This is not meant to be used as a substitute for proper professional advice based on the facts of the particular legal problem. The content of this article is intended to provide a general guide to the subject matter. Norton Rose accept no liability for any action taken based on the contents of this article.
Introduction
In this paper I will consider the question of protective and conservatory measures that are available in the course of litigation. As an English lawyer I will, inevitably, be required to consider those protective or conservatory measures that are available in the English Courts. However the reason for considering what may, otherwise, be viewed as a rather parochial subject matter is the exportability of those protective and conservatory measures.
The Brussels and Lugano Conventions make protective and conservatory measures available in all the Courts throughout the Contracting States and, in many instances may make those protective and conservatory measures capable of being exported to other Contracting States.
Indeed England has gone one step further and is now prepared to make its whole range of protective and conservatory measures available for anyone with proceedings anywhere in the world and not just in a Brussels/Lugano contracting state.
Article 24
Article 24 of the Brussels and Lugano Conventions provides:
"Application may be made to the Courts of the Contracting State for such provisional, including protective, measures as may be available under the law of that State, even if, under this Convention the Courts of another Contracting State have jurisdiction as to the substance of the matter."
It is clear, therefore, that even though proceedings are taking place in, say, Germany it is open to a party to apply to the Courts of Portugal or England or any other Brussels or Lugano contracting state in order to obtain "provisional, including protective" relief.
What can be obtained is the "provisional, including, protective" relief available under the law of Portugal or England. The Conventions do not say that the Applicant can only obtain such provisional or protective relief in England or Portugal which would also be available to them in Germany. The full menu of provisional or protective measures available in the country in question can be sampled.
Having said problems are unlikely to be encountered one possible area which could give rise to problems is if provisional relief is sought elsewhere which is contrary to the public policy of the seat of the proceedings. Thus, for example, if there were proceedings in one contracting state being brought by a foreign plaintiff domiciled in another contracting state. If it were possible for the Defendant to those proceedings to make an application in the country of domicile of the Plaintiff for protective relief which was not only unobtainable in the country of the seat of proceedings but was, indeed, contrary to its public policy, what would be the consequence? Would, for instance, the foreign plaintiff be able to obtain an injunction in the country in which he was bringing his proceedings restraining the defendant from making the application for protective relief in the plaintiff's home country? And what if he were too late in doing that and the Order had already been made ex parte, what then?
As can been seen this whole area is ripe for all sorts of applications and cross-applications seeking and attempting to prevent the obtaining of provisional or protective relief in other countries.
Article 25
However, the area where more problems are likely to occur, even than this, is if the provisional or protective relief which is obtained in a country other than the country where the proceedings are taking place is exportable.
Article 25 of the Conventions provides
"For the purposes of this Convention, "judgment" means any judgment given by a Court or tribunal of a Contracting State, whatever the judgment may be called, including a decree, order, decision or writ of execution, as well as the determination of costs or expenses by an Officer of the Court".
Thus, Court Orders granting provisional or protective relief are, in principle, capable of enforcement in other countries as being judgments within Article 25 of the Conventions.
The case has been argued that orders granting interim relief should not be enforced in Contracting States as if they were judgments and, indeed, there is some recent English case law suggesting that Article 24 is not intended to encourage forum shopping for such orders but that it is proper for a Court only to grant relief over assets within its jurisdiction. However, despite argument to the contrary it does seem that the combination of Articles 24 and 25 of the Conventions allows an application to be made in Contracting States for provisional or protective relief which can then be enforced in other Contracting States even though the substantive proceedings are not taking place there.
It must be stressed, however, that for such provisional or protective measures to be exportable they must, truly, be "judgments" within the meaning of the Conventions.
Thus, if the Order for provisional relief has been obtained ex parte, without notice to the other side, then it will not be entitled to be enforced in other Contracting States. It lacks the quality of a "judgment" and, in any event, has been given in default of the defendant having an opportunity to be heard and is therefore unenforceable under the provisions of Article 27 (2) which provides
"A judgment shall not be recognised - where it was given in default of appearance, if the Defendant was not duly served with the document which instituted the proceedings or with an equivalent document in sufficient time to enable him to arrange for his defence."
Thus, even if an English Court were to make an Mareva Order against a Defendant in relation to his assets in a German bank, the English Order would not be enforceable in Germany under the Convention. The position may be different if the Defendant seeks, at a subsequent inter partes hearing, to have the injunction discharged, but fails, for then the order will have lost its original one sided quality. However, if the Defendant has been put at a disadvantage by reason of the Order having been made ex parte for example, by facing a burden of proof which he would not have faced had the original hearing not been in default of his appearance, the judgment will still be seen as one made ex parte.
This position gives rise to a fine question of judgment for a defendant, especially one with assets in other Brussels and Lugano Convention countries when served with an ex parte injunction. Should an application be made to discharge the injunction and, therefore, have an inter partes hearing which may fail and, therefore, risk the order becoming an inter partes exportable judgment or should the defendant ignore it and not take the chance to set it aside.
If the order has been made ex parte in England then the Defendant's assets will be frozen in England, and, what is more, if the Mareva is expressed to be a "worldwide" one then the Defendant will be in contempt of the English Courts if it deals with assets which are situated outside of England. However, if the Defendant is resident outside of England and the substantive proceedings are taking place outside of England then even though the granting of a worldwide Mareva against the Defendant in England may be capable of being overturned if an application were made to do so the Defendant may be better advised to risk being in contempt of the English Courts than to seek to have the injunction overturned at an inter partes hearing. For until the granting of the Order is heard by the Court inter partes it is not going to be enforceable against the Defendants assets outside of England in the Courts of the jurisdiction where those assets are based.
As mentioned earlier the variety of measures available as interim relief from the Courts of Contracting States, and the subtle differences which distinguish one from another are enormous. Nevertheless, the broad proposition is this: a judgment awarding interim relief from the Court of a Contracting State given in a civil or commercial matter is in principle entitled to recognition, and may be enforced, in another Contracting State. In other words, a judgment ordering interim relief will circulate just like any other judgment, provided always that it was obtained as a result of a judicial hearing in which the defendant would have been entitled to have his say. However, as has been mentioned above, such orders are often sought and made ex parte, and this will deprive them of their right to recognition and enforcement. In consequence, it will often be necessary to bring such proceedings for protective relief in each Contracting State in which relief is sought.
An illustration may be seen in EMI Records Ltd -v- Modern Music [1992] 1QB 115.
A German Court had granted, on an ex parte basis, an injunction in a copyright case concerning popular music. The order was of apparently limitless temporal and spatial scope. The English Court refused to enforce it, considering that although the Defendant may have been entitled to apply to the German Court for its discharge, the mere existence of this privilege did not cure the Order of its one sided vice. Again, therefore, we have the illustration that even though the Defendant may be entitled to apply to a Court to set aside an ex parte Order, if that entitlement is not taken up the Defendant may not be prejudiced. If that option is exercised, and the Defendant loses, he may well be.
Thus, in this case, if the Defendant had sought, unsuccessfully, to have the Order set aside, the position would be as follows. If the burden of proof were on the Plaintiff to obtain the Order, and if the Plaintiff derived no procedural or evidential advantage from the fact that the Order had been made, the new Order would qualify for recognition. But if the onus were on the Defendant to prove the case for discharge of the Order, his procedural rights would have been impaired by the obtaining of the ex parte Order, and the continued Order would also be denied recognition.
If the Order of the foreign Court is not entitled to recognition under the Conventions, it may be possible for a party to seek an injunction from the English Court, ordering the party who has obtained the foreign Order to apply to the foreign Court for its complete or partial discharge. This is so if the English Court has jurisdiction over the party who has sought the foreign Order, and if the obtaining of the foreign Order can be said to be oppressive or vexatious.
As I mentioned earlier the full menu of interim relief available in a Contracting State is available for enforcement within that Contracting State.
Interim Relief in England
In England two of the most famous, or should it be infamous, forms of interim relief which may be particularly suitable for plaintiffs with proceedings in other jurisdictions are the Mareva Injunction and the Anton Piller Order. By virtue of Article 24 of the Conventions these are now available to all Plaintiffs in all Contracting States and it may be useful, therefore, to have an outline of what they cover and what considerations the Court takes into account when granting them.
The Mareva Injunction
This injunction takes its name from one of the first cases in which such an Order was made (see footnote 2). It is made against a Defendant to an action and who, it is feared, may remove, conceal or dissipate his assets prior to any attempt to enforce the judgment against him. If no cause of action has yet arisen, the injunction is not available; and neither may the injunction be obtained against a mere third party to an action.
As the injunction is likely to be effective only if applied for ex parte the Applicant/Plaintiff must make full and frank disclosure of all matters material to the exercise of discretion by the Judge. He must also give grounds for believing that the Defendant has assets, and that there is a well founded fear of their being dissipated, or otherwise dealt with so as to defeat the ends of justice, unless the Order is made. He must give an undertaking to pay damages in respect of any loss suffered in the event that the claim on the merits fails at trial. The injunction may be made to last for such a time as the Court directs.
The Respondent/Defendant may be ordered to make disclosure of the existence and whereabouts (see footnote 3) of his assets, for the Court may make Orders ancillary to the Mareva injunction which are necessary to make the injunction effective. He may be ordered not to remove assets within the jurisdiction, or to deal with assets which are outside the jurisdiction, up to the value of the claim made against him; allowances for living, certain business and legal expenses may be permitted. He may even be ordered to move assets from one jurisdiction to another. But none of this gives the Applicant/Plaintiff any proprietary right in the assets: the injunction has no proprietary effect. As a result, in the insolvency of the Respondent, the Applicant has no prior claim on the assets subject to the injunction.
The Respondent/Defendant who disobeys the Order of the Court may be dealt with for his contempt: his Defence to the action may be struck out; he may be fined or imprisoned.
Although the injunction is not ordered against a third party, the third party who is notified of it, or who otherwise comes to hear of its having been made, will be in contempt of Court, on the ground of his interfering with the course of justice, if he assists in the disposal of the assets. Banks are commonly notified of the injunction for this very reason. Because of the difficult position which this may put them in, the injunction and the manner in which it is to affect a third party should be spelled out in the Order in as much detail as possible. The undertaking in damages which the Plaintiff/Applicant has to make may be required to be extended to any losses sustained by third parties in complying with the injunction.
Mareva injunctions may be made in relation to assets both within and outside the jurisdiction and are sometimes known as "worldwide" Mareva injunctions. However this is a misleading term in that the injunction is made against a Defendant who is subject to the in personam jurisdiction of the Court. The Courts, in particular, do not seek to impose liability on third parties outside of the jurisdiction and the present recommended version of the notice in respect of third parties outside the jurisdiction of the Court states that the terms of the Order
"Do not affect or concern anyone outside the jurisdiction of the Court until it is declared enforceable or is enforced by a Court in the relevant country and then they are to affect him only to the extent that they have been declared enforceable or have been enforced unless such person is
(a) a person to whom this Order is addressed or an officer or an agent appointed by a power of attorney of such person; or
(b) a person who is subject to the jurisdiction of this Court and
(i) has been given notice of this Order at his residence or place of business within the jurisdiction of this Court and
(ii) is able to prevent acts or omissions made outside the jurisdiction of this Court which constitute or assist in a breach of the terms of this Order".
The Anton Piller Order
This Order is, again so named after the first case to clarify the power to grant it.(see footnote 4). It is most commonly used in breach of copyright and trade secret cases.
The Defendant is ordered to permit his premises to be searched by the Plaintiff or his agents, and to permit property to be removed. Refusal to comply with the Order can lead to imprisonment for contempt. Periodically the abuse of this process leaves the courts to insist upon its more stringent control, but the Defendant is in no doubt left with the impression that a smash-and-grab raid has been sanctioned by the Court. The Order may be made in relation to premises inside and outside England, for the jurisdiction in question is, once again, personal to the Defendant, not proprietary in character. Even so, the fact that the premises are outside England should make it unenforceable outside the jurisdiction unless it has been declared enforceable or is enforced by a court in the relevant country.
These, then are perhaps the two forms of protective or conservatory measures most peculiar to England.
Anti-Suit Injunctions
There is one other form of injunction which has received some notoriety of late. It is questionable as to whether it falls within the definition of protective or conservatory measures but this question may well be worth debating further. This is the anti-suit injunction. Anti-suit injunctions are obtainable in England, but whether they do fall properly within Article 24 may be worth considering.
Given that the approach to anti-suit injunctions (if indeed they are available) may vary from state to state I will deal here simply with the position in England.
It is clear that an English Court may not make an Order which directs a foreign Judge to cease hearing a case: it has no power over the Courts of a foreign state but it may make orders against individuals who are subject to its jurisdiction, ordering them to behave in a certain way. It is therefore necessary to consider
(i) whether the Court has jurisdiction over the overseas Plaintiff to grant an injunction, and if so
(ii) the principals upon which it acts.
Before doing so it has to be borne in mind that although it is technically true that the injunction is made against an individual and not against a foreign Court, there is little doubt that it will affect the foreign Court's control of its own procedures, and has therefore to be granted with caution. The foreign Court may not appreciate the fine distinction between enjoining it, and enjoining the Plaintiff, and may refuse to co-operate with the party who seeks to comply with the English injunction (see footnote 5) . The modern rules of English law have been developed against this background of a perceived need for judicial self restraint, and with an increasing awareness that the best place to obtain an Order which will stop a Court hearing a case is from that Court itself.
Jurisdiction Over the Party against Whom the Injunction is Sought
An English Court has jurisdiction to grant an injunction against a person if it has personal jurisdiction over him. In order to establish that personal jurisdiction it is necessary to serve upon him the originating process in the application for an injunction. Prior to the coming into force of the Brussels and Lugano Conventions this meant that the Respondent simply had to be present within the jurisdiction of the English Court or had otherwise to be subject to it, which could include being served with process whilst passing through England. The impact of the Conventions, however, has been to limit the personal jurisdiction of the English Courts and this limitation has been felt in relation to applications for anti-suit injunctions.
If the subject matter of the dispute falls within the scope of the Conventions then jurisdiction in personam over the Respondent must be based on the provisions of the Brussels or Lugano Conventions. If, according to these, the Defendant is entitled not to be sued in the English Courts, there will be no basis for asserting jurisdiction over him. It is, therefore, necessary to look at the rules of the Brussels and Lugano Conventions when looking at this question. For example if the Respondent is a party to a choice of Court agreement for the English Courts which is validated by article 17 of the Brussels Convention then the English Court will have jurisdiction if the claim for an injunction may be held to fall within the scope of the Agreement. Equally, if the Defendant is domiciled in the United Kingdom then article 2 of the Brussels Convention will give the Courts of the United Kingdom jurisdiction. But if, for example, the Respondent is domiciled in another contracting state, and there is no basis of Convention jurisdiction available against him, there is no jurisdiction upon the English Courts to grant an injunction or to grant any other relief.
There is no convincing argument to circumvent this conclusion. It cannot be argued that proceedings for an anti-suit injunction fall outside the scope of the Conventions, unless the broader context of the claim is not a civil or commercial matter nor can it really be argued that the Respondent is not being "sued" within the meaning of the Conventions. Although the merits of the dispute may not be in issue before the Court, it is hard to see that the relief sought against the Respondent is consistent with his not being sued. Alternatively it might be argued that such relief is to be seen as a provisional or protective measure within the meaning of article 24 of the Brussels Convention but this argument is not very plausible. Admittedly, the effect of the anti-suit injunction is to prevent another Court making the question of substance res judicata by giving a judgment upon it. In that sense it seeks to preserve a form of status quo ante. But a final anti-suit injunction does not look provisional or protective; it is a final determination in relation to certain rights; and it is therefore thought unlikely that an application for a final anti-suit injunction can fall within article 24.
Thus, although I have concluded that an anti-suit injunction is not part of the provisional or protective measures included under Article 24, given its value where the English Court does have jurisdiction, I set out below the basis upon which one can be obtained.
The Principles Upon Which An Anti-Suit Injunction is Ordered
Assuming the English Court does have jurisdiction it appears that an injunction may be granted if the Applicant has a legal right not to be sued in the foreign country (that is, it is a breach of contract for proceedings to be brought in that foreign country, or an equitable right not to be sued in the foreign country (that is, it is unconscionable for him to be sued there). It is not sufficient merely to show that the natural forum is England 9see footnote 6); nor is it always necessary (see footnote 7) .
Breach of a Legal Right Not to be Sued
Authority for this as a basis for an injunction is to be found in British Airways Board v. Laker Airways Limited (see footnote 8) . In that case an English company, acting by its liquidator, took proceedings in the United States under American anti-trust legislation which permits the victim of an unlawful conspiracy to recover treble damages against the conspirators. The English company and its liquidators were within the jurisdiction of the English Court and the House of Lords held that an injunction could be granted if the applicant had a legal right not to be sued in the foreign proceedings (such as would arise under an exclusive jurisdiction clause, or a binding arbitration clause, or under a binding settlement between the parties with a clause forbidding proceedings being brought to upset it). There was, however, no such right on the facts of this case.
A case where there was a right not to be sued is Sohio Supply Co. v. Gatoil (USA) Inc. (see footnote 9) . The Court of Appeal said that an injunction could be obtained if it was oppressive or vexatious to proceed in the foreign Court, and that to do so in breach of a choice of Court clause "may well in itself be vexatious and oppressive". The language, though not the result, seems rather odd. It is a breach of contract to break a contract. It is hard to see what is added by calling it oppressive, unless this is meant to indicate that an injunction will always go to restrain it; such a proposition would be wrong. In English law, not every breach of contract necessarily leads to an injunction. It is hard to see why the position should be any different when the breach comprises suit in a foreign Court; an injunction should be available if (but generally when) damages are inadequate to compensate the Plaintiff for his loss. Even so, if there is a legal right not to be sued, the Court is likely to grant an injunction.
An Equitable Right not to be Sued
The above example is one in relation to breach of a legal right not to be sued. In British Airways v. Laker Airways it was also stated that an injunction could be ordered if the Applicant had an equitable right not to be sued in the foreign Court. This may be found in estoppel, or in laches, and generally in all conduct capable of being labelled as "unconscionable". Although "unconscionable" conduct can encompass a vast array of possibilities, by far the most important version of unconscionable conduct in this area occurs when England is the natural forum for the resolution of the dispute between the parties, and the overseas Plaintiff vexes or harasses the Applicant by suing in the foreign Court. It should be noted, however, that whilst it is clear that to sue in a foreign Court when England is the natural forum suggests that an overseas Plaintiff may be acting oppressively it does not, of itself, establish that fact. What constitutes oppression clearly seems to be the view taken by English Judges of the system of jurisdiction which the foreign Plaintiff is seeking to impose.
Thus oppression may be found in bringing proceedings in a manifestly inappropriate foreign forum, even if England is not the appropriate forum. The core of the basis of the injunction is the need to prevent oppression. In Airbus Industrie GIE v. Patel the natural forum was India (or perhaps France); the Respondent was restrained from bringing his action in Texas. The English Court stated that the case was an exceptional one, but the exceptional facts appeared to reside in the bizarre way (at least in the minds of the English Judges) the case would unfold in Texas, and not in the fact that England was not the natural forum. As was pointed out so wisely in this case there are many ways of behaving unconscionably, and to seek to limit these by definition may not be to the advantage of the law.
Timing of the Application
Apart from the question of jurisdiction to Order the injunction, it is worth noting that the timing of the application for an anti-suit injunction will be crucial. If foreign proceedings have gone too far it may be too late for the Court to make an Order that these be aborted; but if made too early, the application may also fail. This point is illustrated by the decision of the Scottish Courts in Pan-American Airways v. Andrews.(see footnote 10) After the Lockerby aircraft disaster it was feared by PanAm that proceedings were about to be commenced against it in the American Courts. An attempt was made to obtain an injunction from the Scottish Courts on the ground that Scotland was the natural forum, that the estimated cost of the American proceedings usually exceeded the corresponding Scottish equivalent, and that to sue in the United States was oppressive. The application failed. The Court observed that if American proceedings were commenced, they could be challenged in America on forum conveniens grounds; and that it was premature to order an injunction to prevent the institution of proceedings. It appeared that the Court might have been willing to order an injunction had it been much clearer than it was that the Scottish forum was the only proper one; and that also if a forum conveniens challenge were made unsuccessfully in the American Courts, the application for an injunction could be revived. The principal expounded was that a party should exhaust his local remedies before applying for an exorbitant one.
Breach of an Anti-Suit Injunction
If the overseas Plaintiff disobeys the injunction, two consequences follow. The first is that he is liable to be proceeded against in England for his contempt. This may be inconvenient; he is at risk if he is present in, or returns to, or has assets within England. The remedy may be incompletely effective, but such coercion will often be sufficient. Second, it must follow that the foreign judgment obtained will not be entitled to recognition in England at the behest of a party who has disobeyed an injunction in obtaining it: public policy must, at the very least, require this. Both are, however, consequences which are internal to England. They do not, and cannot, assert any extra territorial effect.
Conclusion
English Law provides an array of interim and protective measures which, if used wisely, and obtained in a form which can be enforced across the Brussels and Lugano Convention countries, can provide an impressive arsenal for litigants and can enable some selective forum shopping and strategic planning for enforcement to be done. Depending upon the domicile of the plaintiff and the location of the assets anti-suit injunctions, Mareva Injunctions and Anton Piller Orders are available for all. Indeed one of the facts which must always be borne in mind by a foreign litigant when visiting the English Courts is that the limits of the measures which the English Courts has power to order may not yet be known. If the English Court has before it a request for an order which it considers expedient in the interests of justice it will grant it. That was how Mareva and Anton Piller came about in the first place, and if the inventive litigant can persuade the Court that his application is necessary and reasonable in the context of the Courts overall task of doing justice, then that litigant's name may one day rank alongside those of Mareva and Anton Piller.
End Notes
1 The Author is the head of Litigation at the International Law Firm, Norton Rose and Editor of "Jurisdiction and Judgments" Briggs & Rees (Second Edition) (Lloyds of London Press)
2 Mareva Compania Naviera SA v. International Bulk Carriers SA [1975] 2 Lloyd's Rep 509
3 Even if out of the jurisdiction
4 Anton Piller KG v. Manufacturing Processes Ltd. [1976] Ch. 55
5 See, for example, Philip Alexander Securities & Futures Limited v. Bamberger (8th May 1996) where it was reported that a German Court had held such injunction to be an infringement of the German sovereignty, and had refused to authorise service of the injunction in Germany.
6 Although there is case law for and against this proposition;
7 An injunction was granted to prevent suit except in a particular foreign Court in Airbus Industrie GIE v. Patel (The Times 12th August 1996)
8 [1985] AC 58
9 [1989] 1 Lloyd's Rep 588
10 1992 SLT 268