## Facts

- Karaha Bodas Company, L.L.C. (KBC) and Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Pertamina), an Indonesian state-owned enterprise, entered contracts in 1994 to develop geothermal resources and sell electricity for an Indonesian power project.
- The contracts required arbitration in Geneva, Switzerland under UNCITRAL rules.
- After an Indonesian presidential decree suspended the project during the Asian financial crisis, KBC initiated arbitration and obtained a final award for roughly $260 million (including interest and costs).
- Pertamina challenged the award in Switzerland; the Swiss Federal Supreme Court dismissed the challenge.
- KBC sought and obtained recognition and enforcement of the award in the Southern District of Texas under the New York Convention.
- Pertamina then filed an action in an Indonesian court seeking (i) annulment of the Swiss award and (ii) an injunction barring KBC from enforcing it.
- The Texas district court issued a temporary restraining order directing Pertamina to withdraw its Indonesian request for injunctive relief; Pertamina did not comply, and the Indonesian court issued an injunction against KBC’s enforcement efforts.
- The district court held Pertamina in contempt and later entered a preliminary injunction prohibiting Pertamina from prosecuting the Indonesian proceeding to annul the award or to obtain anti-enforcement injunctive relief.
- Pertamina appealed the preliminary injunction and the contempt order.

## Issues

1. Whether the district court abused its discretion by issuing an international anti-suit injunction barring Pertamina from pursuing Indonesian proceedings to annul the award and to seek injunctive relief against enforcement, given the New York Convention’s structure and U.S. treaty obligations.
2. Whether the civil contempt order based on violation of the TRO could stand if the underlying anti-suit relief was improper.

## Decision

- The Fifth Circuit vacated the preliminary anti-suit injunction as an abuse of discretion.
- The court concluded that the New York Convention contemplates multi-forum litigation (seat-court set-aside proceedings and enforcement actions in other states), making the anti-suit injunction inconsistent with the Convention’s design and comity principles.
- The court vacated the contempt order to the extent it depended on the impermissible anti-suit relief.

## Legal Principles

- International anti-suit injunctions are extraordinary and should be used sparingly, particularly where they interfere with a foreign sovereign’s courts.
- Under the New York Convention, the court at the arbitral seat has primary authority over set-aside proceedings, while other contracting states may recognize and enforce awards subject to limited defenses; parallel proceedings are contemplated by this framework.
- Comity and treaty obligations weigh strongly against enjoining foreign litigation that the Convention anticipates as part of the award-recognition and award-annulment system.
- A contempt sanction predicated on an improper injunctive restraint may be vacated insofar as it rests on that invalid restraint.

## Conclusion

The Fifth Circuit held that, consistent with comity and the New York Convention’s multi-jurisdictional scheme, a U.S. court generally may not bar a party from pursuing foreign proceedings to annul an arbitral award or to seek foreign anti-enforcement relief, and it therefore vacated the preliminary anti-suit injunction and the related contempt order to the extent necessary.


Karaha Bodas Co., L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 335 F.3d 357 (5th Cir. 2003)