Commercial Litigation and Arbitration

International Comity as Ground to Stay or Dismiss a U.S. Lawsuit in Deference to a Foreign Action — Foreign Bankruptcy Generally Entitled to Comity

From Curran v. Hindu Credit Union Operative Soc’y Ltd., 2011 U.S. Dist. LEXIS 32148 (S.D. Fla. Mar. 25, 2011):

International comity is "the recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens, or of other persons who are under the protection of its laws." See Turner Entertainment Co. v. Degeto Film GmbH, 25 F.3d 1512, 1519 (11th Cir. 1994) (quoting Hilton v. Guyot, 159 U.S. 113, 163-64 (1895)).

The doctrine of international comity may be applied retrospectively or prospectively. A court conducts a prospective analysis when considering whether to dismiss or stay a domestic action where a judgment has not yet been reached in the foreign forum. In analyzing a case for prospective application of international comity, federal courts "evaluate several factors, including the strength of the United States' interest in using a federal forum, the strength of the foreign governments' interests, and the adequacy of the alternative forum." Ungaro-Benages v. Dresdner Bank AG, 379 F.3d 1227, 1238 (11th Cir. 2004). A court's determination of the last factor — the adequacy of the alternative forum — is informed by a forum non conveniens analysis. Id.

Thus, although federal courts have a "virtually unflagging obligation" to exercise their jurisdiction, in some private international disputes it is "prudent and just" for a federal court to abstain from the exercise of its jurisdiction because of concurrent proceedings in another jurisdiction. ***. A court has the power to dismiss or stay a case based on abstention principles regardless of whether the relief sought is equitable or legal and non-equitable. See Posner v. Essex Ins. Co., Ltd., 178 F.3d 1209, 1222 (11th Cir. 1999) (holding, as a matter of first impression, that legal, non-equitable claims may be dismissed or stayed on grounds of international comity abstention).

In particular, the existence of foreign bankruptcy proceedings has been recognized as "one discrete category of foreign litigation that generally requires the dismissal of parallel district court actions." Royal & Sun Alliance Ins. Co. of Canada v. Century Int'l Arms, Inc., 466 F.3d 88, 92-93 (2d Cir. 2006) (noting that it is "the general practice of American courts [to] regularly defer[] to such actions"). Abstention where a foreign bankruptcy proceeding is pending reflects the recognition that "a foreign nation's interest in the equitable and orderly distribution of a debtor's property is an interest deserving of particular respect and deference." Id. (internal quotation marks omitted). A U.S. court will therefore afford comity to a foreign bankruptcy proceeding as long as the proceeding abides by "fundamental standards of procedural fairness." Allstate Life Ins. Co. v. Linter Group Ltd., 996 F.2d 996, 999 (2d Cir. 1993).

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