If, contrary to an agreement to arbitrate, you are sued in the wrong jurisdiction the English courts stand willing to issue an anti-suit injunction – regardless of how quickly the foreign proceedings might have escalated. The recent case of UAU -v- HVB  EWHC 1548 (Comm) serves as a good example of how a party should conduct itself in order successfully to obtain injunctive relief.
Facts of the case
UAU and HVB entered into a farmout agreement in relation to their participation in an oil and gas block, offshore of Equatorial Guinea. The agreement included an arbitration clause governing "any dispute", incorporating the LCIA rules, and designating London as the seat of any arbitration.
A dispute arose. Contrary to the arbitration clause HVB issued proceedings in Equatorial Guinea's Court of First Instance in November 2020. UAU challenged the court's jurisdiction. Following an administrative failing by the court (which resulted in the dismissal of UAU's appeal to the Provincial Court on the jurisdiction point), UAU found itself appealing to the Supreme Court of Equatorial Guinea on 18 March 2021. Meanwhile the Court of First Instance had further ordered UAU to make an interim payment of nearly $8.5m to a third party.
UAU's appeal to the Supreme Court was still outstanding when it applied to the English High Court for an anti-suit injunction in April 2021.
When will the English courts will intervene? A question of comity
Based on principles of courtesy and respect (as opposed to any legal requirement) English courts are reluctant to interfere with the processes, decisions, and jurisdiction of foreign courts. This general concept is known as 'comity'.
However, there are well-established principles under English law as to when a court might grant an anti-suit injunction to enforce an exclusive London arbitration agreement:
- Where foreign proceedings have been brought in breach of an agreement to arbitrate an injunction may be granted, unless there is a 'good reason' not to. The courts will uphold parties' agreements not to sue each other.
- The burden of providing a 'good reason' against an injunction falls on the party in breach of the agreement to arbitrate (in this case HVB).
- However, an anti-suit injunction should be sought promptly and before the foreign proceedings are too far advanced. While there is no hard and fast rule as to what constitutes "excessive delay", it will be relevant if any delay increases the perceived interference with the process of the foreign court. The later the foreign proceedings are abandoned the more of the foreign court's resources will have been wasted.
The English court granted injunctions (i) preventing HVB from taking further steps in the Equatorial Guinea proceedings and (ii) compelling HVB to discontinue them.
The following factors were in UAU's favour:
- In issuing the Equatorial Guinea proceedings HVB was very clearly in breach of the arbitration clause under the farmout agreement;
- HVB submitted no good reason against granting the injunctions or why it should not arbitrate the dispute in accordance with the arbitration clause;
- At no point had UAU engaged with any of the Equatorial Guinea courts on the merits of HVB's substantive claim; all of its representations had been to dispute jurisdiction;
- The English court found that, "given the advice of its lawyers in Equatorial Guinea, [UAU] reasonably believed that the jurisdiction issue could be dealt with effectively in Equatorial Guinea and that its appeal to the Provincial Court had good prospects of success". It was reasonable for UAU to delay English anti-suit proceedings (which might otherwise have proved a waste of time and money) in circumstances where the jurisdiction challenge before the Equatorial Guinea courts were still pending;
- The costs that HVB will have wasted as a result of abandoning the Equatorial Guinea proceedings were only incurred because of its refusal to adhere to the arbitration clause; and
- Even if the injunctions were not obeyed by HVB, and the Equatorial Guinea proceedings continued, they would nevertheless afford UAU protection if HVB attempted to enforce any Equatorial Guinea judgment in England.
The English courts are willing to protect parties who have agreed to arbitrate disputes within their jurisdiction, regardless of how far any foreign proceedings might have proceeded; such injunctions might be sought during the course of a trial or even after a foreign judgment has been given.
For any party faced with proceedings issued in breach of an agreement to arbitrate in England, the take-aways from this case are clear: make sure the dispute and its subject matter are subject to a London-seat arbitration; it is reasonable and permissible to appear before a foreign court to challenge its jurisdiction as long as you do not submit to its jurisdiction by engaging with it on the merits of the dispute itself; and, ultimately, delay in applying for an anti-suit injunction is not fatal if the steps you have taken are reasonable, are designed to save time and costs, and have been informed by legal advice.
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.