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An anti-suit injunction is a form of relief that restrains a party from commencing or continuing foreign proceedings. The injunction operates against the person to whom it is directed, rather than to a particular court or tribunal.
In a significant ruling, the Irish High Court recently granted an anti-suit injunction restraining a Russian entity from advancing three sets of proceedings in Russia. The decision is notable because it is the first written judgment of the Irish courts granting an application for an anti-suit injunction. It is also noteworthy because it was ordered in the context of an Irish liquidation.
Background
GTLK Europe DAC and GTLK Europe Capital DAC (both in liquidation) (Companies) were part of a transport leasing group ultimately owned by the Russian Federation through Joint Stock Company "State Transport Leasing Company" (JSC). The Irish High Court ordered the winding up of the Companies in May 2023 following a petition by a group of bondholders advised by William Fry, who were owed over US$175 million. Joint Liquidators were appointed.
The dispute leading to the Anti-Suit Injunction Application
Central to the dispute between the parties were ten pledge agreements entered into in March 2022, under which JSC claimed ownership of 37 aircraft held by the Companies and their subsidiaries. The Joint Liquidators, having investigated the validity of these agreements, formed the view that they were void or voidable under Irish law. Proceedings were issued under section 631 of the Companies Act 2014, and in December 2023, the High Court declared the pledge agreements invalid. This was despite the existence of an interim anti-suit injunction obtained by JSC in Russia, which purported to restrain the Joint Liquidators from taking any steps in relation to the pledge agreements. The Irish High Court was satisfied it had jurisdiction under Irish and EU law to determine the validity of the pledge agreements, and JSC's anti-suit injunction did not displace its jurisdiction. JSC's attempts to appeal the findings on the pledge agreements to the Court of Appeal and the Supreme Court were unsuccessful.
The Joint Liquidators' Anti-Suit Injunction Application
The Joint Liquidators applied to the High Court for orders restraining JSC from progressing three sets of Russian proceedings: (i) the Russian anti-suit injunction proceedings, (ii) arbitration proceedings, and (iii) what was described as "mandatory injunction" proceedings preventing the Joint Liquidators from taking steps in the liquidation of the Companies (Russian proceedings). JSC did not take part in the application.
In support of their application for the anti-suit injunction, and despite the absence of any written Irish authority, the Joint Liquidators relied on section 27(5) of the Supreme Court of Judicature (Ireland) Act 1877, which they maintained conferred power on a court to prohibit the initiation of proceedings. They also asserted that the principles governing the grant of anti-suit relief, as developed in other jurisdictions, apply equally in Ireland. The Joint Liquidators identified two gateways to allow the court to grant an anti-suit injunction, restraining JSC from pursuing the conflicting Russian proceedings that undermined the Irish liquidation process:
- JSC submitted to the Irish court's jurisdiction by entering an unconditional appearance in the liquidation proceedings, and
- JSC sought to prove as a creditor in the liquidation (it submitted claims of €2.3 billion), thereby invoking the Irish court's jurisdiction.
The Decision
Justice Mulcahy accepted, as a matter of principle, that an Irish court must have jurisdiction to protect the integrity of its own processes by ensuring that parties subject to its authority do not take steps to undermine that jurisdiction, or breach or ignore its orders. He continued that an Irish court supervising a liquidation must also have jurisdiction to ensure that creditors' interests are protected, and the winding-up process is not undermined by a multiplicity of actions regarding the company's assets in various jurisdictions. Mulcahy J set out some principles derived from foreign case law that should apply in Ireland, including:
- The jurisdiction to grant an anti-suit injunction is in personam, exercisable against a person subject to the Irish court's jurisdiction. In the case of a liquidation, a person is subject to the Irish court's jurisdiction where they seek to "prove" in that liquidation.
- In the case of a liquidation, an order may be granted where foreign proceedings undermine liquidation proceedings commenced in Ireland.
- The jurisdiction to grant an anti-suit injunction is discretionary.
- The court must consider the appropriateness of making an anti-suit injunction in each case.
Applying those principles to the case before it, Mulcahy J held that JSC's actions in pursuing the Russian proceedings were an abuse of process of the Irish courts, intended to circumvent any final orders made. JSC had submitted to the Irish court's jurisdiction in the liquidation proceedings; however, it subsequently commenced two sets of Russian proceedings. He continued that it is in the general interest of creditors that a company's assets are capable of being realised by liquidators and the proceeds made available to all creditors. It would undermine the liquidation process if an individual creditor were allowed to bypass the normal process of realisation and distribution by pursuing proceedings in another jurisdiction to gain priority.
Mulcahy J was satisfied that anti-suit relief was justified in this case because JSC's actions in the Russian proceedings risked creating conflicting orders in other countries. Furthermore, JSC was trying to benefit from the Irish liquidation process, all the while ignoring its rulings, a position the Court described as a "contradiction". He granted the anti-suit injunction against JSC; however, he refused to extend the order to all parties having notice of it, doubting whether such a jurisdiction existed.
Concluding thoughts
The decision demonstrates the Irish courts' willingness to protect the integrity of court processes and to safeguard the interests of creditors of companies in liquidation in Ireland. It will have particular significance in Irish insolvency law, particularly where cross-border disputes arise. The decision also confirms, in principle, the jurisdiction of the Irish courts to grant anti-suit injunctions and to do so in the context of insolvency-related proceedings.
Access our previous article related to the liquidation of the Companies here.
Contributed by Gail Nohilly
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.
