Abstention

• Author: International Law Group

In 1998, AAR International, Inc. (AAR) leased a Boeing 737 airplane to Vacances Heliades S.A. (VH) for a term of 96 months. VH subleased the plane to another company which in turn subleased it yet another time (jointly referred to as defendants). In 1999, AAR notified the defendants that they had violated the lease by failing to pay accrued EuroControl charges of approximately EURO 700,000, by removing an engine, and by failing to make a lease payment. AAR terminated the lease shortly thereafter. VH then filed a complaint before the Court of First Instance (CFI) in Athens, Greece against AAR's parent company and other parties.

The pleadings alleged, among other things, that the airplane had not been properly overhauled. The complaint sought the attachment not only of AAR's assets in Greece but also of the plane as security for VH's claims for damages. Later, VH brought a second action in the CFI against defendants, this time seeking damages for the malfunctioning of one of the plane's engines. The Greek Court set a hearing for December 14, 1999. On December 13, 1999, AAR sued VH in an Illinois federal court.

On January 25, 2000, the Athens court issued a written "Provisionary Measures Procedure" decision in the first action, ordering the attachment of the assets of AAR's parent company and the plane. Thereafter, VH brought two more related actions in Athens.

Meanwhile, the defendants moved for the federal court to abstain under Colorado River Water Cons. Dist. v. United States, 424 U.S. 800 (1976), in light of the pending Greek actions or, alternatively, to dismiss the action under the forum non conveniens doctrine. Without addressing the forum non conveniens issues, the district court found that the U.S. lawsuit paralleled the Greek actions and that the Colorado River factors favored abstention. AAR appealed from the district court's grant of the defendant's motion to abstain. The U.S. Court of Appeals for the Seventh Circuit reverses and remands with instructions to vacate the abstention order and to deny appellee's motion to dismiss on grounds of forum non conveniens.

Under certain circumstances, the Court observes, a federal court may abstain from hearing a case and await the outcome of parallel proceedings either in the U.S. or abroad. Since federal courts generally have an obligation to exercise jurisdiction, Colorado River requires that the circumstances be "exceptional " for a court to abstain from exercising jurisdiction.

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