UK: Court Lifts Anti-Suit Injunction Against Unpaid Bunker Suppliers Proceeding In The US

Last Updated: 18 December 2012
Article by David McInnes and Heloise Clifford

In recent years, the English courts have been more reluctant to issue anti-suit injunctions preventing a party from bringing or pursuing foreign court proceedings, due to the concern that they conflict with the principle of comity between states and interfere with the foreign court's jurisdiction. This case concerned the continuation of an anti-suit injunction granted on an ex parte basis in relation to ongoing proceedings in Florida brought by unpaid bunker suppliers. The Commercial Court held that the English jurisdiction clause in the bunker supply contract was "non-exclusive" and, given the substantive involvement of the claimants in the foreign proceedings and the delay in seeking injunctive relief, it would not be appropriate to continue the injunction.

The background facts

The claimants in the English proceedings were the owners and technical managers of the MD Gemini, a passenger vessel which had been time chartered on usual terms whereby the time charterers agreed to provide and pay for all fuel oil. The defendant bunker suppliers provided bunkers to the vessel, which were consumed but not paid for by the time charterers, who suspended operations and advised the bunker suppliers that they could not pay.

The bunker supply contract incorporated the bunker suppliers' standard terms and conditions, which contained the following law and jurisdiction clause:

"Governing law: Save that the seller may take such action or actions as it shall in its absolute discretion consider necessary to enforce, safeguard or secure its rights hereunder in any court or tribunal or any state or country, the provisions hereof shall be governed by the law of England and the jurisdiction of the English courts."

The bunker suppliers brought proceedings in Florida, the owners' place of business, against the owners, technical managers and time charterers. They then commenced proceedings against both the vessel and the owners in the Marshall Islands, where the owners were incorporated.

For their part, the owners successfully applied to have the Marshall Islands proceedings stayed on the basis that Florida was the more appropriate jurisdiction and the US action was a more complete action because it included the time charterers. The owners also continued to participate in the Florida court proceedings, albeit without prejudice to their contention that the English court had jurisdiction over the dispute and that they were not a party to any contract with the bunker suppliers and that the time charterers were solely liable for the unpaid bunkers. Almost eight months after the Florida proceedings had been commenced, the owners applied to the English court for an anti-suit injunction in order to restrain the bunker suppliers from continuing proceedings outside of England. They did so on only two hours notice, the bunker suppliers were unrepresented and an interim anti-suit injunction granted. A few weeks later, the matter came back before Mr Justice Popplewell in the Commercial Court, who refused to continue the injunction.

The Commercial Court decision

The judge ruled that the owners' argument that they were not party to the bunker supply contract should not prevent them from relying on the English jurisdiction clause in that contract to challenge a foreign court's jurisdiction. Having considered the wording of the jurisdiction clause in this case, however, he decided that it was not exclusive and that the bunker suppliers had not agreed not to take proceedings outside England to enforce their claims. The English courts will generally enforce an exclusive jurisdiction clause unless there are strong reasons not to do so. However, where the jurisdiction clause is not exclusive, the judge clarified that the court should consider whether the foreign proceedings would be oppressive or vexatious on the grounds that England was the more appropriate or natural forum and justice required the claimant in the foreign court to be restrained from proceeding there. He added that, even where England was the natural forum, the English court retained a discretion as to whether to grant an anti-suit injunction: "the stronger the connections of the foreign court with the parties and the subject matter of the dispute, the stronger the argument against intervention".

In this case, the judge decided that it would not be appropriate to continue the anti-suit injunction. First, whilst the English court was a convenient forum for the proceedings, he did not consider that it was the natural forum and, in his view, the Miami court was capable of applying English law to the dispute, if English law was found to be the proper law of the contract. Second, he rejected the owners' argument that the bunker suppliers' actions in commencing parallel proceedings in Florida and the Marshall Islands had been oppressive and, in any event, the Marshall Islands proceedings had been stayed. Third, the claimants had delayed in applying for the anti-suit injunction; the appropriate time to apply for an injunction was shortly after the proceedings in Florida and the Marshall Islands had been commenced. Fourth, the owners had not sought to argue before the Miami court that the Florida action should be stayed or dismissed on the grounds that the court did not have jurisdiction. Rather, the owners had positively promoted Florida as the appropriate forum when seeking to have the Marshall Islands proceedings stayed - and they had actively participated in the proceedings in Florida.

The judge concluded that, as the parties had been envisaging for eight months that the substantive proceedings would take place in Florida, it would be inequitable to prevent those proceedings by continuing the anti-suit injunction.

Comment

Parties who wish to give the English courts exclusive jurisdiction over their disputes should ensure that the jurisdiction clause in their contract is carefully drafted to achieve the right result. Where foreign court proceedings are commenced, notwithstanding an English jurisdiction clause in the contract (whether exclusive or non-exclusive), any application to the English court for an anti-suit injunction should be made as early as possible and the party wishing to challenge the foreign court's jurisdiction should consider taking whatever steps are available before the foreign court to challenge its jurisdiction. Finally, a party who wishes to challenge a foreign court action should tread warily in terms of the procedural steps it takes in the foreign proceedings to avoid any impression that it has submitted to that court's jurisdiction. Local law advice on this potentially tricky issue may be advisable.

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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