Opinion ID: 31526
Heading Depth: 3
Heading Rank: 2

Heading: Interests in International Comity

Text: 40 Balanced against the scant vexatiousness and oppressiveness of Pertamina's acts are the not-insubstantial interests in preserving international comity. Neither a matter of legal obligation nor of mere courtesy, comity has long counseled courts to give effect, whenever possible, to the executive, legislative and judicial acts of a foreign sovereign so as to strengthen international cooperation. 56 The doctrine of comity contains a rule of local restraint which guides courts reasonably to restrict the extraterritorial application of sovereign power. 57 In this vein, we have impliedly recognized the importance of comity when a case implicates public international issues and when prior steps in resolving a dispute have taken place in international fora. 58 The immediate issue in this case is whether an injunction, which effectively attempts to arrest the judicial proceedings of another foreign sovereign — here, Indonesia — sufficiently upsets our interests in preserving comity among nations. 41 The district court concluded that its injunction did not impinge on another court's jurisdiction or cause comity concerns, because it had already issued a final judgment, thereby minimizing the reason to defer to proceedings elsewhere, and because Indonesia was not a proper court of primary jurisdiction under the Convention. The district court reasoned that, in fact, it was the Indonesian action that upset comity by permitting the relitigation of issues already decided by the district court, thereby threatening to erode the effectiveness of the district court's judgment, both here and abroad. 42 We agree that there is strong evidence in this instance favoring Switzerland as the paramount country of primary jurisdiction under the Convention. The district court and the Hong Kong Court of First Instance suggest at least three potential bases for finding that Swiss law effectively constitutes the lex arbitri of this case: (1) Pertamina previously argued in favor of Swiss arbitral law, which may reveal the parties' original contractual intentions to apply Swiss law in arbitration; (2) the parties failed clearly to choose Indonesian arbitral law in their agreement, as may be required by international law when parties want to select an arbitral law other than that of the arbitral situs; and, finally, (3) Pertamina may be judicially estopped from arguing otherwise because it contended strenuously in the district court, proffering arguments on which the court relied, that Swiss arbitral law applies to this dispute. Whether Switzerland is the only country of primary jurisdiction (and, impliedly, whether Indonesia could be a proper forum for annulment), however, is an issue that is not directly before us today. That issue arises under Article V of the Convention as a defense to enforcement, which the district court decided earlier, and which was on separate appeal before another panel of this Court and thereafter before the district court on remand. 43 Nevertheless, even if the Indonesian court acted wrongly in its decision to annul the Award as a purported court of primary jurisdiction under the New York Convention, we need not directly address the propriety of that court's injunction and annulment. Contrary to the district court's conclusions, legal action in Indonesia, regardless of its legitimacy, does not interfere with the ability of U.S. courts, or courts of any other enforcement jurisdictions for that matter, to enforce a foreign arbitral award. Furthermore, as we have explained, the relitigation of issues is characteristic of the Convention's confirmation and enforcement scheme. Lastly, the district court's final judgment is not truly a decision on the merits; rather, it is an order to enforce an award resulting from litigation elsewhere, which is not necessarily given res judicata effect in foreign jurisdictions. 59 44 This case also differs significantly from Kaepa, in which we found comity concerns insignificant because that case dealt with a contractual dispute between private parties and was long and firmly ensconced within the confines of the United States judicial system. 60 Unlike the foreign litigation at issue in Kaepa, this case implicates public international issues and has been litigated chiefly in non-American fora. 45 The instant dispute implicates three public international issues. First, this is not a purely private dispute, as Pertamina is wholly owned by the GOI, and the claims at issue in the arbitration arose from sovereign acts of that government. Second, even if Pertamina is acting in bad faith by pursuing annulment in Indonesia (as it appears to be), the district court's attempt to enjoin Pertamina effectively translates into an attempt to enjoin the Indonesian court itself and to interfere with the sovereign actions of the GOI. 61 When viewed in a vacuum, enjoining Pertamina might appear to be the right answer in this case; but when viewed in total context, its effect tends to clash with the general principle that a sovereign country has the competence to determine its own jurisdiction and grant the kinds of relief it deems appropriate. 46 Third, and perhaps most importantly, allowing such an injunction to stand could set an undesirable precedent under the Convention, permitting a secondary jurisdiction to impose penalties on a party when it disagrees with that party's attempt to challenge an award in another country. It is at least conceivable that by using the district court's decision as persuasive authority, an enforcement court in a future dispute might attempt to enjoin proceedings in countries with arguable primary jurisdiction, or in countries with clear primary jurisdiction but with which the enforcement country's court radically disagrees. Reaching out to enjoin proceedings abroad cuts against the Convention's grants of separate and limited roles of primary-jurisdiction courts to annul awards, and of secondary-jurisdiction courts to enforce, or refuse to enforce, awards in their own countries. 62 In sum, an injunction here is likely to have the practical effect of showing a lack of mutual respect for the judicial proceedings of other sovereign nations and to demonstrate an assertion of authority not contemplated by the New York Convention. 47 In addition, the procedural chronology of this case illustrates the inherently international character of the proceedings themselves. This case (1) arises from contracts negotiated and allegedly breached in Indonesia, (2) was arbitrated and litigated originally in Switzerland, and, (3) involves primarily non-United States parties. Although enforcement of the Award in the United States may well satisfy much or even all of KBC's claim, our courts are nonetheless courts of secondary jurisdiction, empowered only to enforce or refuse to enforce the foreign award, and then only within the United States. Thus, the courts of this country do not maintain nearly as meaningful an interest in the resolution of this dispute, other than to give effect to a foreign arbitral award, as they do in the great majority of the cases they hear. 48 It is true that Pertamina is likely in the wrong here, and that Indonesia's injunction and annulment may violate comity and the spirit of the Convention much more than would the district court's injunction. In reality, however, a U.S. court's injunction is powerless to prevent or terminate such foreign actions. The Convention already appears to allow for some degree of forum shopping, 63 and, as with many treaties, the efficacy of the Convention depends in large part on the good faith of its sovereign signatories. 64 Upholding the district court's injunction could only further exacerbate the problem, diplomatically if not legally as well.