Weapons Of International Arbitration

Introduction The advantages of New York law and New York as a forum for international dispute resolution are well known.1 Less well known is the assistance available from New York courts in connection with international arbitrations which take place outside of New York. This includes pre-arbitration security, pre-arbitration discovery from third parties, and assistance in enforcing a non-U.S. award.

These remedies may be available even if the parties to the international arbitration have no connection with New York. Why is that? It is because the courts in New York are “arbitration friendly” in three significant ways.

A. Pre-arbitration Security New York courts historically lacked authority to issue attachments in aid of a foreign arbitration.2 However, there have been relatively recent statutory changes that permit a court to grant an order of attachment or a preliminary injunction in aid of arbitration outside of the United States, namely, N.Y. C.P.L.R. §7502(c). The only ground for such relief is that a final arbitration award may be “rendered ineffectual” absent such relief. A recent case involving N.Y. C.P.L.R. §7502(c) held that a creditor could attach assets in New York of a debtor whose principal place of business was in India, in aid of an anticipated Singapore arbitration where New York lacked subject matter or personal jurisdiction over the Indian debtor. See Sojitz Corp. v. Privthvi Information Solutions Ltd., 921 N.Y.S.2d 14 (1st Dep't 2011)3 (affirming pre-award attachment for security purposes only in aid of foreign arbitration under N.Y. C.P.L.R. §7502(c), even though the target of attachment had no connection to New York by way of subject matter or personal jurisdiction, other than the fact that a customer who owed money to debtor was located in New York).

As to injunctive relief in aid of arbitration, although it is black letter law that injunctive relief is not available for a contract claim for money damages, there are exceptions to that rule.4 In Credit Agricole Indosuez v. Rossiyskiy Kredit Bank, 94 N.Y. 2d 541 (2000), the New York Court of Appeals, citing the U.S. Supreme Court's decision in Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 US 308 (1999), recognized two exceptions to the general rule: (1) when equitable relief is granted under procedures independent of N.Y. C.P.L.R. §63015 and (2) when the suit involves claims of the plaintiff to a specific fund, rightly regarded by the court as “the subject of the action” under N.Y. C.P.L.R.§6301, making a preliminary injunction appropriate under the express wording of the statute. 94 N.Y.2d at 548.

Thus, in New York you can now obtain a preliminary injunction to secure an ultimate money award in aid of arbitration in conformance with the exceptions to the general rule as articulated in Credit Agricole.6

What are the jurisdictional requirements for an attachment or injunction in aid of arbitration in New York? In Sojitz, the court noted that the plaintiff may attach property located in the state “as security” for a judgment being sought in another forum without demonstrating minimum contacts to the state of any kind.7

B. Discovery U.S. courts also may order that testimony be given or documents be produced in aid of a foreign proceeding or international tribunal. 28 U.S.C. §1782.8

Prior to 2004 and the...