Telecom Business Solution, LLC v. Terra Towers Corp.

Background

Telecom Business Solutions, LLC and LATAM Towers, LLC, together called “Peppertree,” and AMLQ Holdings (Cay), Ltd. asked the court for a permanent anti-suit injunction. An anti-suit injunction is an order preventing litigation in another court. The request concerned litigation in the British Virgin Islands filed by Juan Francisco Quisquinay, Respondents’ employee and agent, against Continental Towers LATAM Holdings Limited, which the opinion calls “the Company.” Terra Towers Corp. and TBS Management, S.A., together called “Terra,” and DT Holdings, Inc. were the Respondents.

The British Virgin Islands case asked whether the Company had a chief executive officer and, if so, who that person was. The court said an arbitral tribunal had already resolved that issue in its Second Partial Final Award, and that the court had recently confirmed that award. The court also noted that the tribunal and court had ordered the Company to be sold.

Legal Standard

The court explained that federal courts may stop foreign litigation involving people subject to their jurisdiction, but must use that power sparingly because of respect for foreign courts. An anti-suit injunction against parallel litigation requires two threshold findings: the parties must be the same or substantially similar, and resolving the U.S. case must dispose of the foreign case. If those conditions are met, the court considers five additional factors: whether the foreign case frustrates a policy of the U.S. court, is vexatious, threatens the court’s jurisdiction, harms equitable interests, or creates delay, expense, inconvenience, inconsistent judgments, or a race to judgment.

Court’s Analysis

The court found the parties substantially similar even though Terra and DTH were not named parties in the British Virgin Islands case. It accepted Petitioners’ argument that Quisquinay was advancing Respondents’ interests and acting under their control. It also found that Petitioners were the real parties in interest because Petitioners and Terra owned the Company. Thus, both proceedings were disputes among the Company’s shareholders.

The court also found that the second threshold condition was satisfied. The only issue in the British Virgin Islands case—the identity of the Company’s chief executive officer—had already been resolved by the arbitral tribunal and confirmed by the court. The court rejected Respondents’ argument that the tribunal’s resolution was merely a factual finding that was not part of its judgment.

The court then found all five additional factors satisfied. Allowing the foreign case to continue would frustrate the strong U.S. policy favoring enforcement of arbitration agreements. The court found the foreign case vexatious because it appeared designed to frustrate the arbitration process by revisiting an issue already resolved. It threatened the court’s jurisdiction by undermining the court’s confirmation of the arbitration award and appeared aimed at thwarting the order requiring the Company’s sale. The court also found that Petitioners would face simultaneous litigation in New York and the British Virgin Islands and that the foreign case could harm the Company’s sale prospects. Finally, the court found clear risks of delay, additional expense, inconvenience, and inconsistent judgments.

Disposition

The court granted Petitioners’ motion for a permanent anti-suit injunction. The court stated that Petitioners appeared also to seek fees and expenses for bringing the motion and defending the British Virgin Islands case; to the extent they made that request, it denied the request without prejudice.