Anti-Suit Injunction

• Author: International Law Group
• Pages: 2-3

Page 2

Ibeto Petrochemical Industries Limited (Plaintiff) filed suit in a New York federal court, to recover damages caused by seawater contamination of a cargo of base oil. The Defendants are the vessel M/T Beffen, plus Bryggen Shipping and Trading A/S (Defendants).

The tanker sailed from a New Jersey port in February 2004, loaded with base oil for delivery to the Plaintiffin Nigeria. The shipper of record was Chemlube International, Inc. The Bill of Lading referenced the standard "Asbatankvoy" Tanker Charter Party and the "Chemlube Terms" dated September 2002. The Asbatankvoy provisions included a clause providing for arbitration of disputes in either New York or London. The Chemlube Terms specifi ed arbitration in London.

By the time the M/T Beffen made port in Nigeria, sea water had allegedly contaminated the base oil shipment. Plaintiffsued the Defendants in a Nigerian court in March 2004. Plaintiffdemanded arbitration in London and, alternatively, filed this suit in New York "out of an excess of caution."

The New York court granted Defendants' motions (1) to stay the present action and (2) to issue an antisuit injunction (ASI) against the Nigerian litigation. Plaintiffappealed these two rulings. The Second Circuit affirms in part and modifi es in part.

As for the ASI directed at the Nigerian case, the district court reasoned that the Nigerian litigation might frustrate the general U.S. policy of enforcing arbitration clauses. Defendants argued that the court had issued the ASI improperly because Plaintiffhad not expressly agreed to arbitrate this matter.

The Court explains that other instruments may incorporate by reference "boiler plate" arbitration clauses. In Progressive Cas. Ins. Co. v. C.A. Reaseguradora Nacional de Venezuela, 991 F.2d 42, 48 (2d Cir. 1993), for example, the Court held that an arbitration clause in a Charter Party binds the parties to a Bill of Lading (BOL) which had incorporated the Charter Party by reference.

The Court then turns to the appropriateness of the ASI against the Nigerian litigation and its terms. It holds that the district court had properly applied China Trade & Dev. Corp. v. M.V. Choon Young, 837 F.2d 33, 35-36 (2d Cir. 1987). "Pursuant to the China Trade test, '[a]n anti-suit injunction against parallel litigation may be imposed only if: (A) the parties are the same in both matters, and (B) resolution of the case before the enjoining court is...