A recent case in the English Commercial Court considered the approach and principles to be followed in determining whether an anti-suit injunction should be granted and also the construction of an exclusive jurisdiction clause (Standard Bank PLC v Agrinvest International Inc  EWHC 2595 (Comm)). A summary of the English courts' jurisdiction and the principles to be applied in the grant of anti-suit injunctions is also set out below.
The first claimant, Standard Bank PLC, a London bank, had granted Agrinvest International Inc, a US company, an option to purchase promissory notes (the "option contract"). There was also a master sale agreement between Standard Bank and Agrinvest in which Agrinvest sold Standard Bank certain securities (issued by an Egyptian company) and agreed to buy them back from Standard Bank. Agrinvest failed to buy back the securities from Standard Bank and Standard Bank brought proceedings against Agrinvest claiming the sums due. There was no express choice of law or jurisdiction in the option contract but the master sale agreement provided for English law and jurisdiction in the following terms:
"Each party hereto irrevocably submits to the jurisdiction of the courts of England for the purpose of any action, suit or proceeding relating to this Agreement or any Trade Confirmation and irrevocably agrees that all claims in respect of any action, suit or proceeding may be heard and determined in any such court".
Agrinvest issued a motion in a US court alleging that it was not liable to Standard Bank for any monetary claim and that Standard Bank was liable to Agrinvest for breaches of contract in relation to the sale of securities.
Agrinvest, along with two other defendants, Mr. Charles Chawafaty, a director of Agrinvest and Cairo Phoenix Foreign Trade Centre, a trading name used by Mr. Chawafaty, subsequently brought proceedings in Egypt in respect of claims arising out of both the option contract and the master sale agreement, against Standard Bank and Standard Bank Group Limited, its ultimate parent company.
Standard Bank and Standard Bank Group sought a permanent anti-suit injunction against Agrinvest, Mr. Chawafaty and Cairo Phoenix restraining both the US and Egyptian proceedings on the basis that the jurisdiction clause in the master sale agreement prevented Agrinvest from bringing proceedings outside of England, and that Mr. Chawafaty and Cairo Phoenix should be restrained from bringing the foreign proceedings on the basis that the proceedings were unconscionable or vexatious and oppressive.
The court had to decide whether the jurisdiction clause in the master sale agreement was an exclusive English jurisdiction clause and whether the US and Egyptian proceedings should be restrained by anti-suit injunctions. The judge decided in favour of the claimants and granted declarations relating to the applicable law and jurisdiction as well as the anti-suit injunctions.
Construction of the jurisdiction clause
In examining the wording of the jurisdiction clause in the master sale agreement, the judge concluded that it was exclusive for three reasons:
First, although the first limb of the clause imposed an intransitive obligation "to submit to the jurisdiction of the courts of England", the second limb was a transitive construction imposing a mutual obligation to submit all disputes relating to the agreement to the English courts. The courts upheld the long-held interpretation that a transitive obligation establishes an exclusive jurisdiction clause, whereas an intransitive obligation will lead only to a non-exclusive jurisdiction clause.
Secondly, having chosen that the master sale agreement would be governed by English law and have English jurisdiction, there seemed to be no good reason why the parties would then agree that the English courts would have non-exclusive jurisdiction. Thirdly, use of "may be heard" instead of "shall be heard", which is indicative of option rather than obligation, was considered in the light of the use and context of the word "irrevocably" in the clause, which the court held indicated that submission to the English courts was obligatory rather than optional.
To obtain an anti-suit injunction, each of the claimants (Standard Bank and Standard Bank Group) had to establish in respect of each of the defendants (1) a breach of an exclusive jurisdiction clause or (2) unconscionable or vexatious and oppressive conduct.
Standard Bank could only invoke the exclusive jurisdiction clause against Agrinvest, as they were the only parties to the master sale agreement. This meant that it had to establish unconscionable or vexatious and oppressive conduct on the part of Mr. Chawafaty and Cairo Phoenix to obtain anti-suit injunctions in respect of both the US and Egyptian proceedings.
Similarly, Standard Bank Group could not invoke the contractual provision as it was not a party to the master sale agreement and therefore had to show that all three defendants' behaviour had been unconscionable or vexatious and oppressive.
Since the court ruled the jurisdiction clause was exclusive and Agrinvest had not shown any good reason why it should not be held to its contractual bargain, the court exercised its discretion to grant an anti-suit injunction restraining Agrinvest from bringing proceedings against Standard Bank in the US and in Egypt.
An injunction was also granted restraining Mr. Chawafaty and Cairo Phoenix from bringing proceedings against the claimants in Egypt on the basis that:
- the Egyptian proceedings were unconscionable or vexatious and oppressive, and calculated to subvert or frustrate the English proceedings due to the fact that Mr. Chawafaty and Cairo Phoenix had no contractual claim against Standard Bank; and all three defendants had no contractual claim against Standard Bank Group;
- Egyptian law had been relied on, contrary to the jurisdiction clause of the master sale agreement, since if the claim had been brought in England the claims would have been time-barred. The court took this as further evidence that the Egyptian proceedings were unconscionable or vexatious and oppressive.
While the case does not create new principles, it provides a useful reminder of the way in which the English courts apply the established principles when deciding whether to restrain foreign proceedings. It is also a good example of the grounds used by the English courts when determining whether a jurisdiction clause is exclusive or non-exclusive. In this case, one of those grounds turned on the complex analysis of whether the obligations imposed in the clause were transitive or intransitive, highlighting the importance for contract draftsmen to specify expressly and clearly whether a jurisdiction clause is exclusive or not, depending on the parties' intentions.
Basis for obtaining an anti-suit injunction
An anti-suit injunction restrains a party from commencing or continuing with proceedings in a foreign court. The court's power to order an anti-suit injunction derives from section 37(1) of the Supreme Court Act 1981. The court may grant an injunction "in all cases where it appears to the court to be just and convenient to do so". The jurisdiction to grant an anti-suit injunction is to be exercised where the "ends of justice" require it.
Anti-suit injunctions are justified on the basis that they do not constitute a restriction on the jurisdiction of the foreign court per se, but merely a restriction on the ability of the defendant to avail itself of that jurisdiction. However, as anti-suit injunctions clearly interfere indirectly with the proceedings before the foreign court, they are usually granted only where the defendant has commenced proceedings in another jurisdiction for the purpose of obstructing proceedings in England and the conduct of the defendant is unconscionable or vexatious and oppressive.
The principles to be applied in the grant of anti-suit injunctions were reviewed in Société Nationale Industrielle Aerospatiale (SNIA) v Lee Kui Jak  A.C. 871 PC and summarised more recently in Trafigura Beheer BV v Kookmin Bank Co  EWHC 2350 (Comm) as follows:
- The court would grant an injunction where the pursuit of the foreign proceedings was “unconscionable”. The injunction is a personal remedy for the wrongful conduct of another party – a fault based remedial concept, in respect of conduct which the court may describe as “vexatious” or “oppressive”, but deriving from "the basic principle of justice".
- The court would readily grant an injunction to restrain proceedings brought in breach of an exclusive jurisdiction clause save in circumstances where the Brussels Regulation applies.
- Absent an agreement to the exclusive jurisdiction of the English court, or some other special factor, a person has no right not to be sued in a particular forum. Where proceedings are brought in a foreign forum, the question whether or not that forum is an appropriate forum is a factor in assessing the conduct of the party suing there.
- To grant an injunction, the English court must have a sufficient legitimate interest in the foreign proceedings, which means that if there is no contractual reason to prevent proceedings there, there must be proceedings in this country which require protection.
- English law attaches a high importance to international comity and the perception of the foreign court of interference in its proceedings, albeit indirect. There must therefore be a clear need for protection of the English proceedings.
- An injunction should not be granted if its effect would be to deprive the claimant in the foreign action of an advantage in that forum of which it would be unjust to deprive him.
In considering an application, the court embarks on a two-stage process. First, it asks whether England is the appropriate and natural forum for the trial. If the answer is yes, it then asks "do the ends of justice require the grant of an injunction?" (Cadre SA v Astra Asigurari SA  EWHC 2350 (Comm)).