## Facts

- Karaha Bodas Company, L.L.C. (KBC) contracted with Indonesia’s state-owned energy company, Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Pertamina), to develop a geothermal power project in Indonesia.
- The relevant contracts required arbitration under UNCITRAL rules, seated in Geneva, Switzerland, with Swiss procedural law governing the arbitration.
- After the project was suspended, KBC initiated arbitration in Geneva; the arbitral tribunal consolidated claims and issued a final award in KBC’s favor exceeding $260 million plus interest and costs.
- KBC filed an action in the Southern District of Texas to confirm and enforce the Swiss-seated arbitral award under the New York Convention.
- While the U.S. enforcement proceedings were pending, Pertamina pursued litigation in Indonesia seeking to annul the Swiss-seated arbitral award and to interfere with KBC’s enforcement efforts abroad.
- The district court issued a preliminary anti-suit injunction barring Pertamina from prosecuting its Indonesian annulment action or pursuing foreign relief aimed at restraining enforcement, and later held Pertamina in contempt for continuing the Indonesian proceedings despite notice of the injunction.
- Pertamina appealed the preliminary injunction and the contempt order to the Fifth Circuit.

## Issues

1. Whether the district court properly issued a preliminary anti-suit injunction preventing Pertamina from continuing foreign proceedings seeking to annul a Swiss-seated arbitral award and to obstruct its enforcement.
2. Whether the injunction was consistent with international comity and the New York Convention’s allocation of authority between courts of the seat (primary jurisdiction) and enforcement courts (secondary jurisdiction).
3. Whether the district court properly held Pertamina in contempt for violating the anti-suit injunction by continuing the Indonesian litigation.

## Decision

- The Fifth Circuit affirmed the preliminary anti-suit injunction.
- The court held that the injunction fit established standards for international anti-suit relief because the foreign proceeding threatened the district court’s jurisdiction and would frustrate important U.S. policies favoring enforcement of arbitral awards under the New York Convention.
- The court concluded that comity did not bar the injunction because it regulated the conduct of a party within the court’s jurisdiction and responded to litigation designed to circumvent the parties’ arbitration agreement and the Convention’s structure.
- The court emphasized that, under the Convention, annulment authority is principally located in the courts of the arbitral seat; because the arbitration was seated in Switzerland, Swiss courts were the appropriate forum for a set-aside action, not Indonesian courts.
- The Fifth Circuit affirmed the contempt order because the injunction was clear, Pertamina had notice, and Pertamina continued the prohibited foreign proceedings.

## Legal Principles

- A federal court may issue an international anti-suit injunction as an extraordinary remedy when a foreign action would frustrate significant forum policies, threaten the court’s jurisdiction, or impose vexatious and duplicative litigation risks, including inconsistent judgments.
- Under the New York Convention, courts of the arbitral seat are the primary jurisdiction for set-aside (annulment) proceedings, while courts in other states sit in a secondary, enforcement role subject to limited defenses.
- A foreign set-aside action brought in a forum not designated by the arbitration’s seat or governing arbitral procedural law may be treated as inconsistent with the parties’ agreement and the Convention’s allocation of authority, supporting injunctive relief.
- International comity is discretionary and may yield where an injunction narrowly targets a litigant’s conduct to protect the enforcing court’s processes and the Convention-based enforcement regime.
- Civil contempt is appropriate where a party violates a clear court order with notice, even if the disobedience consists of continuing litigation in a foreign court.

## Conclusion

The Fifth Circuit upheld a preliminary anti-suit injunction and a contempt sanction to prevent a party from using foreign annulment litigation in a non-seat forum to undermine U.S. proceedings to enforce a Swiss-seated arbitral award under the New York Convention.


Karaha Bodas Co., L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 313 F.3d 70 (5th Cir. 2002)