The United States Court of Appeals for the Second Circuit recently affirmed the dismissal of a petition brought by ISC Holding AG against Nobel Biocare Investments NV (“NBI”) in which ISC sought to compel NBI to arbitrate claims asserted by the petitioner for tens of millions of dollars. Golenbock Eiseman (partners Martin S. Hyman and Jeffrey T. Golenbock, and associate David Shamshovich) served as counsel for NBI.
ISC sought to compel arbitration pursuant to what NBI contends is a sham contract that was obtained by fraud. The dispute between the parties has spawned litigation in Switzerland, Singapore and Curacao in addition to the petition filed by ISC in the United States. In dismissing ISC’s appeal from the District Court’s dismissal of the petition, the Court of Appeals rejected ISC’s argument that it had the right, on the eve of trial (and after the completion of substantial discovery), to voluntarily dismiss its claim without prejudice. Had the Court upheld ISC’s contention, ISC arguably could have attempted to refile its case and start the process all over again.
In this case, trial was scheduled to commence the following Monday when ISC sought to voluntarily dismiss its petition without prejudice. NBI opposed that effort, citing, among other things, the time, effort and money that the parties had expended, and the fact that NBI was likely to prevail at trial. NBI thus moved to vacate ISC’s notice of voluntary dismissal (so that the petition could not be refiled), and Judge Stanton agreed.
The decision of the Second Circuit establishes an important precedent that effectively precludes a petitioner, such as ISC, from unilaterally dismissing its petition without prejudice prior to a scheduled evidentiary hearing and thus protects respondents from harassment by parties who file, withdraw and later attempt to refile their petitions. Petitioners may still seek to dismiss their petitions without prejudice, but only by consent of the parties or with leave of court.
The Court of Appeals also affirmed an order denying ISC’s motion to recuse Judge Stanton based on certain in camera comments made by an ISC lawyer in the context of a request for leave to withdraw as counsel, holding that nothing in the record suggested that the lawyer’s concerns about his client’s credibility caused the judge to form an unfavorable opinion about ISC or the merits of its petition.