The Delaware Supreme Court affirmed the Delaware Court of Chancery’s decision in an anti-suit injunction action, in which Carlyle Investment Management LLC (“Carlyle”) sought to enjoin National Industries Group Holding, a Kuwaiti company (“NIG”), from litigating disputes arising under the parties’ subscription agreement in any jurisdiction other than the parties’ chosen forum–Delaware.
In 2009, NIG sued Carlyle in Kuwait after NIG suffered losses in connection with investments made in a fund affiliated with Carlyle pursuant to one or more subscription agreements. In response, Carlyle brought an action in the Delaware Court of Chancery to enjoin NIG from filing or prosecuting any action arising from the subscription agreement in a forum other than Delaware in accordance with an exclusive forum selection clause contained in each subscription agreement. NIG failed to respond to Carlyle’s complaint despite repeated notice of the proceedings in Delaware. Subsequently, the Delaware Court of Chancery granted a default order of injunction in Carlyle’s favor and denied a motion by NIG to vacate the injunction order.
On appeal, the Delaware Supreme Court affirmed the Court of Chancery’s denial of NIG’s motion to vacate. NIG argued that Delaware did not have personal jurisdiction over it because the parties failed to obtain a license to sell securities as required by Kuwaiti law rendering the issuance of shares under the subscription agreement invalid. The Court of Chancery held that NIG could not use an argument that the substantive provisions of the underlying contract were invalid to evade personal jurisdiction where the forum selection clause itself was valid. The Delaware Supreme Court agreed. Under the Delaware Supreme Court’s decision in Ingres Corp. v. CA, Inc., forum selection clauses are “presumptively valid” and should be specifically enforced unless the resisting party shows that “enforcement would be unreasonable and unjust, or that the clause [is] invalid for such reasons as fraud and overreaching.” NIG did not make such a showing. NIG also argued the Court of Chancery did not have subject matter jurisdiction to order specific performance of the forum selection clause because Carlyle had an adequate remedy at law. The Delaware Supreme Court disagreed. The Court found that Carlyle would suffer irreparable harm if it were required to enforce the forum selection clause in Kuwait and that Carlyle had no other adequate remedy other than an anti-suit injunction.