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The United States District Court for the Southern District of New York has refused to enjoin litigation proceedings in Chile involving an American telecommunications company and an international reseller, since the Chilean proceedings do not disturb the parties’ written agreement to arbitrate.
In Comverse, Inc. v. American Telecommunications, Inc., No. 06 Civ. 6825(PKL), 2006 WL 3016315 (S.D.N.Y. Oct. 23, 2006), Comverse, an American provider of software and telecommunications systems, moved to compel arbitration of a dispute with American Telecommunications, Inc. (ATI), a Chilean distributor. ATI, however, had previously filed a claim with the Chilean Competition Tribunal, a specialized court in Chile that investigates claims and refers certain cases for prosecution by the Chilean National Economic Prosecutor.
The principal question in the case was whether or not the contractual right to arbitrate would be disturbed by the Chilean proceedings. The Court determined that there was no conflict between the Chilean action and the pending arbitration, since the Chilean action was conducted through a separate prosecuting authority. However, since ATI had not “fail[ed], neglect[ed], or refus[ed]…to arbitrate” the claim, it was not necessary to compel ATI to arbitrate. See Downing v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 725 F.2d 192, 195 (2d Cir. 1984); 9 U.S.C. §4.
Comverse also sought a preliminary injunction enjoining ATI from continuing with the Chilean action, pending the outcome of arbitration. Again, the Court rejected Comverse’s claim, finding that the tribunal had a “stated purpose of safeguarding the freedom of economic markets in the public interest.” Any impact those proceedings might have on private parties would be purely “incidental.”
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