2d Circuit Invokes "Virtually Unflagging Obligation" to Exercise Jurisdiction Where District Court Dismissed Suit on Int'l Comity Abstention Grounds

Per Royal and Sun Alliance Ins. Co. of Canada v. Century International Arms, Inc., --- F.3d ---, 2006 WL 2873046 (2d Cir. Oct. 10, 2006):

Plaintiff-appellant Royal and Sun Alliance Insurance Company of Canada ("RSA") seeks damages from defendants-appellees Century International Arms, Inc. and Century Arms, Inc. (collectively "Century America") for the reimbursement of defense expenses and the payment of deductibles it claims to be owed under various insurance policies. Century America moved to dismiss the complaint in deference to a pending action previously filed by RSA in Canada against Century America's Canadian affiliate, Century International Arms Ltd. ("Century Canada"), based on the same insurance policies and the same factual allegations. The United States District Court for the Southern District of New York (Deborah A. Batts, Judge), granted defendants' motion, concluding that considerations of comity warranted dismissal of RSA's action against Century America.

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Often, a party invoking the doctrine of international comity seeks the recognition of a foreign judgment. In this case, however, Century America argues that concerns of comity favor the recognition of a pending foreign proceeding that has yet to reach final judgment, and that proper deference to that proceeding requires abstention in domestic courts. . .

Generally, concurrent jurisdiction in United States courts and the courts of a foreign sovereign does not result in conflict. China Trade & Dev. Corp. v. M.V. Choong Yong, 837 F.2d 33, 36 (2d Cir.1987). Rather, " '[p]arallel proceedings in the same in personam claim should ordinarily be allowed to proceed simultaneously, at least until a judgment is reached in one which can be pled as res judicata in the other.' " Id., quoting Laker Airways, Ltd. v. Sabena Belgian World Airlines, 731 F.2d 909, 926-27 (D.C.Cir.1984), citing Colorado River, 424 U.S. at 817. The mere existence of parallel foreign proceedings does not negate the district courts' "virtually unflagging obligation ... to exercise the jurisdiction given them." Colorado River, 424 U.S. at 817. . . .
The Supreme Court has recognized that a decision to abstain from exercising jurisdiction based on the existence of parallel litigation "does not rest on a mechanical checklist, but on a careful balancing of the important factors ... as they apply in a given case, with the balance heavily weighted in favor of the exercise of jurisdiction." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 16 (1983) "No one factor is necessarily determinative; a carefully considered judgment taking into account both the obligation to exercise jurisdiction and the combination of factors counselling against that exercise is required." Colorado River, 424 U.S. 818-19, citing Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936); see also Moses H. Cone, 460 U.S. at 15 (stating that Colorado River did not "prescribe a hard-and-fast rule for dismissals of this type, but instead described some of the factors relevant to the decision").

In the context of parallel proceedings in a foreign court, a district court should be guided by the principles upon which international comity is based: the proper respect for litigation in and the courts of a sovereign nation, fairness to litigants, and judicial efficiency. . .

The existence of a parallel action in an adequate foreign jurisdiction must be the beginning, not the end, of a district court's determination of whether abstention is appropriate. As we explained above, circumstances that routinely exist in connection with parallel litigation cannot reasonably be considered exceptional circumstances, and therefore the mere existence of an adequate parallel action, by itself, does not justify the dismissal of a case on grounds of international comity abstention. Rather, additional circumstances must be present--such as a foreign nation's interest in uniform bankruptcy proceedings--that outweigh the district court's general obligation to exercise its jurisdiction. The district court did not identify any such special circumstances.

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The factors relied upon by the district court in granting Appellee's motion to dismiss are not sufficient to overcome the virtually unflagging obligation of a district court to exercise the jurisdiction conferred on it by Congress. The record contains no evidence of any exceptional circumstances that would justify abstention from jurisdiction. Accordingly, we hold that the district court abused its discretion by dismissing the action.