Anti-Suit Injunctions

• Author: International Law Group

The Royal Bank of Canada (plaintiff or RBC) is a Canadian bank based in Toronto. The Cooperatieve Centrale Raiffeisen-Boerenleenbank BA (defendant or Rabobank) is a Netherlands bank, with its principal place of business in Utrecht. Both parties carry on the banking business in London and New York. RBC's claim rests upon a "swap agreement" with Rabobank recorded in a Total Return Swap Confirmation (TRS) dated in January 2001. The agreement formed part of, and was subject to, the 1995 International Swap Dealers Association Master Agreement (ISDA or Master Agreement).

Under its express terms, English law was to govern both substantive rights and the interpretation of the TRS. ISDA also contained a non-exclusive jurisdiction clause authorizing the English courts to decide disputes arising out of a TRS arrangement. It also had the following clause: "Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction... nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction." According to their swap agreement, Rabobank was to pay RBC $517m plus $6m interest on June 28, 2002. The TRS formed part of a structured finance deal. It had to do with a block of shares in a publicly traded company called EOG Resources Inc, the shares being owned by Enron Corporation.

The TRS involved two closings. By the second closing on January 31, 2001, RBC had effectively advanced the full sum of $517m to an agreed entity called Heracles Trust. Rabobank's involvement in the TRS came at the second-closing phase. At this point, there was an Equity Swap with Enron North America, which Enron guaranteed. In the course of the second closing, Rabobank assumed part of the Enron credit risk. The present case deals to a substantial degree with the circumstances surrounding Enron's demise. Next, a dispute sprang up between the parties. RBC's claim was for damages of about $523.8m payable under the contract on June 28, 2002, which Rabobank declared on June 21 it would not pay. On the latter date, Rabobank filed proceedings in the New York state courts -- mainly to rescind the TRS agreement. Alternatively, it asked for $523.8m in damages, alleging fraudulent misrepresentation.

RBC filed the instant case in the English courts on the next working day after June 21. The claims and cross claims in the English and New York proceedings mirrored each other. The plaintiff asked...