## Facts

- A Brazilian distributor (Tecnimed) and a U.S. medical-systems company (GEMS-IT) operated under distribution agreements containing broad arbitration clauses.
- A dispute arose over the distribution relationship, including alleged payment and interference issues.
- GEMS-IT initiated arbitration in 2002 pursuant to the agreements.
- Tecnimed filed a related civil action in Brazil against GEMS-IT and a Brazilian GE affiliate (GE Brasil) asserting claims arising from the same distribution relationship.
- Tecnimed also sought to stay the arbitration in New York; the dispute proceeded in federal court after removal.
- The federal district court compelled arbitration and issued an anti-suit injunction directing Tecnimed to take all steps necessary to cause dismissal of the Brazilian action.
- Tecnimed did not secure dismissal in Brazil; it sought only a suspension of the case, which the district court found noncompliant.
- The district court ordered Tecnimed to execute a joint dismissal petition and ordered Tecnimed’s president (Werlang) to appear; Tecnimed did not sign and Werlang did not appear.
- The district court held Tecnimed and Werlang in civil contempt and imposed escalating per diem fines, later increased to $5,000 per day, jointly and severally.

## Issues

1. Whether a federal court may enjoin a party from prosecuting foreign litigation to protect and enforce an order compelling arbitration, including where the foreign action names a related non-signatory affiliate.
2. Whether the elements of civil contempt were satisfied for failure to comply with orders to dismiss the foreign action and to appear, and whether contempt sanctions were within the court’s discretion.
3. Whether Werlang’s individual appeal had to be dismissed because the notice of appeal did not make his intent to appeal objectively clear.
4. Whether escalating per diem contempt fines were properly calibrated to civil contempt’s coercive or compensatory purposes rather than punishment.

## Decision

- The court affirmed the anti-suit injunction as a proper means to enforce and protect the judgment compelling arbitration.
- The court affirmed the contempt findings (liability) against Tecnimed and Werlang, concluding the orders were clear, noncompliance was proven by clear and convincing evidence, and reasonable diligent compliance efforts were lacking.
- The court dismissed Werlang’s individual appeal for lack of an objectively clear notice of appeal identifying him as an appellant.
- The court remanded for reconsideration of the amount and structure of the per diem fines to ensure the sanctions served coercive or compensatory civil purposes and were not excessive or punitive.

## Legal Principles

- A foreign anti-suit injunction may issue sparingly, but may be warranted to protect a federal court’s jurisdiction or to enforce its judgments, including an order compelling arbitration.
- Substantial similarity of parties and issues can justify an anti-suit injunction even when the foreign action includes a related non-signatory affiliate, where the foreign claims arise from the same dispute and would frustrate the arbitration order.
- Civil contempt requires: (1) a clear and unambiguous order, (2) clear and convincing proof of noncompliance, and (3) a lack of reasonably diligent compliance efforts.
- Civil contempt sanctions must be coercive (to compel compliance) or compensatory (to remedy losses), not punitive; sanction amounts must be evaluated against those permissible purposes.
- A notice of appeal must identify the appealing party with objective clarity; otherwise, the appellate court lacks jurisdiction over that party’s appeal.

## Conclusion

The Second Circuit enforced arbitration by upholding an injunction stopping parallel foreign litigation that threatened the arbitration order, sustained civil contempt findings for disobeying clear compliance directives, dismissed an inadequately noticed individual appeal, and required the district court to reassess daily fines to align with civil contempt’s coercive or compensatory limits.


Paramedics Electromedicina Comercial, Ltda. v. GE Med. Sys. Info. Techs., Inc., 369 F.3d 645 (2d Cir. 2004)