Comity, Irreparable Harm, and the Lago Agrio Injunction
Posted on March 11, 2011
I commented on the Opinio Juris post, and I want to pick up on my comment here. The point I ultimately want to make is that I don’t think that Judge Kaplan really demonstrates a sufficient risk of irreparable harm to justify his injunction, even if granting the injunction does not offend international comity.
Under China Trade & Dev. Corp. v. MV Choon Yong, 837 F.2d 33 (2d Cir. 1987), once the threshold requirements (substantial identity of the parties, and the dispositive effect of a permanent injunction in New York on the foreign proceedings) are met, there are five factors the court should consider in determining whether comity permits an anti-suit injunction:
(1) frustration of a policy in the enjoining forum; (2) [whether] the foreign action would be vexatious; (3) [any] threat to the issuing court’s in rem or quasi in rem jurisdiction; (4) [whether] the proceedings in the other forum prejudice other equitable considerations; or (5) [whether] adjudication of the same issues in separate actions would result in delay, inconvenience, expense, inconsistency, or a race to judgment.
Judge Kaplan found that factors (2), (4), and (5) favored the injunction.
But it’s not necessary to reach the issue of comity until the court is satisified that the ordinary requirements for issuance of a preliminary injunction have been met. One of these requirements is a showing of irreparable harm if the injunction is not granted. The specific threat of irreparable harm that Judge Kaplan found sufficient was the threat that the Ecuadoran plaintiffs
intend quickly to pursue multiple enforcement actions and asset seizures, including ex parte remedies where possible, around the globe. Absent a preliminary injunction, Chevron would be forced to defend itself and litigate the enforceability of the Ecuadorian judgment in multiple proceedings.
But Judge Kaplan also found that Chevron had shown it was likely to succeed on its claim that Ecuador did not provide impartial tribunals and due process of law, and that Chevron had “at least raised serious questions” about whether the Ecuadoran judgment was procured by fraud. Assuming he is right about these findings, it’s not clear to me why he thought that there was a real risk that foreign courts would recognize and enforce the Ecuadoran judgment. The only hint in the opinion is the remark that the plaintiffs may seek to proceed ex parte in some jurisdictions. But there is no discussion of whether such proceedings would have any real chance of success in any particular foreign jurisdiction. Certainly under U.S. law, it’s difficult to see how the Ecuadoran plaintiffs could show a sufficient threat of “immediate and irreparable injury” that would justify ex parte equitable relief. (Caveat: as experience in my own state, Massachusetts, shows, while the burden for obtaining a temporary restraining order is high, the burden for obtaining legal prejudgment remedies such as attachments ex parte is relatively low, notwithstanding the language of the relevant rules. The same may or may not be true in other states or jurisdictions).
Maybe Judge Kaplan is worried less about whether the Ecuadoran plaintiffs would ultimately succeed in tying up Chevron’s assets and worried more about the burden and expense Chevron would face in litigating such questions in multiple jurisdictions. But it seems to me that these considerations carry little weight in this context. Shouldn’t we expect that in post-judgment collection proceedings where the defendant resists the judgment, there will be multiple proceedings wherever the defendant has assets, particularly where, as in this case, it seems unlikely that the plaintiff will be able to collect in the defendant’s home jurisdiction?
In short, I don’t think that Judge Kaplan gave sufficient reasons not to trust the courts of other jurisdictions’ response to requests for recognition and enforcement, and I don’t think that in the post-judgment context, the costs associated with defending multiple collection actions carry much weight.
None of this, of course, is to say that the Ecuadoran plaintiffs should be entitled to enforce their judgment here in the U.S. or anywhere else. But a preliminary injunction is an extraordinary remedy intended just to preserve the status quo, and I am not convinced one is justified here.