Pilkington Bros. PLC v. AFG Industries Inc., Civ. A. No. 83-561 MMS.

• Decision Date: 28 February 1984
• Docket Number: Civ. A. No. 83-561 MMS.
• Citation: 581 F. Supp. 1039
• Parties: PILKINGTON BROTHERS P.L.C., Plaintiff, v. AFG INDUSTRIES INC., Defendant.
• Court: U.S. District Court — District of Delaware

581 F. Supp. 1039

PILKINGTON BROTHERS P.L.C., Plaintiff, v. AFG INDUSTRIES INC., Defendant.

Civ. A. No. 83-561 MMS.

United States District Court, D. Delaware.

February 28, 1984.

Charles F. Richards, Jr., Richards, Layton & Finger, Wilmington, Del., for plaintiff; Joel M. Freed, and Joseph R. Magnone, Burns, Doane, Swecker & Mathis, Alexandria, Va., of counsel.

Stephen P. Lamb, Skadden, Arps, Slate, Meagher & Flom, Wilmington, Del., for defendants; John C. Dods, James T. Newsom, and Peter E. Strand, Shook, Hardy & Bacon, Kansas City, Mo., of counsel.

OPINION

MURRAY M. SCHWARTZ, District Judge.

This is an action for declaratory and injunctive relief under 28 U.S.C. §§ 2201-02 (1976) with jurisdiction based upon diversity, and an application for an order confirming an arbitral award under 9 U.S.C. § 201 (1982). The Court has before it plaintiff's motion for a preliminary injunction and defendant's motion for summary judgment. The central issue embodied in those motions is one of first impression: whether an American court should issue a preliminary injunction duplicative of an ex parte interim injunction issued by a foreign court based solely on grounds of international comity and without regard to the merits of the underlying dispute. For reasons which follow the Court concludes that international comity does not require issuance of the requested preliminary injunction. As a consequence, summary judgment will be granted to defendant.

I. Background

Plaintiff Pilkington Brothers P.L.C. ("Pilkington") is a British corporation with its principal place of business in England. Defendant AFG Industries, Inc. ("AFG") is a Delaware corporation. Pilkington licensed to ASG Industries, Inc. ("ASG"), a predecessor to AFG, an interest in certain technology involved in making "float glass."¹ Its licensing agreements provide that disputes arising under the agreements should be arbitrated in London in accordance with English law. Arbitration, in fact, has for some time been proceeding in a dispute over the failure of AFG to make royalty reports and payments.

A more recently commenced second arbitration bears an immediate relationship to this action. Pilkington grew concerned that AFG was contemplating selling the float glass technology which is covered in its license agreements. Two events in particular gave rise to Pilkington's apprehension. First, AFG formed a new subdivision, AFG Technologies, Inc., which Pilkington believed AFG intended to use to export Pilkington's float glass technology world-wide. Second, AFG allowed representatives of a Portuguese company, Covina Companhia Vidreira Nacional SARL ("Covina"), to tour AFG's float glass plant. This "Covina incident," Pilkington contends, violated AFG's licensing agreements. AFG admits that Covina officials toured its plant but denies that the incident violated its license agreements.

Pilkington brought its misgivings before an arbitration panel in England. On August 25, 1983, motivated by fears that its float glass technology would be exposed, Pilkington requested an interim injunction from the High Court of Justice, Queens Bench Division, Commercial Court, pursuant to section 12(h) of England's Arbitration Act of 1950.² The High Court held a hearing on August 26, 1983. Although Pilkington supplied AFG's London counsel with copies of its filings, counsel for AFG did not attend the hearing.³ The High Court entered an ex parte order that same day restraining AFG from doing the following acts:

(a) from copying, reproducing, transmitting or communicating to any third party whomsoever and in particular to any director officer or employee of AFG Technologies Inc. who is not also an authorized person as defined in subparagraph (c) below any drawings, diagrams, manuals, memoranda or other technical documents whatsoever obtained by the Defendants from the Plaintiffs pursuant to the License Agreements referred to in paragraph 3 of this Order;

(b) from disclosing to any third party whomsoever and in particular to any director, officer or employee of AFG Technologies Inc. who is not also an authorized person as defined in subparagraph (c) below any technical information or know-how derived by the Defendants under the License Agreements referred to in paragraph 3 of this Order, whether contained in drawings, reproductions of drawings, written reports, letters, memoranda notes or in any other form whatsoever or acquired from observation of machines, processes or activities in plants of the Plaintiffs or otherwise howsoever;

(c) from causing or permitting the inspection of or access to such parts of the Defendants' production facilities in which the operations which are the subject matter of the License Agreements referred to in paragraph 3 of this Order are practiced or carried on by any person whomsoever except for authorized persons (that is to say, the Defendants' own employees actually employed in such production facilities, the Defendants' own management, legal, supervisory, engineering, technical and research employees, the employees of suppliers and contractors employed to repair and maintain such production facilities, and duly authorized governmental and regulatory authority officials, from whom in each case a written undertaking of confidentiality in the form set out in the Fourth Schedule to each of the License Agreements referred to in paragraph 3 of this Order has been obtained by the Defendants);

(Doc. 1, Exhibit F). The High Court extended to AFG the opportunity to "apply on 48 hours notice to the plaintiffs to vary or discharge" the Court's injunction. (Id.). AFG has, apparently, still not made such an application.⁴

II. Preliminary Injunction

Plaintiff seeks a preliminary injunction from this Court that will exactly track the wording of the interim injunctive order issued by the English High Court of Justice. Plaintiff does not ask this Court to decide the merits of its underlying trade secret and contract dispute with defendant or to craft its own injunction based on that dispute. (See Doc. 29 at 31-32). Rather, relying solely on principles of international comity, plaintiff requests this American court to duplicate the English court's order because plaintiff fears that the English order affords it inadequate protection.

This Court earlier denied Pilkington's request for a temporary restraining order. The Court was not convinced that AFG would violate the High Court's order and therefore held that Pilkington failed to demonstrate irreparable injury. Pilkington Brothers P.L.C. v. AFG Industries, Inc., No. 83-561 (D.Del. Sept. 12, 1983) (order denying temporary restraining order). For purposes of the present preliminary injunction motion and motion for summary judgment, the parties stipulated that AFG would violate the High Court injunction and cause irreparable harm to Pilkington.⁵ The issue now before the Court is thus whether an American court must duplicate a foreign interim injunction, without reference to the underlying dispute, where there are ongoing and continuous violations of that foreign injunction.

I conclude that principles of international comity do not require, and in fact militate against, the issuance of a duplicative order that would interject this Court into the arbitration dispute now before the English courts and the English arbitration panel.

Unlike decisions by American courts, those issued by foreign jurisdictions are not entitled to automatic recognition or enforcement in the United States. Nonetheless, an American court will under principles of international comity recognize a judgment of a foreign nation if it is convinced that the parties in the foreign court received fair treatment by a court of competent jurisdiction "under a system of jurisprudence likely to secure an impartial administration of justice between the citizens of its own country and those of other countries...." Hilton v. Guyot, 159 U.S. 113, 202, 16 S.Ct. 139, 158, 40 L.Ed. 95 (1895); see also Bata v. Bata, 39 Del. Ch. 258, 163 A.2d 493 (1960); Restatement (Second) of Conflict of Laws § 98 (1971). As Judge Aldisert explained in Somportex Ltd. v. Philadelphia Chewing Gum Corp., 453 F.2d 435 (3d Cir.1971), cert. denied, 405 U.S. 1017, 92 S.Ct. 1294, 31 L.Ed.2d 479 (1972):

Comity is a recognition which one nation extends within its own territory to the legislative, executive, or judicial acts of another. It is not a rule of law, but one of practice, convenience, and expediency. Although more than mere courtesy and accommodation, comity does not achieve force of imperative or obligation. Rather, it is a nation's expression of understanding which demonstrates due regard both to international duty and convenience and the rights of persons protected by its own laws.

Id. at 440.

In the usual case parties seek enforcement in this country of foreign money judgments, not injunctive orders. According to the Restatement (Second) of Conflict of Laws, however, the principle of international comity should not be limited to money judgments.⁶ The Restatement's authors reason that because American courts enforce injunctive decrees of sister states,

it can therefore be assumed that a decree rendered in a foreign nation which orders or enjoins the doing of an act will be enforced in this country provided that such enforcement is necessary to effectuate the decree and will not impose an undue burden upon the American court and provided further that in the view of the American court the decree is consistent with fundamental principles of justice and of good morals.

Restatement (Second) of Conflict of Laws § 102 comment g (1971). This Court has no reason to quarrel with the Restatement's position. Nonetheless, plaintiff is not entitled to its requested relief.

The parties have extensively briefed the issue of whether the High Court's order is "final" for res judicata purposes and the issue of "reciprocity" — that is, the issue of whether an English court would recognize an...