Summary
When any international transaction turns bad, absent of an
arbitration clause or exclusive jurisdiction clause, one of the
most critical early decisions a party must make is where to have
the dispute resolved. Where the facts of the case involve more than
one country, or where the parties are based in different countries,
each will likely want to "forum shop". This involves
bringing the dispute before the courts of the country considered
likely to offer the greatest overall advantages. This advantage may
be as simple as geographic proximity to where a party is based or
ease of giving evidence. More likely, the advantages sought may
include lower cost, or quicker/slower procedures and processes, or
- above all - the "home advantage" of a judge and legal
system likely to be more receptive to the arguments the party
intends to rely on.
On 20 January 2012, the Court of Appeal re-confirmed that as long
as the parties have not already agreed to litigate or arbitrate in
England, it is a perfectly valid strategy to act quickly to attempt
to secure a favourable venue for the case by starting an action in
another connected country. Looking into the facts of Star
Reefers Pool Inc v JFC Group Co Ltd shows how this strategy
can pay off.
The Case
JFC is a Russian company. It brought proceedings in the Russian
courts for a declaration that it was not bound under guarantees in
respect of unpaid hire of chartered vessels between JFC's
nominee company and Star Reefers, a Cayman Islands company. Star
Reefers objected to this by bringing an anti-suit application
before the English courts preventing JFC from taking further steps
in the Russian proceedings. At first instance, Teare J granted an
anti-suit injunction.
On appeal by JFC, this order was overturned. Rix LJ, giving the
judgment for the Court of Appeal, held that although the disputed
guarantees that JFC provided to Star Reefers were arguably governed
by English law, it did not follow that England was the natural or
most appropriate forum where the dispute should be resolved. JFC
had legitimate grounds to bring an action in Russia. These are the
courts of its domiciliation, at the place where the obligation fell
to be performed and the place where, if there were contracts of
guarantee, these contracts were made. In addition, the Court of
Appeal held that the Russian courts would apply Russian law (not
English law) to the guarantees, and that some advantage from the
application would accrue from the application of it, that JFC
should not be deprived from.
In order for the English courts to grant an anti-suit injunction,
it must be proven that a party was acting unconscionably in
launching proceedings in another court. It must also be shown that
England was clearly the natural and most appropriate forum and that
in the interests of justice, the other proceedings should be
restrained. The Court of Appeal disagreed with Teare J's
conclusion in finding that the Russian proceedings were
unconscionable, vexatious and oppressive, with the purpose of
frustrating the determination of the dispute in England, and the
decision was therefore overturned. The Court of Appeal confirmed
that if a foreign action is based on a "hopeless claim or one
doomed to failure", it might well be unconscionable conduct to
commence that action. This was not the case here. It was not
unconscionable to rush to commence proceedings in the preferred
location without warning the other party and before the other party
organised itself to act. This is common practice. Nor can Russian
proceedings be seen to be frustrating the determination of the
dispute in England, in circumstances where at the time the Russian
proceedings began, no English proceedings had been commenced.
This case demonstrates a typical choice of forum battle between an
English claimant wishing to invoke English international law
principles and a Russian defendant wishing to invoke Russian
international law principles. JFC had secured an early and
legitimate tactical advantage in the Russian courts. It had also
secured a long-term advantage, as it would be difficult to enforce
an English judgment in Russia should an earlier judgment in Russia
be made. This rapid thinking did not justify an anti-suit
injunction, nor was an injunction needed in the interests of
justice. Because the English proceedings were very likely to be
completed before the Russian proceedings in any event, an
injunction was unnecessary.
Case citation - Star Reefers Pool Inc v JFC Group Co
Ltd [2012] EWCA Civ 14
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 03/02/2012.
