UK: Anti-Suit Injunctions

Last Updated: 12 August 2008

West Tankers Inc v. RAS Riunione (the "Front Comor")

This is reported at [2007] All ER (Comm). Whether the principle in Turner v. Grovit (see Issues 5-7) applied to arbitration clauses has been the subject of much divided opinion. The House of Lords considered this question to be of practical importance and used the decision to refer to the European Court the following question:-

"Is it consistent with EC Reg.44/2001 for a court of a Member State to make an order to restrain a person from commencing or continuing proceedings in another Member State on the grounds that such proceedings are in breach of an arbitration agreement?"

It is clear from the views of all members of the House of Lords that they considered the answer should be an affirmative one.

The House of Lords agreed with the views of the court of first instance on two issues. First, granting such an injunction was not inconsistent with the New York Convention. Second, the English court should not exercise its discretion to refuse to restrain proceedings in another member state.

We await the European Court's decision.

Starlight Shipping Co and Another v. Tai Ping Insurance Co Limited

This is reported at [2007] All ER (D) p.8. In Issue 8 we considered the decision in Cetelem v. Roust Holdings and the jurisdiction under s.44 of the 1996 Act to grant injunctive relief in aid of the arbitration process. That left over the relationship of s.37 of the SCA with s.44. We looked at this briefly in Elektrim v. Vivendi (No2).

Background

The First and Second Claimants were respective Owner and Manager of a vessel chartered to T. The charter included an English law and arbitration clause. T subchartered the vessel to the Second Defendant on identical terms as to law and arbitration. A bill of lading was issued and the Second Defendants became a party to the bill of lading contract. The bill of lading incorporated the arbitration clause from the charter. The arbitration was to comprise three persons being members of the London Maritime Arbitrators Association ("LMAA"). During the voyage, the vessel and cargo were lost.

In March 2007 the First Defendant (being the insurers of the Second Defendant) obtained a "Civil Award" from the Wuhan Maritime Court in China against the First Claimant and T. In June 2007 the First and Second Claimants objected to the jurisdiction of the Wuhan Maritime Court on the grounds of the arbitration clause, but the evidence when such an objection would be heard by the Wuhan Maritime Court was unsatisfactory. Also, there was evidence of a tendency of the Chinese maritime courts to declare arbitration clauses to be invalid. There was also no requirement for the Wuhan Maritime Court to hear the issue and it was felt a hearing to be unlikely.

The First Claimants applied for an anti-suit injunction against both First and Second Defendants. The First and Second Defendants were bound by the arbitration clause and ordinarily the English court will exercise a discretion to restrain the foreign proceedings unless there was a strong reason for continuing those proceedings. The issue was whether there was some strong reason not to do so. The court also assessed the relationship between s.37 of the SCA and s.44 of the 1996 Act.

S.37 of the SCA and s.44 of the 1996 Act

S.37 gives the court jurisdiction to grant an anti-suit injunction and anti-arbitration injunction, but could it also exercise that power under s.44? The powers under s.44 are much narrower than s.37. A tension existed, but could the two be reconciled?

S.44 of the 1996 Act

The following points were made.

  • In this case the tribunal had no power to grant an interim injunction, but only a final injunction in the form of a final award.
  • Under s.44 the court can grant an interim injunction "if the case is one of urgency" and "for the purpose of preserving the assets". An asset would be a contractual right including the right to have disputes referred to arbitration.
  • Was this case urgent? Although the First Claimant considered it urgent, it sought the permission from the tribunal to make the application (permission of the tribunal is a pre-condition to a court application under s.44 in non-urgent cases). This was declined.
  • However, where s.44 applies, the court can grant an injunction if the tribunal does not have the power or is unable to do so effectively. Therefore, could the tribunal have made a final award against the Defendants in time to restrain them from pursuing the Chinese proceedings before any decision of the Wuhan Maritime Court was issued?
  • Provided a third arbitrator could be appointed and a decision made, the tribunal could have acted effectively within the meaning of s.44 even if the award was "ineffective" in the particular jurisdiction, because the courts refused to recognise it.
  • If the tribunal could have acted effectively, could they have done so within the timescale? On the evidence it could not. Some of the tribunal members were unavailable within the timescale and since they cannot act "effectively" within s.44, the requirements of s.44(5) are met to entitle the court to exercise its jurisdiction under s.44. Provided other discretionary requirements are satisfied and there is no strong reason not to make an interim order, an order was made under s.44 to cover the position until such time as the tribunal can itself determine the matter and make a final award relating to the restraining order.

S.37

The factors taken into account in the exercise of s.44 do not apply to s.37. Since the proceedings were undertaken in breach of the arbitration clause, an order under s.37 would have been available. S.37 gave the court power to make the order and there was no strong reason against making it.

The order made went no further than under s.44, but the court failed to address the issue under s.1 of the 1996 Act that; "..in matters governed by this Part the Court should not intervene except as provided by this Part.." Therefore, whilst the court does have the power under s.37, since the 1996 Act that power was to be exercised cautiously and with regard to principles upon which the 1996 Act was expressly based, particularly respect for party autonomy and s.1 of the 1996 Act.

C v D

This is reported at [2007] EWCH 1541. An anti-suit injunction was granted by the English Court restraining a party from challenging before the New York court a Partial Award made in an English arbitration. The party alleged that the Partial Award was in disregard of New York law and in breach of the New York Convention. Both parties had participated in the arbitration. The contract was subject to New York law, contained a London arbitration clause and referred to the 1996 Act. The English court held that irrespective of the proper law of the contract (New York law), by agreeing to London as the seat of the arbitration and the curial law being English law, the party had agreed to limit its challenge to the award only through the 1996 Act.

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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