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What To Do With Competing Lawsuits in Australia and Houston

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I had the opportunity to make oral arguments before the Thirteenth Court of Appeals on April 20, 2012. The case involved a dismissal by the lower court of the entire case based on a motion a filed on behalf of my clients. The Houston trial court dismissed the case on the basis of a common law doctrine called forum non conveniens. My clients were Australian companies, and they formed a joint venture with a US based company. My clients’ software technology was licensed to the joint venture company to sell the technology in the North American market. Shortly after the joint venture was formed and my clients sent money to be utilized by the joint venture company, problems developed. The money was not accounted for and there were no sales of the technology.

Realizing there was a problem, my clients sued in Australia. The company with whom the joint venture was formed made an appearance in the Australian court–never contesting jurisdiction. After realizing its mistake, the company decided to abandon the Australian case in favor of its new case it filed in Houston against my Australian clients. Now, we had two competing lawsuits going-the first by my Australian clients in Australia and the second was by the US company against my clients in Houston.

When faced with that circumstance, the law allows my clients to ask the Houston trial court to dismiss the case in favor of the Australian case for a host of reasons, which largely depend on where the parties are located, where the evidence is easily found, whether the foreign court has jurisdiction over the defendants, whether the foreign court’s proceedings are fair, and how much of a burden the case will impose on the Texas courts.

After taking these and other factors into consideration, the Houston court agreed with my clients’ position and dismissed the case brought by the US based company. It then filed an appeal. After the appeal was filed, another twist developed. The Australian court entered a judgment against the US based company and terminated the contract between it and my Australian clients. What does one do now?

I asked the court of appeals to dismiss the appeal as being moot. Once there is a judgment from a foreign court on exactly the same subject matter, the Texas courts should give that judgment due deference and not litigate that position over again. That was my argument to the court of appeals.

The oral arguments covered many aspects of what the Australian court did in rendering the judgment, what factors the Houston trial court used to base its decision for dismissal on, and what evidence was appropriate for the trial court to consider. It is not every day that justices on the court of appeals face these facts, so the justices asked interesting and tough questions to flesh out the issues.

The lesson from this case, though, is that parties to contracts–domestic or international–need to contractually agree to litigate disputes in one forum, with the application of particular law, and with the parties consenting to the forum’s jurisdiction. Although the agreement between my clients attempted to do that, the contract was not precise enough.

Now, we await the appellate decision.

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