United States District Court, N.D. California
ORDER GRANTING ANTI-SUIT INJUNCTION
VINCE CHHABRIA, District Judge.
This case stems from a dispute between Gilbane Federal, formerly known as ITSI Gilbane Company ("Gilbane"), a United States company, and United Infrastructure Projects FZCO ("UIP FZCO"), a foreign corporation with a principal place of business in Dubai, United Arab Emirates. Gilbane is the prime contractor on a construction contract for a U.S. Naval base project in Djibouti, Africa. Several months after entering into its contract with the United States, Gilbane subcontracted with UIP FZCO, which then transferred its responsibilities under the subcontract to two other companies, UIP Lebanon and UIP Djibouti. In June 2014, Gilbane terminated the subcontract with UIP FZCO due to a contractual dispute, and, a few weeks later, sued UIP FZCO in the Northern District of California for breach of contract, express contractual indemnity, and declaratory relief. A few days later, UIP Lebanon sued Gilbane in a Lebanese court, UIP FZCO apparently also sued Gilbane in a Lebanese court, and UIP Djibouti has either sued or threatened to sue Gilbane in a Djiboutian court. Gilbane has now moved for an anti-suit injunction, asking this Court to enjoin UIP FZCO, UIP Lebanon and UIP Djibouti from pursuing the foreign litigation, primarily on the ground that a forum selection clause in the subcontract between Gilbane and UIP FZCO mandates that all disputes arising out of the subcontract be litigated in a court of Gilbane's choice, which is the Northern District of California. Gilbane's motion for an anti-suit injunction is granted.
In September 2013, Gilbane entered into a contract with the United States, with Gilbane agreeing to perform electrical and mechanical renovations at Camp Lemonnier, a U.S. Naval base located in Djibouti, Africa. On January 21, 2014, Gilbane entered into a subcontract with UIP FZCO, in which UIP FZCO took on essentially the entire scope of work under the contract. For purposes of the anti-suit injunction, there are three relevant sections of the subcontract, the most important of which is Section 13, which governs disputes between the parties and contains the forum selection clause. Section 13(B) reads as follows:
As to any other unresolved dispute, controversy or Claim, ("Dispute") between the CONTRACTOR and Subcontractor, the parties shall first seek to resolve it through good faith negotiation involving senior management of the Parties. Thereafter, CONTRACTOR shall determine whether the Dispute shall be resolved by: 1) in accordance with the rules of the American Arbitration Association ("AAA") (including as an option the rules of the AAA's International Center for Dispute Resolution), before one or three arbitrators (chosen by the parties and the AAA in accord with AAA rules) in a given location, 2) by location specified by CONTRACTOR, or 3) through litigation in a United States or other court of competent jurisdiction of CONTRACTOR's choice, with or without a jury.
Hogue Decl. Ex. A at p. 50, § 13. Section 13(E) then stipulates that Gilbane provided consideration for the forum selection clause; it reads, "Subcontractor agrees that CONTRACTOR has provided material consideration for these Section 13 Formal Disputes terms and conditions, and that CONTRACTOR is particularly concerned as to the proper choice of forum." Id.
In addition to Section 13, Sections 17 and 14 of the Subcontract are also pertinent to this dispute. Section 17(B), entitled "Governing Law and Language, " states, "The validity, interpretation and performance of this subcontract shall be governed and construed in accordance with California law." Hogue Decl. Ex. A at p. 52, § 17. And Section 14 covers lower tier subcontracting, reading as follows:
Neither the rights nor duties of this Subcontractor (nor the payments to become due hereunder) may be assigned or delegated without the written consent of the CONTRACTOR. Subcontractor shall not further subcontract the whole or any part of the Subcontract without prior written consent of the CONTRACTOR, which shall not be unreasonably withheld. When Subcontractor does subcontract any of the Work, or procure any materials or services for the Work, from others, Subcontractor shall incorporate all required FAR [Federal Acquisition Regulation] and other clauses in it subcontracts with such sub-subcontractors and vendors, and Subcontractor shall otherwise comply with all FAR and Prime Contract requirements as to such subcontracting.
Hogue Decl. Ex. A at 51, § 14.
Nonetheless, without Gilbane's consent and in contravention of this provision, on January 29, 2014, UIP FZCO entered into downstream purchase orders with UIP Lebanon and UIP Djibouti, two companies which appear to be closely intertwined with UIP FZCO, most particularly due to their common ownership. Mazin Sadiq, who owns 80 percent of UIP FZCO's stock, represented to Gilbane that he owns 51 percent of UIP Lebanon's stock, and that UIP Djibouti is "more or less for legal representation." Leineke Decl. Ex. A. In addition to their common ownership, the three companies appear to share assets and accounting practices.
In late June 2014, Gilbane terminated its Subcontract with UIP FZCO due to disputes over UIP FZCO's performance. Then, roughly one week later, Mazin Sadiq represented to Gilbane that UIP FZCO had therefore terminated its purchase orders with UIP Lebanon and UIP Djibouti. On July 18, 2014, Gilbane sued UIP FZCO for breach of contract, express contractual indemnity, and declaratory relief as to the propriety of the subcontract termination. That case - the specifics of which are not related to this anti-suit injunction - is currently pending before this Court.
Three days later, on July 21, 2014, UIP Lebanon filed suit against Gilbane in a Lebanese court seeking damages related to the termination of its subcontract with UIP FZCO. Further, it appears UIP FZCO has brought legal action against Gilbane in a Lebanese court, as Gilbane obtained a copy of a Lebanese court order preventing Gilbane from drawing down on its letter of credit from the Bank of Beirut, which had secured UIP FZCO's performance obligations under its subcontract with Gilbane. In addition, over the last three months, Gilbane has received at least three emails from representatives of UIP Djibouti in which UIP Djibouti has threatened to sue Gilbane in a Djiboutian court. Based on an email exchange between Gilbane's attorney and UIP FZCO's U.S. counsel, it appears as if UIP FZCO, UIP Lebanon, and UIP Djibouti are willing to dismiss the foreign actions if Gilbane dismisses its suit against UIP FZCO before this Court. Merrell Decl. Ex. I.
Gilbane has now asked the Court to enjoin all three parties from pursuing any litigation against it in a foreign forum if that litigation arises out of disputes related to the project or to the subcontract between Gilbane and UIP FZCO, as all such disputes should be subject to the subcontract's forum selection clause. ...