The past few months have seen some developments as to the circumstances in which the English Court is prepared to exercise its discretion to grant an anti-suit injunction to restrain foreign proceedings. These will be of interest to those who engage in multi-jurisdictional business or international trade.
In order for the English Court to exercise its discretion to grant an interim or final anti-suit injunction, the claimant must show either (a) breach of an exclusive jurisdiction or arbitration clause by the defendant(s) by virtue of commencement of foreign proceedings; or (b) that England is the natural forum for the dispute to be heard and pursuit of foreign proceedings by the defendant(s) is vexatious and oppressive.
HFW has acted in two recent relevant cases, the CHANNEL RANGER (Caressa Navigation Ltd v Zurich Assurances MAROC (21 October 2014)), a Court of Appeal decision in which HFW acted for the claimant owners, and the GOLDEN ENDURANCE (Golden Endurance Shipping SA v RMA Watanya & Others (25 November 2014)), a Commercial Court judgment in which HFW acted for the defendant cargo interests.
In the CHANNEL RANGER, the Court of Appeal upheld the first instance decision, finding that the English Court did have jurisdiction over the shipowner’s claim for a declaration of non liability in respect of a cargo damage claim commenced in the Moroccan Court by the defendant cargo interests. It also found that the claimant was entitled to an interim anti-suit injunction restraining the Moroccan proceedings, on the basis that by starting proceedings in Morocco, the defendants had breached an exclusive English High Court jurisdiction clause.
The result was relatively neat: the anti-suit injunction restrained the defendants from continuing with the Moroccan proceedings, forcing them to pursue their claim in the English Court (provided it was not time barred). The defendants were also ordered to pay the costs of their unsuccessful appeal and are likely ultimately to have to pay the majority of the costs of the first instance hearing of their jurisdiction challenge.
The consequences of the decision in the GOLDEN ENDURANCE were not so clear cut. In that case, cargo interests had brought cargo damage claims against the shipowner under three bills of lading in Morocco. The shipowner obtained (without notice) an interim anti-suit injunction from the English Court, preventing cargo interests from taking steps in the Moroccan proceedings. The shipowner also sought a declaration of non liability in respect of the Moroccan proceedings. Cargo interests challenged the English Court’s jurisdiction.
All three bills of lading incorporated the English governing law clause from the related charterparty, but the English Court found that only one used wording which was sufficient to incorporate the charterparty arbitration clause. The English Court therefore granted an anti-suit injunction restraining the Moroccan proceedings under that one bill, which had been brought in breach of the arbitration clause.
The other two bills contained only general words incorporating “[a] terms and conditions, liberties and exceptions of the Charterparty”, which are not usually sufficient to incorporate jurisdiction or arbitration clauses, and the shipowner could not show any vexatious or oppressive conduct on the part of the cargo interests. The English Court would not grant anti-suit injunctions in relation to the claims brought in Morocco under those two bills. It, however, dismissed the cargo interests’ application to set aside the English proceedings relating to those bills.
The result is that parallel proceedings are now taking place in relation to the two bills, in Morocco (cargo interests’ cargo damage claims) and England (the shipowner’s claim for a declaration of non-liability in respect of the Moroccan proceedings), as well as a London arbitration for alleged damage to cargo carried under the third bill.This not only risks inconsistent judgments, but if the Moroccan Court delivers judgment first, there will be issues regarding the enforcement of that judgment in England and Wales - and vice versa if the English Court delivers judgment first. Res judicata may become relevant.
In reaching its judgment on the two bills, the English Court felt bound by the Court of Appeal’s decision to set aside an anti-suit injunction in Highland Crusader Offshore Partners LP v Deutsche Bank AG (13 July 2009). The parties in that case had agreed an English non-exclusive jurisdiction clause and the Court of Appeal found that to justify the granting of an anti-suit injunction, there must be vexatious and oppressive conduct by the defendants other than commencement of the foreign proceedings themselves: parallel proceedings in different jurisdictions, although undesirable, are not necessarily vexatious or oppressive if they are properly brought and an anti-suit injunction could not be granted merely because the foreign court would not apply the English proper law of the contract. In the Golden Endurance, there was no exclusive jurisdiction or arbitration clause in the two bills and the Moroccan proceedings were properly brought.
The decisions in the CHANNEL RANGER and GOLDEN ENDURANCE show how important it is to comply with English jurisdiction and arbitration provisions. If the English Court decides it has jurisdiction and grants an anti-suit injunction, the party in breach is likely to be penalised in costs, which could be substantial. If they are obligated to discontinue foreign proceedings, their claim may be time barred, leaving them without a remedy, and security provided in relation to the foreign proceedings may be lost or void.