Delaware Business Litigation Report

Chancery Lacks Jurisdiction to Grant Injunction While Superior Court Appeal Is Pending

Vama F.Z. Co. v. WS02, Inc., C.A. No. 2020-0141-JRS (Del. Ch. Mar. 29, 2021)
This case illustrates that the Court of Chancery lacks subject matter jurisdiction to issue an injunction pending appeal of another court’s rulings, and where the plaintiff has adequate remedies at law. 

Plaintiff Vama F.Z. Co., a Dubai company, obtained a final judgment in Dubai that Defendant Pacific Control Systems (L.L.C.) (“PCS”) failed to repay a loan. Vama then sought to enforce the Dubai Judgment in Delaware Superior Court under the Delaware Uniform Foreign-Country Money Judgments Recognition Act. Vama also tried to attach PCS’s shares in Defendant WS02, a Delaware corporation, to satisfy the judgment. The Delaware Superior Court vacated the Dubai Judgment, and the Delaware Supreme Court affirmed. While the appeal in the Supreme Court was pending, Vama sought a preliminary injunction in the Court of Chancery to prevent PCS from transferring its shares in WS02. In response, PCS filed a motion to dismiss the complaint for lack of subject matter jurisdiction.

The Court of Chancery dismissed the entire case. Under Delaware Supreme Court Rule 32, only the Superior Court and the Supreme Court had jurisdiction to issue an injunction while the appeal from the Superior Court was pending. Additionally, Vama had an adequate remedy at law, and so did not fall within the Court’s limited equitable jurisdiction, because it could seek to attach the WS02 shares from any court that recognized the Dubai Judgment. Finally, after dismissing the rest of the claims, the Court dismissed Vama’s count for declaratory judgment, because Delaware’s Declaratory Judgment Act does not independently confer jurisdiction on the Court of Chancery.

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