Something Familiar, Something Peculiar, Comity Tonight!

Every day, it seems, we are told that we live in the era of globalization. There is, of course, a somewhat troubled underside to global trade, the issues attendant to dispute resolution when global deals go sour. In The Johns Hopkins Health System Corp. v. Al Reem General Trading & Company's Rep. Est., Judge Blake of the U.S. District Court for the District of Maryland addressed issues of comity and abstention where an action was pending in a foreign jurisdiction.

In 1999, Hopkins, through a subsidiary, entered into a business development agreement with Al Reem. Al Reem was to promote Hopkins in the United Arab Emirates so that medical professionals there would refer their patients to Hopkins. Al Reem also agreed to assist Hopkins in broadening its business activities in the U.A.E. After deduction of various expenses, Hopkins, through its subsidiary, and Al Reem were to split a certain percentage of the total charges collected by Hopkins from Al Reem referred patients.

Hopkins terminated the 1999 agreement in June of 2000. However, in July of 2000, Hopkins was advised by Al Reem's counsel that Al Reem had registered "agency agreements" for Hopkins in the U.A.E. Apparently, Hopkins never received a copy of any such agreement until late October, 2001, and the agreement it received was dated September 18, 1998.

Hopkins contends that the 1998 agreement is an outright forgery. It differs in several material respects from the agreement that Hopkins contends governs the parties' relationship and it contains numerous gramatical and typographical errors and inconsistencies. (My favorite is in the section that contains the major difference between the two documents. There, a percentage is set forth in numerals and then, in parenthesis, in words. This is different from the way numbers or percentages are set forth in the remainder of the agreement and is, of course, different from customary drafting in this country.)

In July, 2000, Al Reem filed suit in the U.A.E. Hopkins presented to the U.S. Court a number of alleged irregularities in the U.A.E. proceeding. While it had also raised these issues in the U.A.E. courts, its efforts there had all been denied. While no judgment as to liability had been entered against Hopkins in the U.A.E., the U.A.E. court had appointed an "independent expert" to assess damages. (Even though the judges in the U.A.E. had been educated in the U.A.E., Egypt, and England, they apparently confused the Queen of Hearts with Blackstone ("the plaintiff has no certain demand till after verdict").)

Judge Blake first addressed Al Reem's attack on the exercise of personal jurisdiction over it. Since this case is focused on a contract that was entered into in the U.S. and was to be substantially performed in Maryland, the Court wasted little time in rejecting Al Reem's jurisdictional arguments.

The more difficult issue before the court was the comity argument raised by Al Reem. Al Reem's argument was simple: We filed suit first, our court choice is as good as yours, and who are you to say otherwise. Judge Blake applied the four factors set forth in Colorado River Water Conservancy District v. U.S., 424 U.S. 800, 818 (1976), together with the two additional factors set out in Gannett Co., Inc. v. Clark Construction Group, Inc., 286 F.3d 737, 741 (4th Cir. 2002) and Al-Abood ex rel. Al-Abood v. El-Shamari, 217 F.3d 225. 232 (4th Cir. 2000) as follows:

1. Which forum first assumed jurisdiction;


2. The inconvenience of the federal forum;


3. The desireability of avoiding piecemeal litigation;
   


4. The order in which jurisdiction was obtained by the different forums;
   


5. The source of governing law; and
   


6. Whether the foreign proceedings are adequate to protect the parties' rights.
   

I could set forth a summary of the Court's rulings on these particular points, but I don't think that it would be a particularly edifying exercise. The guts of the ruling is more basic. Let me summarize:

1. The owner and chairman of the board of Al Reem is His Royal Highness Sheikh Saeed Bin Tahnoun Al Nahayan, a member of the royal family and Executive Council member. The Sheikh is, ah, well connected in the U.A.E. He is the older son of the Ruler's Representative for Al Ain, the second largest city in Abu Dhabi. His father is a powerful member of the royal family, as his first cousin was the recently deceased President of the U.A.E. His aunt was the first wife of the former President and is the mother of the current President of the U.A.E. Thus, there was a good possibility of some judicial home cookin' in the U.A.E.


2. The document upon which Al Reem relied was apparently a fairly patent fraud.


3. The documents at issue were in English and almost all of the witnesses spoke fluent English. Yet, the U.A.E. proceedings were to be conducted in Arabic. This factor was given additional weight due to the fact that much of Hopkins' defense was based on the drafting errors in the document upon which Al Reem's claim rests. These errors, obvious to an experienced American fact finder, might not be as apparent to an Arabic-speaking judiciary.
   


4. As noted above, judicial procedures in the U.A.E. fall somewhat short of U.S. due process standards.

When I first began to practice law, Baltimore City lawyers argued cases in Baltimore County with some trepidation, feeling that they were in a foreign jurisdiction. I suspect that enforcing rights in true foreign jurisdictions are even more challenging. My guess is that we are going to see a dramatic increase in the number of cases involving dueling courthouses. It is heartening to see that U.S. judges are not shy in asserting their rights to exercise jurisdiction over international commercial disputes involving American interests.