Marc J. Goldstein Arbitrator & Mediator NYC
July 10, 2010

Ninth Circuit Confirms Judicial Power to Issue Injunctions in Aid of International Arbitration

Not so long ago, there was controversy among federal courts in the United States about whether the New York Convention ousted the courts of jurisdiction to provide injunctive relief in aid of international arbitration. Just as that issue was sorted out in favor of judicial power to grant provisional relief, controversy arose over whether institutional rules conferring power on arbitrators to grant provisional relief, when adopted by parties, left courts without power to grant such parties provisional relief, or at least when viewed in light of the Federal Arbitration Act strongly suggested that courts should wield discretion against granting provisional relief.


That issue, also, has largely been sorted out in favor of judicial power, and discretion, to grant provisional measures in aid if arbitration to preserve the efficacy of the arbitral process. (See, for example, the Commentary on the applicable law in New York, posted on this site on June 22, 2010.)


But pockets of resistance have remained, notably where federal district courts have considered themselves bound to follow older, unrevisited precedents in their Circuit Courts of Appeals. The Ninth Circuit is one such jurisdiction, and, as it embraces so many important centers of international commerce — such as Los Angeles, San Francisco, Seattle, San Diego and Phoenix — the revisitation of an older precedent by that court is a development worthy of note.


Last month the Ninth Circuit reversed a Los Angeles federal district court’s refusal to grant an injunction in aid of arbitration, where the parties had a pending arbitration under the ICC Rules, but the Tribunal was not fully formed at the time of the application for relief. The Court held that the granting of such relief was fully consistent with Article 23 of the ICC Rules, which permits a party to apply to a competent judicial authority for provisional measures before the Tribunal is formed and in “appropriate circumstances” thereafter. (Toyo Tire Holdings of Americas, Inc. v. Continental Tire North America, Inc., 2010 U.S. App. LEXIS 12475 (9th Cir. June 17, 2010)).


The district judge had considered himself bound to deny the relief under a Ninth Circuit decision dating from 1999 that also involved an arbitration under the ICC Rules, and Article 23 thereof whose text was essentially the same at that time. But here the Ninth Circuit found that 1999 precedent distinguishable, as a case in which the applicant was seeking to bypass the arbitral tribunal, maintaining that it lacked power to grant the particular provisional relief sought. In the present case, in contrast, movant’s application was made expressly for the purpose of ensuring that the status quo was maintained until the Tribunal was able to act, so that any application to the Tribunal for further provisional (or permanent injunctive) relief would not be rendered ineffectual. Specifically, the Court concluded that “a district court may issue interim injunctive relief on arbitrable claims if interim relief is necessary to preserve the status quo and the meaningfulness of the arbitration process — provided, of course, that the requirements for granting injunctive relief are otherwise satisfied.”


This decision harmonizes Ninth Circuit law with the law in other Circuits where international arbitrations in the United States often take place, notably the Second (New York), Eleventh (Miami and Atlanta) and Fifth (Houston and Dallas) Circuits. 


With so many arbitral institutions having adopted rules for fast-track procedures or appointment of an emergency arbitrator, the next wave of case law development concerning provisional relief is likely to focus upon whether an agreement to arbitrate under such rules further narrows the circumstances in which judicial relief is strictly necessary to preserve the status quo. Given the strong emphasis in US provisional remedies law on proving likely success on the merits, US judges can be expected to incline against hearing applications for provisional relief absent strong evidence that an arbitrator cannot be selected on an expedited basis.

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