A Primer on Transnational Parallel Proceedings
January 30, 2024
It is not uncommon for parties involved in cross-border disputes to file competing or overlapping lawsuits in different forums. When should a U.S. court stay its hand in favor of a lawsuit filed in another country? Conversely, when should a U.S. court take proactive measures to defend its jurisdiction from interference by proceedings in a foreign court? This Primer outlines the potential problems posed by parallel proceedings; how U.S. federal courts treat foreign parallel proceedings; the role of antisuit injunctions to protect U.S. jurisdiction in unusual circumstances; the special case of transnational bankruptcy; and the possibility of an international convention addressing parallel proceedings. This primer focuses on federal doctrines regarding parallel proceedings; state courts may have their own approach to these questions.
Defining Parallel Proceedings
Adversaries may litigate cross-border disputes in multiple forums at the same time. This multi-front approach may reflect necessity as different forums can provide different remedies, reach different defendants, or address discrete issues of a broader dispute. Other times, it may reflect pure forum-shopping and litigation strategy, when parties seek out more friendly (or more obstructive) forums. And, of course, sometimes necessity and forum-shopping blend together.
Parallel proceedings are suits in two different forums that involve substantially the same parties and substantially the same claims or issues. The concern is that the two suits can lead to inconsistent or preclusive judgments.
As a federal system with many sovereigns, the United States generally tolerates parallel proceedings across U.S. states and between state and federal courts. The Full Faith and Credit Clause of the U.S. Constitution in turn requires U.S. courts to give full effect to whichever judgment is entered first. In Colorado River Water Conservation District v. United States (1976), the Supreme Court instructed federal courts to stay cases in light of parallel proceedings in state courts only in exceptional circumstances. Colorado River emphasized that federal courts have a “virtually unflagging obligation” to exercise the jurisdiction that Congress assigns to them, even if that means duplicative litigation between state and federal courts and a race to judgment.
Parallel Proceedings in the Transnational Context
The Supreme Court has not given similar guidance, however, regarding the treatment of parallel proceedings in foreign forums. The transnational context could affect the analysis in two directions. On the one hand, unlike in the Colorado River context, dismissal in deference to foreign proceedings means that no U.S. court will hear the dispute. That might favor an even greater tolerance of parallel proceedings when those proceedings are in a foreign forum.
On the other hand, international comity is implicated when U.S. litigation competes with litigation in other nations’ courts, particularly if those other nations do not generally tolerate parallel proceedings. Under the Brussels I Regulation (recast), for example, members of the European Union are obligated to defer to the court first seised with a matter involving the same parties and the same cause of action (lis pendens). They may also stay their proceedings if an action in another court is “so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings” (related action). Other civil law jurisdictions follow a similar approach. Respect for the adjudicatory interests of other countries might in turn favor a greater willingness to stay or dismiss parallel proceedings in U.S. courts.
The Approach of Federal Courts to Foreign Parallel Proceedings
In the absence of clear Supreme Court guidance, the federal circuits’ treatment of foreign parallel proceedings can be divided into three groups. The Fourth, Sixth, Seventh, and Ninth Circuits simply apply Colorado River’s framework, effectively treating federal-foreign parallel proceedings just like federal-state parallel proceedings. The Colorado River approach first requires a determination that the suits are in fact parallel. To determine whether exceptional circumstances exist warranting a stay or dismissal, the federal court then balances such factors as the order in which the suits were filed, their relative progress, the relative inconvenience of the federal forum, and the source of applicable law.
The First, Eighth, and Tenth Circuits have not yet addressed the question of foreign parallel proceedings. But leading district court decisions in all three circuits have adopted an identical test. That test is very similar to Colorado River because it also analogizes to federal-state parallel proceedings, but it predates Colorado River and is thus phrased slightly differently. Like Colorado River, the district court approach considers the similarity of the parties and issues and the order in which the suits were filed. But instead of “the relative inconvenience of the federal forum,” it weighs more specifically issues of fairness and convenience for the parties and witnesses, the possibility of prejudice to any of the parties, the adequacy of relief in the alternative forum, and the promotion of judicial efficiency.
Finally, the Eleventh Circuit mixed this district court test with Colorado River, added some factors related to the enforcement of foreign judgments, and labelled its approach “international comity abstention.” The Second Circuit drew on the Eleventh Circuit model in formulating its own “international comity abstention” for parallel proceedings. The Second Circuit, for example, considers the similarity of the parties and issues, the order in which the suits were filed, the adequacy of the other forum, the convenience of the parties, the potential prejudice to either party, and—unlike the first two approaches—the connection between the litigation and the United States and the connection between the litigation and the foreign jurisdiction.
There is not much practical difference across these approaches, though semantics can matter. The “international comity abstention” label used in the Eleventh and Second Circuits can lead to unnecessary confusion. And simply applying Colorado River might erroneously suggest that the systemic interests implicated by transnational parallel proceedings are identical to those implicated by federal-state parallel proceedings.
Some federal courts have instead used forum non conveniens to address foreign parallel proceedings. Forum non conveniens, however, does not require similarity of parties or issues, nor does it consider the degree of progress of litigation in the foreign forum. Some federal courts also used to evaluate transnational parallel proceedings under the rubric of Landis v. North American Co. (1936). Under Landis, federal courts are generally willing to stay cases in light of parallel litigation in other federal courts. Parallel litigation in foreign forums, however, is more analogous to federal-state parallel litigation (Colorado River) than federal-federal litigation (Landis). In recent years, the Landis-inspired approach to foreign parallel proceedings has been supplanted by the approaches described above.
Antistuit injunctions are directed to parties before the court, compelling them to stop litigation in other forums. Typically, the enjoined proceedings are parallel, meaning that they involve the same parties and issues and thus a judgment in one case would preclude continued litigation in the other. But antisuit injunctions can also be invoked against “interdictory” actions in foreign courts that aim to interfere with the U.S. litigation. An anti-antisuit injunction, for example, enjoins a party from pursuing an antisuit injunction in a foreign court aimed at stopping the U.S. litigation.
Because antisuit injunctions effectively interfere with the work of foreign courts, they are disfavored and should be issued “sparingly.” The federal circuits have split into two camps over how they approach antisuit injunctions.
The Fifth, Seventh, and Ninth Circuits employ a “permissive” or “liberal” approach to anti-suit injunctions. That approach permits anti-suit injunctions if the proceedings are duplicative and the foreign proceeding could frustrate and delay the U.S. suit or otherwise lead to inequitable hardship.
The Second, Third, Sixth, Eighth, and D.C. Circuits apply a more “restrictive” or “conservative” approach to antisuit injunctions, limiting them to circumstances in which foreign proceedings threaten the U.S. court’s jurisdiction or an important national policy; they also place greater emphasis on comity concerns. The First Circuit largely follows the conservative approach but permits a broader weighing of equitable considerations, like the good faith of the parties and the relative degree of progress in the two suits.
It is not clear, however, that the difference between these approaches results in much difference in application. Thus despite the long-standing circuit split, it is not surprising that the Supreme Court recently denied a petition for certiorari seeking to resolve it.
Large-scale bankruptcies can spark litigation in multiple forums. The federal courts and Congress have developed a different approach to parallel proceedings for this context. Litigation related to bankruptcy raises different considerations: There is a greater benefit to a single adjudicator controlling the consolidation and disbursement of the bankrupt’s estate, yet that effort can in turn be affected by overlapping or adjacent—even if not “substantially similar”—litigation. In other words, the need for deference is greater and the scope of deference may be broader.
Because of these differences, care should be taken in applying the reasoning of such decisions outside the context of bankruptcy. That includes the Second Circuit’s influential line of cases addressing deference to foreign bankruptcy proceedings, including JP Morgan Chase Bank v. Altos Hornos de Mexico, S.A. de C.V. (2005), Finanz AG Zurich v. Banco Economica S.A. (1999), Allstate Life Insurance Co. v. Linter Group Ltd. (1993), Victrix S.S. Co. S.A. v. Salen Dry Cargo A.B. (1987), and Cunard S.S. Co. Ltd. v. Salen Reefer Servs., AB (1985).
This judge-developed approach to transnational bankruptcy was superseded by Congress’s adoption in 2005 of Chapter 15 of the Bankruptcy Code, which was modeled on the UNCITRAL Model Law on Cross-Border Insolvency (1997). Much like the judge-developed approach that preceded it, Chapter 15 directs U.S. courts to cooperate with and defer to foreign insolvency proceedings. (This post covers some of the mechanics of Chapter 15.)
Parallel Proceedings at the Hague Conference
Following the 2005 Choice of Court Convention and the 2019 Judgments Convention, the Hague Conference on Private International Law has begun work on a convention to address parallel proceedings. The United States has yet to join the Choice of Court and Judgments Conventions. Nonetheless, an international consensus on how to address transnational parallel proceedings might provide a clearer model for U.S. courts pending further guidance from the Supreme Court or Congress.