The United States Court of Appeals for the Second Circuit recently held that an order denying a party's motion to dismiss an application for a preliminary injunction was not an immediately appealable decision under the "final order rule," on the grounds that the court lacked jurisdiction to hear it. Wabtec Corp. v. Faiveley Transport Malmo, 525 F.3d 135 (2d Cir. May 2, 2008).

Defendant Faiveley Transport Malmo AB ("Faivley") commenced arbitration proceedings in Stockholm, Sweden, due to an alleged breach of a licensing agreement by Wabtec Corporation ("Wabtec"). Faiveley also filed a motion for preliminary injunctive relief in the United States District Court for the Southern District of New York to prevent Wabtec from continuing its alleged breach of contract. Wabtec moved to dismiss the preliminary injunction motion on the grounds that the district court lacked jurisdiction due to the "competent jurisdiction" clause contained in the license agreement that specified that any dispute arising out of the agreement should be "finally settled by arbitration without recourse to the courts."

The court denied Wabtec's motion to dismiss, finding that "when a contract is silent as to the availability of injunctions pending arbitration, a district court retains the power to provide such relief." Wabtec appealed the decision to the Second Circuit. Faiveley cross-moved to dismiss Wabtec’s appeal on the grounds that the Second Circuit lacked jurisdiction to hear it, arguing that the lower court’s previous denial of Wabtec’s motion to dismiss was not appealable pursuant to the "final order rule," since it was neither a final order nor an appealable interlocutory order.

The Second Circuit granted Faiveley's cross-motion to dismiss, finding that Wabtec's rights would not be irretrievably lost in the absence of an immediate appeal and that Wabtec was not attempting to compel arbitration in a case that demanded it. Thus, it was not swayed by Wabtec’s arguments that the order of the lower court was appealable as an exception to the "final order rule" under both the collateral order doctrine and Section 16(a)(1)(B) and (C) of the Federal Arbitration Act. Notably, however, the Second Circuit hinted in its decision that had the application been framed as a motion to compel arbitration under the licensing agreement as opposed to an outright dismissal of the matter with no guarantee of future arbitration, then it may have been looked upon more favorably by the court.

Click here for the Second Circuit's decision.