Turkey: Anti-Suit Injunctions In International Arbitration

Last Updated: 19 March 2015
Article by Ezgi Babur

Anti-suit injunctions are national court orders used especially in common law countries, in order to protect the jurisdiction of the arbitral tribunal, or to prevent the tribunal from assuming jurisdiction. Anti-suit injunctions may order a party not to pursue court proceedings initiated in breach of a dispute resolution clause, or an arbitration agreement. Anti-suit injunctions are controversial, since they are an indirect interference with the judicial process of a foreign sovereign state, which is analyzed in this article.

In General

The anti-suit injunction is a court order rendered against a private party with the intention of either to prevent that party from commencing an action in another forum, or forcing that party to discontinue such an action if already started1.

Anti-suit injunctions may be granted where it is absolutely clear that the arbitration proceedings have been wrongly initiated. It should be emphasized that these injunctions can be initiated against the parties alone, or may only be directed against the arbitrators if the court granting the injunction has personal jurisdiction over them2.

Anti-suit injunctions may be divided into two categories, as injunctions restraining arbitration proceedings, and injunctions restraining parallel court proceedings. The latter is more common in practice, since the aim is to realize an arbitration agreement between the parties.

In practice, parties who disregard the arbitration clause, or attempt to pressure the other party may initiate parallel court proceedings in breach of the arbitration agreement. Parallel court proceedings that are initiated in breach of an arbitration agreement could frustrate the on-going arbitration, since they use resources in time and expense, which leads to re-litigating the same issue, as well as preventing the enforcement of the final award of the arbitral tribunal3.

National Court Practices on Anti-Suit Injunctions

Court practices regarding anti-suit injunctions differ for common law jurisdictions and civil law jurisdictions.

English courts state that on the condition that they have jurisdiction over the defendant, an anti-suit injunction may be granted if there is a valid arbitration agreement, the application is made without undue delay, the foreign action is not well-advanced, and there is no other reason why the injunction should be granted4.

With regard to US courts, the standard to be met under the US approach is the determination of "irreparable harm," and the courts take into consideration the stage of the foreign proceedings, as well as the parties' expectation to litigate in that particular court5.

On the other hand, civil law jurisdictions have considered anti-suit injunctions to be an intrusion into their jurisdiction. For instance, in the decision of Oberlandesgericht Düsseldorf dated January 10th, 1996, IPRax 245 (1997), the German court refused to serve a judgment of an anti-suit injunction based on the public policy exception under the Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters.

With regard to European Union Law, the European Court of Justice ("the Court") opined that member states should not issue anti-suit injunctions against another member state, in any case in which a party filed a lawsuit in a member state. In the Turner case6, the Court referred to mutual trust as being paramount in its judgment, and stated that anti-suit injunctions are incompatible with the Brussels Convention of 1968, and the principle of mutual trust, no matter how sparingly, or under what circumstances they are utilized7.

Under EU Law, pursuant to Article 27 of the Council Regulation (EC) No. 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (the "Brussels Regulation"), in case proceedings involving the same cause of action and between the same parties are brought in the courts of different member states, any court other than the court first seized, shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seized is established.

It should be noted that arbitration is listed among the exceptions to the application of the Brussels Regulation. Within this context, the doctrine opines that there is a right to commence parallel court proceedings alongside arbitration, which is widely criticized and seen as a problem that can be solved by a rethinking of the Brussels Regulation8.

Enforcement Issues and Consequences of the Disregarding of Anti-Suit Injunctions

The enforcement of anti-suit injunctions may be problematic. As mentioned above, civil law jurisdictions consider these injunctions as an intrusion of their jurisdiction. Unless the addressee of the anti-suit injunction has assets in the issuing state that could be attached for any breach of the court's order, enforcement is often not possible9.

On the other hand, the disregard of an anti-suit injunction may cause issues concerning the enforcement of the court decision given at the end of the foreign court proceedings that have been initiated or continued contrary to the anti-suit injunction. For instance, in the event that the proceedings are continued in spite of the anti-suit injunction granted by an English court, the enforcement of the foreign court decision in England would be rejected. However, if the addressee has assets in the state where the court decision has been given, then no enforcement would be required.

In light of the explanations above, even if it is problematic, it is hard to say that there would be no legal consequences of the disregard of an anti-suit injunction.

Conclusion

Anti-suit injunctions are controversial, since they can be considered as interference to the judicial process of a foreign state. On the other hand, it is worth mentioning that the courts applying this remedy make the justification that the order is addressed to the person filing the lawsuit, and not to the foreign court10. However, it should be emphasized that this reasoning has been widely criticized. As the disregard of the anti-suit injunction granted by common law courts, such as English courts, would trigger enforcement problems, the parties should be cautious regarding agreements stipulating that the English courts would have jurisdiction in the resolution of disputes.

Footnotes

1. Neil A Dowers, The Anti-Suit Injunction and the EU: Legal Tradition and Europeanisation in International Private Law, Cambridge Journal of International and Comparative Law (2)4: 960-973 (213), p. 960 ("Dowers").

2. Julian D M Lew, Loukas A Mistelis, Stefan M Kröll,Comparative International Commercial Arbitration, Kluwer Law International, 2003, p.363 ("Lew-Mistelis-Kröll").

3. Lew-Mistelis-Kröll,p. 363.

4. Lew-Mistelis-Kröll, p. 365.

5. Lew-Mistelis-Kröll, p. 366.

6. Case C-159/02, Gregory Paul Turner v. Felix Fareed Ismail Grovit and others [2004] ECR I-3565.

7. Dowers, p. 966-967.

8. Dowers, p. 972-973.

9. Lew-Mistelis-Kröll, p. 366.

10. Dowers, p. 961.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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