Whether defendant to an anti-suit injunction application was bound by an arbitration agreement
The claimants applied for an anti-suit injunction under section 37 of the Senior Courts Act 1981, on the basis that the defendant was bound to arbitrate rather than pursue his claim before the New York courts. The arbitration agreement in question provided that: “The Parties agree that any dispute, controversy or claim arising between the Parties out of or in connection with this Agreement … shall be finally settled by arbitration in accordance with the UNCITRAL Arbitration Rules”. The defendant was not a party to the contract in which the arbitration agreement was found, but the contract did purport to bind one of the party’s “Affiliates” and the judge, Jonathan Hirst QC, concluded that it was likely that the defendant did fall within the definition of an “Affiliate”.
However, the judge said that the words “arising between the Parties” in the arbitration agreement was an important factor: “Had they not included these words, it might have been easier to conclude that the arbitration clause was intended to apply also to Affiliates”. Although it would have been “much neater” had the arbitration agreement extended to include disputes involving the defendant, “there are limits as to what a Court can properly do to improve a carefully drafted and (at least in this respect) reasonably clear written agreement”. It would have been easy enough to add the defendant to the arbitration agreement or to have concluded a side agreement, had that been the intention. Accordingly, the defendant was probably not bound by the arbitration clause and it had certainly not been established to a high degree of probability that he was bound.
The judge also dismissed an argument that the claimants could rely on section 44 of the Arbitration Act 1996. This section grants the court the power to grant an interim injunction in support of arbitral proceedings. In Starlight Shipping v Tai Ping (see Weekly Update 31/07), Cooke J held that he could grant an anti-suit injunction under both section 44 of the Act and section 37 of the 1981 Act. However, the Supreme Court in AES LLP v JSC (see Weekly Update 22/13) subsequently opined that “the better view” is that the source of the power to restrain foreign proceedings brought in breach of an arbitration agreement is to be found not in section 44 but in section 37 instead. The judge agreed with that view and said that the claimants had not been able to “offer any way round this clear statement of principle”.