In Emirates Int'l Inv. Co. v ECP Mena Growth Fund, LLC, (S.D.N.Y. June 15, 2012), Emirates International Investment Company (EIIC) invested in ECP Mena Growth Fund's private equity fund (Fund). When EIIC was late in making a capital payment, the Fund declared EIIC a "defaulting shareholder" and claimed that EIIC had forfeited past contributions to the Fund. EIIC objected and the parties are currently engaged in arbitral proceedings before a tribunal of the International Chamber of Commerce (ICC) to resolve the dispute. When the Fund entered liquidation, EIIC petitioned the court for a preliminary injunction to prevent the Fund from selling EIIC's portion of the Fund until the underlying dispute was resolved.

The court explained that a party seeking a preliminary injunction must show:

To satisfy the irreparable harm requirement, the petitioner must demonstrate that absent a preliminary injunction it will suffer an injury that is neither remote nor speculative, but actual and imminent.

The court found that EIIC did not demonstrate any likelihood of irreparable harm because sale of the Fund's assets was not imminent due to current market conditions. Moreover, current plans for disposing of the assets indicated that actual transactions would not occur in the near future. While the Fund had the power to sell its assets, EIIC failed to show that there were any active negotiations for the sale of Fund assets or that a transaction of any kind was imminent. EIIC also failed to show that any injury would be irreparable because there was no showing that EIIC would not be made whole by a monetary award.

Thus, the court concluded that a preliminary injunction was not justified and denied the motion.

As an aside, the court noted that since both parties were aliens there was no basis for diversity jurisdiction. EIIC argued this could be solved by dropping the Fund as a respondent and issuing the order for injunctive relief against the manager of the Fund. The court disagreed because EIIC may still have to proceed against the Fund in another forum. The court also pointed out that the arbitral tribunal, which could enjoin both parties, might be a better forum. The Fund argued that subject matter jurisdiction existed under Chapter 2 of the Federal Arbitration Act, which allows courts to enforce the New York Convention.

The court stated that Second Circuit law was "somewhat unclear" on the question of "whether a petition for preliminary injunctive relief pending an arbitration otherwise covered by the New York Convention should be considered an action or proceeding falling under the New York Convention." Some case law states that federal jurisdiction under the New York Convention only covers compelling arbitration or confirming an arbitral award. The court noted, however, that courts also have heard requests for provisional remedies in situations similar to the case at hand. Ultimately, the court avoided the question of subject matter jurisdiction by explaining that the motion for preliminary injunction lacked merit.

This case illustrates the importance of establishing irreparable harm, which requires more than monetary damages, to obtain a preliminary injunction in support of a pending arbitration. The case also highlights uncertainty over whether the New York Convention provides subject matter jurisdiction when parties request provisional measures.