Forward freight agreements have given rise to relatively little litigation. It is likely that the litigation which does arise will result from the insolvency of one of the parties. That was the case in AWB (Geneva) SA v. North America Steamships Ltd [2007] EWCA Civ 739 in which HFW acted for the defendants, NASL.
The Court of Appeal rejected an application by AWB for an anti-suit injunction against NASL, which had applied in Canadian insolvency proceedings to prevent AWB terminating FFAs on the grounds of NASL's bankruptcy. AWB sought to restrain NASL's application in Canada on the grounds that the FFAs (which were on ISDA Master Agreements) provided for "any suit, action or Proceedings" relating to the FFAs to be subject to English law and jurisdiction.
The Court of Appeal held that the Trustee's application in Canada did not relate to a dispute under the FFAs but was part of the Canadian insolvency proceedings to which the law and jurisdiction provisions in the FFAs did not apply.
The Court of Appeal refused to stay a separate application by AWB for a declaration that NASL had defaulted under the FFAs. The Court held that that application did fall within its jurisdiction and should be determined as soon as possible, not least because it would assist the Canadian courts to know whether NASL had defaulted under the FFAs. This second aspect of the judgment is an important indication that the English courts are prepared to rule on potential FFA defaults despite the existence of foreign insolvency proceedings affecting one of the FFA parties.
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