The subject for consideration at this Ninth Colloquium, conservatory and provisional measures in international arbitration, has an enduring attraction and interest for two reasons: it has a substantial practical importance to the efficacy of international arbitration as a procedure for the settlement of commercial controversies, and at the same time the subject arouses a theoretical interest because it marks one of the important intersections between arbitration and national judicial systems. Whatever one's views may be as to the degree to which international arbitration ought to be free of the constraints imposed by juridical parochialism, it remains the case that the ultimate sanctions for the decisions taken by arbitral tribunals lie in the hands of the judges of national courts wielding coercive power that arbitrators do not now, and likely never will, possess.

The provisional remedies, to employ the usual American term, that will be dealt with in this paper are two: the preliminary injunction and attachment.1 An injunction is a judicial order addressed to a party over whom the court has jurisdiction that commands, or prohibits, the performance of an act, the adjective "preliminary" denoting that such a remedy is given in advance of a determination of the merits of the controversy. An attachment, by contrast, is a judicial order normally addressed to a third party, almost invariably a stranger to the controversy, requiring that party to turn over property of the defendant to an official, who is to hold the property subject to further order of the court. In the case of an attachment, it is the court's jurisdiction or power over the obligor that permits the court to act. The common objects of an attachment are debts, such as bank balances or accounts payable, owed to the defendant.

These two remedies have practical objectives.2 By requiring or prohibiting action by a defendant in advance of litigation on the merits, an injunction primarily serves to preserve the status quo pending a determination of the merits, and attachment has as its usual objective to ensure the availability of a sum against which a later judgment (or arbitral award) can be satisfied. In an age when a simple telex can move millions of dollars, the availability of such provisional relief can be decisive for the effective resolution of a controversy.3

Given the practical importance of provisional relief, one might suppose that vaunted "Anglo-Saxon pragmatism" in the hands of American judges would early have evolved and consistently applied a jurisprudence adequate to the task. The development has been more uneven. American law on the subject reveals complications and inconsistencies, reflecting, at least in part, the structure and history of the American judicial system and its ambivalent relation to arbitration and perhaps suggesting, as well, what an observer might be tempted to identify as a measure of ideological confusion. Yet the working out by American courts of the problems associated with the application of provisional remedies in arbitrable controversies might well persuade that same observer that, in the main, a reasonably satisfactory balance has been struck. It is the purpose of this paper to examine these points briefly. [Page93:]

I. Matters of structure and history

The judicial system in the United States is not a unitary whole, but consists of the separate judicial systems of 50 states, each with an array (differing from state to state) of courts of first instance and one or more levels of appellate courts, functioning side by side with a system of federal courts. The lowest level of federal court is the District Court, exercising jurisdiction over a geographic area that consists of a single state or a portion of a state. Appellate jurisdiction in the federal system is exercised by twelve regional Courts of Appeals, these regions being referred to as "circuits". The Courts of Appeals not infrequently express differing positions on particular legal issues; as we shall see, that has been the case with respect to the availability of preliminary injunctions in controversies subject to arbitration. Atop both the state and federal court systems is the United States Supreme Court, with largely discretionary power to hear cases within its jurisdiction coming to it from both state and federal courts.4

The jurisdiction of the federal courts, including the Supreme Court, is limited by the Constitution and by statute.5 As a consequence, most disputes of a commercial character, including the great bulk of suits for breach of contract, may be heard by a federal court only if the parties to the controversy are of diverse US state or foreign citizenship, for in the main the substantive law of commerce and contract in the United States is state, not federal law.6

Only with the enactment of the Federal Arbitration Act in 1925 did national American law begin to reflect the support of arbitration that is now so characteristic of it.7 State law continued to be relevant and, as will be seen, remains so. The Federal Arbitration Act did not itself confer jurisdiction on the federal courts to hear cases and was initially viewed as a purely procedural reform applicable only in cases otherwise properly before a federal court (these would normally be cases in which the parties were of diverse citizenship). The legislation enacted in 1970 to implement American adherence to the New York Convention8 for the first time made the circumstance that a controversy was to be resolved by arbitration a basis of federal court jurisdiction. By virtue of this legislation, the federal courts now have jurisdiction of any case to which the New York Convention applies,9 and if suit in such a case is commenced in a state court, it may be transferred ("removed" is the term of art) at any time prior to trial to the federal District Court located where the state court suit is pending.10

In consequence of doctrinal developments beyond the scope of this paper, the original view that the Federal Arbitration Act was applicable only to cases in a federal court and had no pertinence to proceedings in state courts, has been reversed. It is the current position that the Federal Arbitration Act (including Chapter 2 which implements American adherence to the New York Convention), and the jurisprudence which has developed around it, constitute national law applicable in state as well as federal court proceedings, displacing state law to the extent that it is in conflict with the federal [Page94:] law of arbitration.11 The substance of that federal law may be summarily stated: arbitration is strongly favored, arbitration clauses are to be broadly construed, and any uncertainty as to whether a given claim is subject to arbitration is to be resolved in favor of arbitration 12 The scope of the almost revolutionary pro-arbitration developments of the last two decades can be seen in a series of decisions holding that even claims which invoke statutes expressive of national public policy of great importance are subject to arbitration if the parties have contracted for it.13 As one leading decision put the matter, the role of the court is to "move the parties to an arbitrable dispute out of court and into arbitration as quickly and easily as possible".14 This expansion of the role of arbitration is not confined to international arbitration, although that was the origin of it, nor has it distinguished arbitration between business entities from controversies involving private parties not themselves commercial actors. 15 In both of these respects American law is more favorably disposed to arbitration than is much law elsewhere.

Notwithstanding these developments, state law remains important to the subject of the Colloquium for two reasons. First, although there is an independent federal jurisprudence on the right to an injunction, the provisional remedy of attachment remains a creature of state law, "available under the circumstances and in the manner provided by the law of the state where the district court is held, existing at the time the remedy is sought..."16 Moreover, if the contract subject to arbitration also contains a choice of law clause that identifies the law of an American state and if that choice of law is construed to include a reference to the procedural or arbitration law of the state, then as a result of the recent decision in Volt Information Sciences, Inc. v. Board of Trustees of Stanford University17", other features of state law that could influence more broadly the availability of provisional remedies may come into play. It is not yet clear what significance the Volt decision will have on procedural aspects of an international arbitration. For example, is it to be expected that a contractual choice of New York law will be construed to incorporate a reference to the recent amendment of the New York arbitration statute expressly authorizing an attachment in aid of arbitration if the award would otherwise be rendered ineffectual?18 In any event, the construction given to the choice of law clause in Volt, that it incorporates local arbitration law, would seem particularly difficult to justify in the context of an international contract.

III. Doctrinal considerations

The fundamental problem that has clouded American law concerning the availability of provisional remedies in cases where the merits [Page95:] of the dispute are subject to arbitration is that these remedies conventionally require at least a preliminary assessment of the merits of the legal claim advanced by the party seeking the interim relief. Because the law of attachment is state law, there is variation from state to state. To take New York procedure as one example, an attachment is available only where "the plaintiff has demanded and would be entitled, in whole or in part, or in the alternative, to a money judgment against one or more defendants..."19 The showing required to satisfy that threshold requirement inevitably injects the court to which application for an order of attachment is presented into the merits of the controversy.20 As for preliminary injunctive relief, under the standard applied in the Second Circuit (the formulations vary somewhat from one federal Circuit to another) the applicant for relief must show (i) "irreparable harm", and (ii) either (A) "likelihood of success on the merits" or (B) alternatively, "sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting preliminary relief".21 The inquiry required by this standard injects the federal District Court even more explicitly into the merits of the case.22

The necessity of this inquiry into the merits of the claim contrasts sharply with a central tenet of the strongly pro-arbitration stance of modern American jurisprudence, which insists that issues tending to the merits are solely for the arbitrators, not the courts, whose primary function, as noted above, is to move the parties to an arbitrable controversy into arbitration as rapidly as possible. Allied to that issue is the broader concern expressed by some judges that any judicial intervention at all would be inconsistent with the perceived command of the New York Convention. It is against the background of this tension that the current state of American law must be considered.

III. Attachment

The leading cases that deny the applicability of attachment in connection with a controversy subject to the New York Convention are a 1974 decision by the federal Court of Appeals for the Third Circuit and a 1982 decision by the Court of Appeals of New York, the highest court of the state. In each of the cases the applicant for attachment was quite evidently seeking to frustrate arbitration of the controversy in preference to a judicial resolution of it, a circumstance that may have influenced the tenor of the opinions.

In the earlier case the disputants were a Pennsylvania corporation, McCreary Tire & Rubber Co., and an Italian corporation, CEAT, S.p.A., and the subject of dispute was a claimed breach of a distribution agreement which provided for arbitration. McCreary had brought a previous suit against CEAT in the federal District Court in Massachusetts, which had ordered arbitration and stayed the suit. Nothing daunted, McCreary commenced a new litigation in the federal District Court in western Pennsylvania and in connection with it obtained an attachment of sums owed to CEAT by a Pittsburgh bank. CEAT unsuccessfully applied to the District Court to dissolve the attachment and to dismiss the complaint or alternatively to transfer the case to the District Court in Massachusetts.

The Court of Appeals reversed the judgment of the District Court and remanded the case for entry of an order discharging the attachment and referring the claims to arbitration pursuant to the contract23The rationale of the decision was that the language of Article 11(3) of the New York Convention, viz., that the court "shall, at the request of one of the parties, refer the parties to arbitration", was mandatory and [Page96:] that it was therefore an error to refuse to stay the suit. On the point of the attachment, the Court held that McCreary's resort to suit and attachment

is a violation of McCreary's agreement to submit the underlying disputes to arbitration... Quite possibly foreign attachment may be available for the enforcement of an arbitration award. This complaint does not seek to enforce an arbitration award by foreign attachment. It seeks to bypass the agreed upon method of settling disputes. Such a bypass is prohibited by the Convention... The Convention forbids the courts of a contracting state from entertaining a suit which violates an agreement to arbitrate. Thus the contention that arbitration is merely another method of trial, to which state provisional remedies should equally apply, is unavailable... The obvious purpose of the enactment of [Chapter 2 of the Federal Arbitration Act, implementing American adherence to the Convention], permitting removal [to the federal District Courts] of all cases falling within the terms of the treaty, was to prevent the vagaries of state law from impeding its full implementation. Permitting a continued resort to foreign attachment in breach of the agreement is inconsistent with that purpose.24

The McCreary decision represents an extreme statement of the position that local provisional remedies are simply and in principle inapplicable in a case subject to arbitration. There is no trace of any consideration of whether, in the circumstances, an attachment might have assisted the eventual enforcement of the award, thus rendering the arbitral process more efficacious. The rationale of the decision appears to preclude any such analysis.

The decision of the New York Court of Appeals was rendered in the case of Cooper v. Ateliers de la Motobécane, S.A.25 Unlike McCreary, where the decision by the three-judge panel was unanimous, the 4-3 decision in Cooper provoked a sharp dissent. The essence of the majority opinion by Chief Judge Cooke is summarized in the two sentences with which his opinion begins.

The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards was drafted to minimize the uncertainty of enforcing arbitration agreements and to avoid the vagaries of foreign law for international traders. This policy would be defeated by allowing a party, contrary to contract, to bring multiple suits and to obtain an order of attachment before arbitration.26

The plaintiff Cooper and others had contracted with the French defendant to establish a New York corporation to distribute the defendant's products. The contract provided that the defendant would subsequently repurchase plaintiff's shares in the New York corporation and that any dispute over valuation of the shares was to be resolved by arbitration in Switzerland. The plaintiff tendered his shares, the valuation was not agreed, and the defendant demanded arbitration. In a prior suit Cooper had sought a stay of arbitration, which had been refused by the court of first instance,27 granted by the Appellate Division, and then refused again by the Court of Appeals. While that suit was pending Cooper commenced another action for a money judgment and obtained an ex parte order of attachment, which was confirmed by the Supreme Court after the Appellate Division had granted the stay of arbitration in the first case. After the reversal of the stay by the Court of Appeals, on a renewed motion by the defendant the Supreme Court dismissed the complaint and vacated the attachment. A divided Appellate Division again reversed the lower court, holding that pre-arbitration attachment should be available. It was that decision that the Court of Appeals reversed in 1982.

In his opinion in Cooper Chief Judge Cooke noted that domestic New York law has long favored arbitration as a mechanism for dispute resolution, the desirability of which "is enhanced in the context of international trade".28 He took note of the history of efforts to promote the effectiveness of international arbitration, in which process the New York Convention was the latest step. He noted that, unlike the Geneva Conventions of the 1920s, the New York Convention places the burden of [Page97:] establishing the invalidity of an award on the party opposing enforcement and limits the grounds for objection. He questioned whether attachment is even necessary in the arbitration context, given the implicit assumption of good faith in the contracting process of which arbitration is a part, the high degree of voluntary compliance with awards, and the availability of world-wide enforcement as a result of widespread adherence to the New York Convention. "Moreover, parties are free to include security clauses (e.g., performance bonds or creating escrow accounts) in their agreements to arbitrate."29

The more important objection to pre-arbitration attachment identified in the decision was "the injection of uncertainty-the antithesis of the UN Convention's purpose-that would occur by permitting attachments and judicial proceedings. Once again, the foreign business entity would be subject to foreign laws with which it is unfamiliar".30 Relying heavily on the McCreary decision, Judge Cooke saw in the controversy before him an illustration of the evils to which McCreary had referred: two lawsuits, although the underlying dispute was subject to arbitration. Judge Cooke also saw a potential risk to American business entities engaged in international commerce were other countries to follow the lead of the United States and allow attachments in Convention cases: "The essence of arbitration is resolving disputes without the interference of the judicial process and its strictures. When international trade is involved, this essence is enhanced by the desire to avoid unfamiliar foreign law."31

Three judges dissented from the decision in Cooper. Their view was that nothing in the Convention suggested that it was intended to foreclose attachment when otherwise permitted and that there was no reason to distinguish the attachment specifically permitted in maritime cases by the Federal Arbitration Act from attachment in non-maritime cases under state law.

As Chief Judge Cooke himself noted, not all American courts have followed McCreary. The principal contrary authority is Carolina Power & Light Co. v. Uranex,32 a decision in a case involving a dispute under a contract for delivery of uranium concentrate by Uranex, a French groupement d' intérêt économique. Following dramatic price increases, Uranex would not or could not deliver at the contract price and requested renegotiation; the plaintiff Carolina Light refused and filed suit against Uranex in California by attaching an $85 million debt owed to Uranex by Homestake Mining Co. Under the contract, disputes were to be arbitrated in New York, and after Carolina brought suit, the arbitration was commenced. Uranex applied to vacate the attachment, relying on McCreary. The District Court declined to follow that decision, finding its reasoning unconvincing.33The District Court noted that there was no reference to prejudgment attachment in either the Convention or implementing legislation. The Convention requirement that a court must "refer" parties to arbitration if a valid contract so provides, was not seen as excluding all exercise of judicial jurisdiction, just as in the domestic context under the Federal Arbitration Act a court may retain jurisdiction of a case after ordering the parties to arbitration.

The conflict of decisions has not been resolved.34 The United States Supreme Court has not spoken on it. In New York state, notwithstanding a statutory amendment in 1985 explicitly authorizing an order of attachment [Page98:] "upon the ground that the award... may be rendered ineffectual without such provisional relief",35 the most recent New York decision followed Cooper and held that attachment continued to be unavailable in a case subject to the New York Convention.36 If it were correct to say that the New York Convention precludes pre-award attachment (absent a contractual waiver37), then the principle of the supremacy of federal law, including treaties, embodied in Article VI of the United States Constitution, would nullify any New York statute purporting to authorize an attachment.

Decisions in the federal District Court for the Southern District of New York, whose jurisdiction includes the Borough of Manhattan, have generally rejected the McCreary rationale. One example is the decision of Judge Pollack in the Bosnia case.38 The controversy concerned a charter party executed in Italy. The plaintiff first obtained an ex parte attachment in the New York state court, which was modified and confirmed after removal of the case to the federal court. The plaintiff then sought a second attachment against two individuals and eight corporations alleged to be related to the defendant and to have participated in a scheme to hide assets. The defendant responded by moving to vacate the attachment, compel arbitration of the dispute, and dismiss the action. The court denied plaintiff's motion for a second attachment, refused to vacate the first attachment or dismiss the case, and ordered arbitration.

The decision is of interest for several reasons. First, the court had no doubt of its power to order provisional relief pending a foreign arbitration (the place of arbitration was not stated in the decision), noting simply that McCreary was a contrary decision. Second, the court was prepared to take a realistic view of the situation before it.

Plaintiff appears to have a meritorious cause of action for charter hire, to which no defenses have been raised. The defendant has not claimed to be unduly burdened by the order of attachment. Furthermore, the defendant has created some confusion as to its proper corporate name, such that this action was commenced and the first order of attachment issued against a non-existent corporation. In these circumstances, the Court finds that attachment pending arbitration may be a necessity rather than a convenience.39

Third, the court displayed a recognition of the respective roles of the court and the arbitral tribunal, both in declining to grant the second attachment sought ("because it seeks to engage the Court in the merits of the dispute, and further delays the resolution of the merits in the chosen arbitral forum",40 thus frustrating the policy of the Federal Arbitration Act) and in suggesting that if the plaintiff desired to pursue further interim relief, it should direct its application to the arbitrators.

Because attachment is a remedy addressed almost invariably to entities which are strangers to the dispute to be arbitrated and are thus not parties appearing before the arbitrators, it is not to be expected that arbitrators themselves would purport to issue an attachment, which would surely be a vain act. In referring the plaintiff in the Bosnia case to the arbitrators for consideration of any application for additional interim relief, Judge Pollock presumably had in mind the broader point that any application to a court for interim relief after the commencement of arbitration should where possible rest upon prior arbitral consideration of the question. Illustrations of that practice in the American cases are discussed after consideration of the availability of preliminary injunctive relief in arbitration cases.

As the Cooper decision suggests, the parties are free to make explicit contractual provision for [Page99:] provisional remedies, and for certain purposes (for example, to protect intellectual property rights) experience indicates that such provisions are fairly common. It is no doubt often difficult in the amiable atmosphere of contractual agreement to introduce details concerning provisional remedies in the event of future disputes, a difficulty that may go far to explain the relative rarity of such provisions in general. Such provisions, nonetheless, are likely to be of substantial assistance to a party later seeking provisional relief, either from arbitrators or a court. If parties can foresee the need for such relief and are in a position to incorporate such remedies in their agreement, they are well advised to do so, rather than to rely upon the general terms of arbitration rules, such as clause 5 of ICC Rule 8, or upon general principles of contract construction.41

IV. Preliminary injunction

Because any controversy arising in a case to which the New York Convention applies can be brought initially before a federal District Court, and can be removed to a District Court if commenced in a state court, it is the federal court jurisprudence on the availability of a preliminary injunction in an arbitration case that is the more pertinent to the subject of this Colloquium. Like the law regarding attachments in arbitration cases, decisions on the subject of preliminary injunctions are in conflict. The United States Supreme Court has thus far declined to resolve that conflict, although the specific case in which it declined jurisdiction was a domestic dispute.

In that case Merrill Lynch, Pierce, Fenner & Smith, Inc. sought a preliminary injunction against a former employee, McCollum. McCollum's employment contract with Merrill Lynch provided that upon termination of employment McCollum was to take no customer lists with him and was not to solicit Merrill Lynch customers for a period of one year; it also provided for arbitration of any dispute at the request of either party. Alleging that McCollum, who had taken employment with a competitor, had violated the contract by absconding with customer lists and soliciting Merrill Lynch customers, Merrill Lynch brought suit in a Texas state court seeking damages and injunctive relief. After granting a temporary restraining order, the Texas court concluded that the dispute was arbitrable and that it therefore lacked authority to adjudicate it. In consequence, the court terminated the restraining order, denied the requested preliminary injunction and stayed the court suit pending arbitration. The Texas appellate court affirmed the order, concluding that Section 3 of the Federal Arbitration Act precluded issuance of injunctive relief in cases subject to arbitration.42 As Section 3 is the statutory counterpart of Article 11(3) of the New York Convention, the decision is instructive on the issue of the availability of preliminary injunctive relief in a Convention case.43

Application for review to the United States Supreme Court was denied.44 In dissent from the Court's refusal to accept the case, Justice White noted the sharp divergence of view on the subject among the various federal Circuits as well as among the state courts. "Whether the Arbitration Act bars the issuance of a preliminary injunction pending arbitration appears to be a frequently litigated question of considerable importance to the parties to arbitration agreements. The issue is one well worth definitive resolution by this Court."45 Although the Supreme Court has yet to resolve the issue, parties concerned with international arbitration who believe that preliminary injunctive relief should be available in appropriate cases, will take comfort from the fact that for more than 40 years the federal courts in New York City, which hear a disproportionate number of important commercial cases, have [Page100:] held that preliminary injunctions are available in connection with arbitrable controversies."46

The rationale for this approach appears in a 1951 decision by Judge Weinfeld.47 At issue in that case was whether United States involvement in the United Nations "police action" in Korea in June 1950 constituted a "case of war involving the United States" under a provision of the charter party so as to permit the shipowner. Manning, to terminate the charter and repossess the ship (and reap the benefits of greatly increased ocean freight rates). The charter party provided for arbitration, which Manning demanded, and two party-appointed arbitrators were named. Notwithstanding the commencement of arbitration, however, Manning announced that it would seize the ship on its arrival in New York. The charterer, Albatross, then commenced an action to compel arbitration and to enjoin Manning from attempting to take possession of the ship until the arbitrators had rendered their decision.

Manning opposed the application on the ground, among others, that the Arbitration Act conferred no power on the court to grant injunctive relief. The court rejected that argument. It reasoned that although enforcement of an agreement to arbitrate was, to be sure, specific performance of the agreement and an exercise of the court's equity power,

The Courts are not limited in their equity powers to the specific function of enforcing arbitration agreements but may exercise those powers required to preserve the status quo of the subject matter in controversy pending the enforcement of the arbitration provision. To rule otherwise would in effect permit a party to take the law into his own hands while the proceeding is carried on as a result of the specific direction of the Court... It would be an oddity in the law if the Court, after compelling a party to live up to his undertaking to arbitrate, had to stand idly by during the pendency of the arbitration which it has just directed and permit him to assert his "right to breach a contract and to substitute payment of damages for non-performance". The stay is an incident of the power to enforce the agreement to arbitrate."48

The court then considered whether in the circumstances the petitioner was entitled to a preliminary injunction and held that it was: there was a genuine dispute, the contract rights of the charterer were clear, and no ground for termination of the charter was alleged apart from the owner's interpretation of the war clause in the charter. Whether at the end of the day relief other than money damages would be appropriate was held to be irrelevant to the issue of the propriety of an injunction to preserve the status quo. The circumstances of the case did not require any close appraisal of the merits of the dispute or the relative balance of convenience or inconvenience to the parties.

A more recent decision in the same court illustrates current practice in international arbitration cases. The controversy in that case arose under a subcontract providing for ICC arbitration in Paris between the Korean general contractor, Dongsan, and an American subcontractor on a hospital project in Saudi Arabia. Under the subcontract Dongsan had made an advance payment of 20% of the total contractual sum due, secured by a bank letter of guarantee in the full amount of the advance, the guaranteed amount decreasing periodically as work was performed by the subcontractor and paid for by Dongsan. After disputes arose, the subcontractor instituted suit in New York for breach of contract and sought a preliminary injunction restraining Dongsan from calling the letter of guarantee. Dongsan then moved to stay the action pending arbitration. The court granted both motions.49

In the issue of injunctive relief, the court held that the only issue was whether this was a proper case for relief under the well-established Second Circuit standards governing issuance of [Page101:] preliminary injunctions.50 The relief sought was simply preservation of the status quo,51 with scant prejudice to Dongsan, the disputes were serious, and the balance of hardship was held to tip decisively in favor of the subcontractor. Although Dongsan at the time had substantial assets in the United States (it had an office in the neighboring state of New Jersey), those assets were liquid and could easily have been moved, leaving the subcontractor with nothing better than enforcement proceedings in Korea. The Court held that the subcontractor had made a sufficient showing of the required irreparable injury if relief were denied.

There is authority for the proposition that preliminary injunctive relief in aid of arbitration need not be narrowly confined to the preservation of the status quo, that is, that the court's power is not limited to simple stand-still orders. Rather, it has been held that in respect to arbitrable controversies, as in litigation generally, the court has broader authority and may take such action as is necessary to prevent the arbitral process from being rendered futile by a party's action or refusal to act.52 The Third Circuit Court of Appeals affirmed this principle in the following language:

[B]ecause the district court must focus on preservation of the integrity of the arbitral process, the [preliminary injunctive] relief granted need not be limited to restoring the parties precisely to their pre-litigation position without regard to the irreparable injury that movant faces. If the existing `status quo' is currently causing one of the parties irreparable injury and thereby threatens to nullify the arbitration process, then it is necessary to alter the situation to prevent the injury."53

It can fairly be expected that federal District Court judges will find their powers adequate to permit the issuance of preliminary injunctive relief deemed essential in the circumstances of the particular case before them. The challenge will lie in persuading the court that the relief sought is essential.

V. Court review and enforcement of preliminary measures awarded by arbitrators

One final point that deserves mention in respect of preliminary relief in arbitration cases is the judicial response to awards of interim relief by the arbitrators. In such a situation the risk of an improper judicial "intrusion" into the arbitral process is sharply reduced, if not absent, for by hypothesis the court is being asked to give effect to relief that the arbitrators themselves have judged appropriate. From another perspective, however, an award of preliminary relief in such a case poses potential conflict with the widely accepted proposition that courts should rarely interfere in the arbitral process while it is underway and before the work of the arbitrators has come to completion in the award on the merits of the controversy.54 In particular, courts decline to review an award that disposes of only some of the issues raised on the merits .55

Illustrative of the issues that arise when a party seeks to obtain judicial confirmation of provisional relief awarded by arbitrators is Sperry International Trade, Inc. v. Government of Israel,56 In that case, Sperry, which was to design and construct a communication system for the Israeli Air Force, had pursuant to the [Page102:] contract opened an irrevocable letter of credit in Israel's favor for $15 million. Israel had the right to draw on the letter of credit, to the extent of its payments to Sperry, upon presentation of a sight draft and its own certification that it was entitled to the amount covered by the draft "by reason of a clear and substantial breach of the contract". The contract provided that any disputes were to be arbitrated under the rules of the American Arbitration Association. In 1981 Sperry initiated arbitration proceedings, seeking a declaration that Israel had breached the contract and claiming damages of $10 million. Israel asserted eleven counterclaims, alleging inter alia nonperformance by Sperry.

Shortly thereafter Sperry filed suit to compel arbitration and to enjoin Israel from drawing on the letter of credit pending the arbitral decision. The district court granted a preliminary injunction, but the Court of Appeals reversed that order in January 1982, on the ground that Sperry had failed to establish that it would suffer irreparable injury were the relief denied. Six days later Israel submitted its sight draft and certification, but before the proceeds had been remitted, Sperry obtained an ex parte order of attachment from the New York Supreme Court. Israel removed the case to the federal District Court in New York and moved to vacate the attachment. On February 8, 1982, before that motion was heard, Sperry applied to the arbitrators to require Israel to withdraw its certification and to enjoin Israel permanently from drawing on the letter of credit. On February 9 the arbitrators issued an award, ordering that the proceeds of the letter of credit be held in a joint escrow account in the names of both parties, but without giving reasons for their decision.

Sperry then applied to the District Court for an order confirming the award. Israel's opposition to the motion was based primarily on the ground that the arbitrators had thus granted substantially the same relief that the Court of Appeals in its previous decision had held impermissible. Israel contended that, in issuing the award, the arbitrators had "exceeded their powers" or acted in "manifest disregard of the law", grounds for vacating an award under the Arbitration Act.57 The District Court rejected Israel's argument and confirmed the award. The Court of Appeals affirmed that decision, holding that its prior decision concerned only the propriety of issuance of a preliminary injunction by the District Court and that no issue had been before it either as to the merits of the controversy or as to relief the arbitrators themselves might award. Under the applicable legal standard for judicial review of an unreasoned award-to indulge all reasonable grounds that might sustain it-the Court of Appeals held that the award withstood challenge. And under applicable New York law the arbitrators were authorized to fashion such remedies as they believe will do justice between the parties.

It seems quite clear that the court in Sperry was prepared to give relief, in the form of confirmation of an arbitral award, which it would not have given had the application been made directly to the court. Indeed, unless Sperry had been able to offer new evidence in support of an application to the court, the prior decision of the Court of Appeals would almost surely have doomed it to failure.

In a later case seeking confirmation of an arbitral award of interim relief, the District Court easily disposed of the contention that because the award was only an interim award the court could not review or enforce it.58 In that case Pemex had filed a Notice of Claim of Lien in the amount of $2 million on the Liberian registry of the vessel subject to the charter party in dispute. The owner sought an order from the arbitrators removing the Claim of Lien. After a hearing and some debate as to whether they had the power to award interim relief, the arbitrators concluded, expressly as only a provisional finding, that Pemex's claims in excess of $350,000 were not colorable and granted a reduction in the Notice of Claim to that amount. The owner sought confirmation of the award.

Pemex opposed confirmation of the award on the ground that the award was not final and therefore not reviewable. The court rejected the contention:

Given the equitable relief granted, this Court cannot accept Pemex's argument. This award is not a partial resolution of the [Page103:] parties' claims as an intermediate step in an ongoing arbitral process but, in effect, the grant of a preliminary injunction... To accept Pemex's argument, and preclude Southern from enforcing the award, would render meaningless the arbitrators' power to grant such equitable relief... No undue intrusion upon the arbitral process results from a finding that such an award is ripe for confirmation. Although such relief is to some extent dependent upon an appraisal of, it is nevertheless distinct from a determination on, the merits... The only meaningful point at which such an award may be enforced is when it is made, rather than after the arbitrators have completely concluded consideration of all the parties' claims.59

This case, like Sperry, suggests the wisdom of an application for interim relief to arbitrators before an attempt is made to obtain relief in judicial proceedings. In the case just discussed, it must be seriously doubted that the District Court would have been prepared to proceed as far into the merits of the case as the arbitrators had done to grant provisional relief.

These decisions suggest that there is both greater scope for judicial enforcement of provisional remedies after the arbitrators have acted and also a greater measure of judicial reluctance to intervene after arbitrators have been appointed and are in a position to act in respect of a party request for provisional relief. Such a principle would seem to accord well with the expectations of the international arbitral community.

VI. Conclusion

Although doctrinal confusion surely remains, it may fairly be said that the more experienced commercial courts in the United States have developed a jurisprudence with respect to provisional remedies sufficient to accommodate most of the needs of parties to international arbitration. Even if a degree of parochialism remains-as for example, in the near total lack of attention paid by American courts to the jurisprudence on the subject developed in the judicial systems of other countries signatory to the New York Convention-the results arrived at, with notable exceptions here and there, bespeak an appropriate recognition of the role courts should play in helping to make international arbitration an effective process for the resolution of disputes.

1
The New York Civil Practice Law and Rules (hereafter "CPLR"), the general procedural statute enacted by the State of New York, lists four provisional remedies, attachment, injunction, receivership, and notice of pendency, see CPLR § 6001, to which should be added the seizure of a chattel in an action to recover a chattel. See CPLR §§ 7101 ff. The latter three remedies are rarely relevant to an international arbitration and will not be further discussed. The pertinence of the provisional remedies provided by state law in a proceeding in a United States federal court, as distinct from a state court, is discussed below.

2
Apart from the historic use of attachment to establish quasi in rem jurisdiction. See Harris v. BAL 198 U.S. 215 (1905), overruled by Shaffer v. Heitner, 433 U.S. 186 (1977).

3
See Lawrence F. Ebb, "Flight of Assets from the Jurisdiction "In the Twinkling of a Telex": Pre- and Post-Award Conservatory Relief in International Commercial Arbitration," 7 J.Int'l Arbitration 9 (1990).

4
The existence of a conflict in decisions of federal Courts of Appeal on a point of law is one of the primary reasons that the Supreme Court will consider in deciding to hear a case, for if the circuits persist in their differing views, only the Supreme Court can resolve them. R. Stem et al., Supreme Court Practice, 193-97 (6th ed. 1986).

5
Two principal categories of cases that may be heard in a federal court are (i) cases "arising under" the Constitution, laws or treaties of the United States (the so-called "federal question jurisdiction") and (ii) cases, without regard to the identity of the substantive law that governs the subject matter of the controversy, between citizens of different states of the United States or between citizens of a state and citizens or subjects of a foreign state (the so-called "diversity jurisdiction"). United States Constitution, Art. Ill; United States Code (hereafter "U.S.C."), Title 28, 1331 and 1332(a).

6
There are, of course, a number of federal statutes that play a substantial role in commercial law and give jurisdiction, often "exclusive" jurisdiction, to the federal courts. Principal among these are the Securities Act of 1933, the Securities Exchange Act of 1934, and the American antitrust laws, which date back to 1890.

7
The Act provided that henceforth an arbitration clause in a contract "evidencing a transaction involving commerce ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract". 9 U.S.C. § 2. Theretofore federal courts had consistently refused to enforce agreements to arbitrate, although the grounds for the well-established doctrine denying enforcement were increasingly seen as wholly lacking in justification. See U.S. Asphalt Refining Co. v. Trinidad Lake Petroleum Co., 222 Fed. 1006 (S.D.N.Y. 1915). Under the 1925 statute the federal court was directed to require arbitration, if a valid arbitration agreement so provided, and to stay court litigation brought in violation of such an agreement. 9 U.S.C. 3, 4.

8
This legislation now appears as Chapter 2 of Title 9 of the United States Code.

9
9 U.S.C. 203.

10
9 U.S.C. 205. Cases to which the Inter-American Convention on International Commercial Arbitration of January 30, 1975, applies may likewise be commenced in a federal court or removed to a federal court if initiated in a state court. 9 U.S.C. § 302.

11
Southland Corp. v. Keating, 465 U.S. 1 (1984) (California statute prohibiting arbitration of claims under franchise agreements pre-empted by the Federal Arbitration Act).

12
It will be of interest to this audience that the standard ICC arbitration clause has recently been construed by a federal appellate court as a broad clause, justifying the position of the French parties to the controversy that various tort claims were properly subject to arbitration under it. J.J. Ryan & Sons. Inc. y, Rhône Poulenc Textile. S.A., 863 F.2d 315 (4th Cir. 1988).

13
Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974) (placing decisive weight on the importance of agreed procedures for dispute settlement in international commerce in upholding arbitration of a claim under the Securities Exchange Act of 1934 under an agreement to arbitrate contained in an international assets purchase agreement); Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth Inc., 473 U.S. 614 (1985) (arbitration of antitrust claim under an international contract); Shearson/American Express. Inc. v. McMahon, 482 U.S. 220 (1987) (arbitration of domestic securities law claims, among others); Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477 (1989) (same, and overruling Wilko v. Swan, 346 U.S. 427 (1953), which had refused enforcement of an arbitration clause in a brokerage agreement as to a claim under the Securities Act of 1933).

14
Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 22 (1983). This was said in the context of a District Court order which had stayed an action to compel arbitration in order to await the outcome of a state court suit.

15
The McMahon and Rodriguez decisions, cited in note 13, both sustained the enforceability of arbitration clauses contained in customer agreements with stockbrokers. Neither involved international commerce.

16
Rule 64, Federal Rules of Civil Procedure.

17
Volt Information Sciences. Inc. v. Board of Trustees of Stanford University 489 U.S. 468 (1989). At issue in that case was a dispute under one contract in a construction project for Stanford University calling for arbitration, whereas contracts covering related disputes arising out of the same project did not. California statute law permitted the state court to stay the arbitration pending the result of related litigation between a party to the arbitration agreement (the University) and other parties not bound by it. It was conceded that if the Federal Arbitration Act applied, the stay would have been improper. The California court construed the provision in the contract that it was to be governed by "the law of the place where the project is located" to constitute not merely a choice of California substantive law, but of California procedural law, as well. The Supreme Court majority held itself bound by the state court construction of the choice of law clause and justified the result as simply enforcement of the contract the parties had made, which was all that the Federal Arbitration Act required. 489 U.S. at 472.

18
The New York statutory amendment is discussed below. See note 35 and accompanying text.

19
CPLR 6201.

20
Under CPLR 6212(a) the applicant for an order of attachment must show that there is a valid cause of action, that it is "probable" that the applicant "will succeed on the merits", that one or more of the statutory grounds for attachment exist, and that the amount demanded exceeds all known counterclaims. Whether an order for attachment should issue "has traditionally been a question addressed to the discretion of the trial court .... [T]he plaintiff is never entitled to an attachment as a matter of right." 7A J. Weinstein, H. Korn & A. Miller, New York Civil Practice 6201.03 (1991) (footnotes and citations omitted).

21
Jackson Dairy. Inc. v. H. P. Hood & Sons. Inc. 596 F.2d 70, 72 (2d Cir. 1979). The Third Circuit has enunciated a four-part test: irreparable injury, a "reasonable probability of eventual success", the possibility of harm to others from a grant or denial of the injunction, and "the public interest". See Ortho Pharmaceutical Corp. v. Amgen. Inc., 882 F.2d 806, 812- 13 (3rd Cir. 1989).

22
The often close relationship between the issues raised on an application for a preliminary injunction and the issues pertinent to the merits is reflected in the specific authority given to the federal District Court to convert the hearing on the preliminary injunction into a hearing on the merits. Rule 65(a)(2), Federal Rules of Civil Procedure.

23
McCreary Tire & Rubber Co. v. CEAT. S.p.A., 501 F.2d 1032 (3rd Cir. 1974).

24
501 F.2d at 1038 (footnote omitted).

25
Cooper v. Ateliers de la Motobécane. S.A., 57 N.Y.2d 408 (1982).

26
57 N.Y.2d at 410.

27
In the rather confusing New York terminology the court of first instance is the Supreme Court sitting in each county, the intermediate appellate courts are the Appellate Divisions for four judicial "departments" (geographical subdivisions of the state), and the court of last resort is the Court of Appeals.

28
57 N.Y.2d at 411.

29
57 N.Y.241 at 414.

30
57 N.Y.2d at 414.

31
57 N.Y.2d at 416.

32
Carolina Power & Light Co. v. Uranex, 451 F. Supp. 1044 (N.D. Cal. 1977).

33
The California District Court lies within the jurisdiction of the Court of Appeals for the Ninth Circuit, whereas McCreary was a decision by the Court of Appeals for the Third Circuit. Had McCreary been a Ninth Circuit decision, the Carolina court would have been obliged to follow it.

34
It has provoked a considerable literature. See, e.g., in addition to articles cited elsewhere, David Westin and Peter Chrocziel, "Interim Relief Awarded by U.S. and German Courts in Support of Foreign Proceedings", 28 Colum. J. Transnat'l L. 723, 725-30 (1990); Charles N. Brower and W. Michael Tupman, "Court-Ordered Provisional Measures Under the New York Convention", 80 Am. J. Int'l L. 24 (1986); Joseph D. Becker, "Attachments in Aid of International Arbitration - the American Position", 1 Arb. Int'l 40 (1985); Neil E. McDonell, "The Availability of Provisional Relief in International Commercial Arbitration", 22 Colum. J. Transnat'l L. 273 (1984); Note, "Pre-Award Attachment Under the U.N. Convention on the Recognition and Enforcement of Arbitral Remedies", 21 Va. J. Int'l L. 785 (1981); Note, "Carolina Power and Light Co. v. Uranex: Quasi in Rem Jurisdiction to Secure a Potential Arbitral Award: An Exception to Shaffer v. Heitner's Minimum Contacts Requirements", 5 N.C. J. Int'l L 247 (1980). Amendment of American law to authorize provisional remedies has been proposed. See, e.g., David W. Rivkin and Frances L. Kellner, "In Support of the F.A.A.: An Argument Against U.S. Adoption of the Uncitral Model Law", 1 Am. Rev. Int'l Arb. 535, 550-51 (1992).

35
CPLR 7502(c), as amended by L. 1985, ch. 253, effective January 1, 1986.

36
Drexel Burnham Lambert Inc. v. Ruebsamen, 139 A.D.2d 323 (1st Dept. 1988). In that case a New York brokerage firm sought an attachment in aid of arbitration against two of its West German clients on the ground that West German law precluded enforcement of debts arising out of options and margin trading by non-registered merchants. However, in a situation where the party resisting attachment was a resident of a non-Convention country, the Cooper rationale has been held inapplicable. See Intermar Overseas. Inc. v. Argocean. S.A., 117 A.D.2d 492 (1st Dept. 1986); C. E. Pew and R. M. Jarvis, "Pre-Award Attachment in International Arbitration: The Law in New York", 7 J. Int'l Arb. 31 (1990).

37
No American decision appears to have considered whether a reference to arbitration rules authorizing resort to national courts for provisional remedies should be held to constitute such a waiver. See, e.g. Rule 8, clause 5 of the ICC Rules of Arbitration.

38
Compania de Navegacion y Financiera Bosnia S.A. v. National Unity Maritime Salvage Corp., 457 F.Supp. 1013 (S.D.N.Y. 1978).

39
Id. at 1014 (citations omitted).

40
Id. at 1015.

41
The suggestion that the availability of provisional remedies in an arbitrable controversy should be treated as a matter of contract interpretation has beguiled commentators. See, e.g., Philip E. Karmel, "Injunctions Pending Arbitration and the Federal Arbitration Act: A Perspective from Contract Law", 54 U. Chi. L. Rev. 1373 (1987). In the context of contractual silence, however, the search for presumed intent will be elusive (if not factitious) and will intrude deeply into matters reserved for the arbitrator. A rule of law will surely be easier to apply in most cases and provide a more predictable outcome.

42
Merrill Lynch. Pierce. Fenner & Smith. Inc. v McCollum, 666 S.W.2d 604 (Tex. Ct. App. 14th Dist. 1984).

43
There are slight differences in language, but it is difficult to discern any material difference in objective. Section 3 of the Act requires that "upon any issue referable to arbitration" under a valid agreement to arbitrate a District Court must "stay the trial of the action" until the arbitration has been conducted in accordance with the agreement. 9 U.S.C. 3. Under Article II(3) of the Convention the court is to "refer" the parties to arbitration.

44
Merrill Lynch, Pierce. Fenner & Smith. Inc. v. McCollum, 469 U.S. 1127 (1985).

45
469 U.S. at 1131.

46
The same view has been expressed in decisions rendered by the First, Third (perhaps surprising in view of the McCreary decision), Fourth, Seventh and Ninth Circuits. See, e.g., Teradyne. Inc. v. Mostek Corp., 797 F.2d 43, 47 (1st Cir. 1986); Ortho Pharmaceutical Corp. v. Amgen. Inc., 882 F.2d 806 (3rd Cir. 1989); Merrill Lynch. Pierce, Fenner & Smith, Inc. v. Bradley, 756 F.2d 1048 (4th Cir. 1985); Sauer-Getriebe KG v. White Hydraulics. Inc., 715 F.2d 348 (7th Cir. 1983), cert. denied, 464 U.S. 1070 (1984); PMS Distributing Co. v. Huber & Suhner., A.G., 854 F.2d 355, 358 (9th Cir. 1988).

47
Albatross S.S. Co. v. Manning Bros., Inc., 95 F.Supp. 459 (S.D.N.Y. 1951). There is even older authority in the decision by Judge Learned Hand in Murray Oil Products v. Mitsui & Co., 146 F.2d 381 (2d Cir. 1944). In Judge Hand's view the desire for a speedy decision in arbitration "is entirely consistent with a desire to make as effective as possible recovery upon [arbitral] awards, after they have been made, which is what provisional remedies do". Id. at 384.

48
95 F.Supp. at 463 (citation and footnote omitted).

49
Rogers. Burgun. Shahine & Deschler. Inc. v. Dongsan Construction Corp., 598 F.Supp. 754 (S.D.N.Y. 1984).

50
These are stated above, see text at note 21.

51
The court defined status quo to mean "the last uncontested status which preceded the pending controversy". Id. at 758.

52
In considering the issuance of a preliminary injunction in conventional litigation the court is necessarily obliged to balance possibly competing factors: "[T]he most compelling reason in favor of... [issuing a preliminary injunction] is the need to prevent the judicial process from being rendered futile by defendant's action or refusal to act. On the other hand, judicial intervention before the merits have been finally determined frequently imposes a burden on defendant that ultimately turns out to have been unjustified. Consequently, the preliminary injunction is appropriate whenever the policy of preserving the court's power to decide the case effectively outweighs the risk of imposing an interim restraint before it has done so." 11 Wright & Miller, Federal Practice and Procedure 2947 at 424 (1973).

53
Ortho Pharmaceutical Corp. v. Amgen. Inc., 882 F.2d 806, 814 (3rd Cir. 1989).

54
This proposition has reflections in decisions on a number of issues. Examples are Aerojet-General Corp. v. American Arbitration Association, 478 F.2d 248 (9th Cir. 1973) (the AAA had resolved a dispute over the place of arbitration and fixed New York as the site; only in the rare case would such a determination be reversed); Mobil Oil Indonesia. Inc. v. Asamera Oil (Indonesia) Ltd, 43 N.Y.2d 276 (1977) (court had no jurisdiction to review an interim arbitral decision that the 1975 ICC rules, rather than the 1955 rules, were applicable); In re Astoria Medical Group, 11 N.Y.2d 128 (1962) (court may intervene prior to award to disqualify an arbitrator only in the rare case).

55
E.g., Michaels v. Mariforum Shipping. S.A., 624 F.2d 411 (2d Cir. 1980) (District Court was without authority to review a "Decision and Interim Award" of disputes trader a charter party, which left undecided for further proceedings the issue of liability on one of the owner's counterclaims and all of the charterer's claims, and the issue of damages in respect of the owner's counterclaims on which the charterer had been held liable).

56
Sperry International Trade. Inc. v. Government of Israel, 689 F.2d 301 (2d Cir. 1982).

57
Under Section 10(d) of the Act, an award may be vacated "where the arbitrators exceeded their powers". 9 U.S.C. 10(d). "Manifest disregard of the law" is a judge-made supplementary ground for vacating an award, first enunciated in dictum by the United States Supreme Court in Wilko v. Swan, 346 U.S. 427, 437 (1953), but, so far as the author is aware, never actually applied to do so. See I/S Stavborg v. National Metal Converters. Inc., 500 F.2d 424, 429-31 (2d Cir. 1974).

58
Southern Seas Navigation Limited v. Petroleos Mexicanos 606 F.Supp. 692 (S.D.N.Y. 1985).

59
606 F.Supp. at 693-94.