultaneously. The record reflects that the German action was filed one week prior to the American litigation, and the record does not show that the American suit was a reaction to the German suit. We note that none of the cases regarding concurrent international jurisdiction give priority solely on the basis of first-filing in a case where the suits were filed so closely together. See Ingersoll, 833 F.2d at 682 (American suit stayed in favor of Belgian action filed over a year earlier); Continental Time Corp. v. Swiss Credit Bank, 543 F.Supp. at 410 (American litigation dismissed in deference to Swiss action filed six months earlier); Caspian Investments, Ltd. v. Vicom Holdings, Ltd., 770 F.Supp. at 882 (litigation dismissed in deference to Irish action filed over six months earlier). Whatever weight is to be accorded this one-week priority, of course, points toward the German forum. The other factors point even more strongly in that direction. 47 With respect to convenience of the forum, the weightier German interest, discussed above, indicates that the German court provides a more convenient forum for the litigation, as does the fact that most of the witnesses and experts in the litigation would be European, and the fact that the Agreement calls for performance of the contract, for the most part, in Germany. The significantly greater German interest in the litigation, discussed above, also supports the more general notion that concerns of fairness favor the German forum. 48 Before accepting or relinquishing jurisdiction a federal court must be satisfied that its decision will not result in prejudice to the party opposing the stay. See Caspian Investments, Ltd., 770 F.Supp. at 884. Ensuring the ability of the parties to fully and fairly litigate their claims in some tribunal surely is a paramount goal of international abstention principles. See Hilton v. Guyot, 159 U.S. 113, 205, 16 S.Ct. 139, 159, 40 L.Ed. 95 (1895) (It must, however, always be kept in mind that it is the paramount duty of the court before which any suit is brought to see to it that the parties have had a fair and impartial trial, before a final decision is rendered against either party.) In the instant case, we see nothing that has occurred in the German proceedings to indicate that staying the litigation will foreclose any chance for Turner to obtain a fair and just result. For example, nothing has occurred in the German proceedings to date to dispel the expectation that Turner will have ample opportunity to fairly present to the German trial court at the next stage of the proceedings its evidence regarding the value of the ASTRA broadcasts in the areas outside the licensed territory defined in Paragraph 4 of the Agreement. 49 In sum, we conclude that fairness in this case indicates deference to the German proceedings.
50 Finally, courts have considered the efficient use of scarce judicial resources. Criteria relevant to efficiency include (1) the inconvenience of the federal forum, see Colorado River, 424 U.S. at 818, 96 S.Ct. at 1247; Ingersoll, 833 F.2d at 685; (2) the desirability of avoiding piecemeal litigation, Colorado River, supra, Ingersoll, supra; (3) whether the actions have parties and issues in common, see Ronar v. Wallace, 649 F.Supp. at 318; and (4) whether the alternative forum is likely to render a prompt disposition, see id. We have already discussed the convenience of the federal forum. The desire to avoid piecemeal litigation is also relevant to the convenience of the forum. If both proceedings continued, the courts' calendars would have to be synchronized and the litigation would have to move back and forth across the Atlantic. We have already noted that the actions involve substantially the same parties and issues. Finally, the German court would seem as likely as the American forum to render a prompt disposition. Although the appeal of the German decision will not be heard until 1995, the German litigation has moved much farther along than the American action. There has been no discovery in the American litigation, while a trial on the merits has already occurred in Germany. Overall, we readily conclude that concerns regarding judicial efficiency militate strongly in favor of staying or dismissing the instant action in favor of the German litigation.
51 In summary, we conclude that the relevant concerns of international comity, fairness and efficiency point overwhelmingly, at this stage of the litigation, to deference to the German forum which has already rendered a judgment on the merits. 52 We also conclude that at this stage of the litigation, the appropriate resolution is a stay rather than a dismissal of the American action. The German court has yet to rule on appeal or to determine the manner or amount of the fee that the appellants shall pay to Turner. After the German litigation is complete, Turner may seek a hearing to determine whether the final results have altered any issues addressed herein. If not, the action should be dismissed. Either party also may add an action for enforcement of the foreign judgment at an appropriate time.