Did The Second Circuit Get It Right?

Thurgood Marshall CourthouseMy first post on the Second Circuit’s blockbuster decision in the Chevron/Ecuador case highlighted the court’s emphasis on comity as a reason not to enjoin recognition and enforcement actions in other countries. I think the court got this 100% right. Thus I agree that Judge Kaplan’s injunction was improper.

But I also noted that I didn’t really agree with the court’s discussion of the Declaratory Judgment Act. It’s true, as the court says, that the Act does not create any new substantive rights but merely provides a new procedure. But I don’t see how it follows from this that Chevron’s claim for a declaratory judgment should fail. Yes, Chevron’s arguments are in the nature of affirmative defenses, but parties raise affirmative defenses offensively in declaratory judgment actions all the time. Nor are there any comity concerns at stake in deciding whether to allow the declaratory judgment action itself to proceed (to the extent the relief sought is limited to a declaration concerning the enforceability of the judgment in New York).

So to my mind, the best outcome would have been a reversal of the injunction but a remand for further proceedings rather than a remand with instructions to dismiss. That’s not to say I think Chevron’s claim ultimately has merit. It’s just to say that I don’t see that the claim is impermissible on its face.

Photo credit: Americasroof

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2012), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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