## Facts

- Gau Shan Company, Ltd., a Hong Kong cotton merchant, arranged sales of American cotton to buyers in the People’s Republic of China.
- The Julien Company, a Tennessee cotton supplier, was financed by Bankers Trust Company.
- Gau Shan’s managing director sought assurances from a Bankers Trust vice president that funding would be available so Julien would release cotton needed for Gau Shan’s China sales.
- Gau Shan entered contracts to sell 5,000 metric tons of cotton (Oct. 20, 1989) and 10,000 metric tons (Oct. 23, 1989) to Chinese buyers.
- Bankers Trust later conditioned advancing funds to Julien on Gau Shan signing a $20 million promissory note payable to Bankers Trust; Gau Shan signed the note in Hong Kong under protest and returned it to the bank in New York.
- Gau Shan alleged that Julien’s financial difficulties and the handling of the financing caused shipment problems and substantial losses.
- Gau Shan sued Bankers Trust in federal court in Tennessee for fraud, deceit, and negligence and obtained a preliminary injunction barring Bankers Trust from filing or prosecuting a Hong Kong lawsuit on the promissory note.

## Issues

1. Whether the district court abused its discretion, in light of international comity, by preliminarily enjoining Bankers Trust from pursuing litigation in Hong Kong against Gau Shan on the promissory note.

## Decision

- The Sixth Circuit reversed the preliminary injunction and remanded with instructions to dissolve the antisuit injunction.
- The court held the district court misapplied the comity framework by relying on considerations akin to forum non conveniens rather than the stricter standard for restraining foreign proceedings.
- The court found no showing that a Hong Kong action would threaten the U.S. court’s jurisdiction or evade an important U.S. public policy.

## Legal Principles

- A foreign antisuit injunction is an extraordinary remedy that should be used sparingly and only in the most compelling circumstances because it implicates international comity.
- Parallel in personam proceedings in domestic and foreign courts are generally permitted; duplication of parties and issues and the possibility of inconsistent judgments are not, by themselves, sufficient grounds for an antisuit injunction.
- A U.S. court may restrain foreign litigation only when the foreign action would (1) threaten the U.S. court’s jurisdiction (typically in rem or quasi in rem concerns) or (2) evade or undermine an important U.S. public policy.
- Differences between domestic and foreign remedial schemes (including the availability of enhanced damages under state law) do not, standing alone, establish policy evasion justifying interference with foreign litigation.

## Conclusion

The Sixth Circuit vacated an order barring a Hong Kong lawsuit, holding that comity favors allowing parallel foreign proceedings unless the foreign action would impair the U.S. court’s jurisdiction or subvert an important U.S. policy; ordinary inconvenience, duplicative litigation, or different remedies are insufficient.


Gau Shan Co. v. Bankers Trust Co., 956 F.2d 1349 (6th Cir. 1992)