Legal Commentary

In recent years, the number of transnational cases (those involving parties or claims that cross national borders) have increased dramatically. Transnational law is recognized by many law schools as a separate field, and transnational litigation is now almost commonplace. In the news, hearing about cross-border disputes is certainly routine (China transboundary pollution is an interesting example that has received significant press in recent years). And parties are not afraid to attempt to litigate remotely (for a recent high-profile example, think of the dismissed "end of the world" lawsuit filed in Hawaii to attempt to prevent the operation of Switzerland's giant particle collider). The increase is often attributed to globalization, the relaxation of jurisdictional rules, and the embrace of American-style litigation.

In this context, a key issue is how to deal with concurrent, foreign, parallel proceedings. Should a U.S. court stay its hand if an action involving the same dispute and parties is already pending in a foreign country? Although potentially important for many litigants, a dearth of scholarship currently exists (with some notable exceptions) and the issues seem largely undertheorized.

For some U.S. courts, parallel foreign proceedings do not require staying or dismissing a later-filed U.S. proceeding. Federal courts, it is argued, have an "unflagging" obligation to exercise jurisdiction given to them. Only in exceptional circumstances should a U.S. court stay the foreign proceeding. Although there are at least three different approaches, generally U.S. federal courts are hesitant to stay a local action in favor of a foreign action. For some, staying a U.S. action in light of a pending foreign parallel proceeding runs the risk of subordinating local values. Often the issue is misportrayed as pitting international comity against national interest.

Although the U.S. Supreme Court has not had the opportunity to recently address the issues raised by parallel proceedings, a seminal case is pending before the Supreme Court of Canada. The case, which will be heard by the court in November -- Lloyd's Underwriters v. Cominco -- has the potential to say important things about judgment enforcement and recognition in Canada. In reaching its decision, the Canadian Court may also look to U.S. precedent for guidance (looking at forum non conveniens, lis pendens, and abstention cases). The case is of note because until January when the U.S. Supreme Court denied certiorari, a related case was pending before the U.S. Supreme Court.

To my mind, the issue is not really one of comity, but self-interest. There seems to exist few reasons to permit domestic proceedings to continue in the face of duplicative foreign litigation, so long as the foreign court has jurisdiction under domestic jurisdictional standards and so long as any eventual judgment would have the potential to be enforced in the U.S.. The problems associated with duplicative, parallel proceedings (waste of resources, inefficiency, potential conflicting judgments, the race to judgment) all strongly militate again parallel proceedings, absent exceptional circumstances. The argument that the federal courts have a so-called unflagging obligation to exercise jurisdiction seems problematic given just how many situations federal courts are willing to decline jurisdiction (e.g., justiciability, abstention, forum non conveniens, exceptions to jurisdictional doctrines, etc.).

I have written a short article on the Lloyd's case that will appear in the Canadian Business Law Journal. The article explores some of these issues in greater detail (from a Canadian law perspective) and embraces a first-to-file rule. The article was written in response to a nice piece by Vaughan Black and John Swan that takes a different view. I would be interested in hearing others thoughts.