5.1 ANTI SUIT INJUNCTIONS
The much anticipated decision of the House of Lords in West Tankers Inc. v. RAS Riunione Adriatica di Sicurta SpA and Others was released on 21.2.07.
You may recall that the issue before the Court was whether the court of a member state may grant an injunction against a person bound by an arbitration agreement to restrain him from commencing or prosecuting proceedings in breach of the agreement in a court of another member state which has jurisdiction to entertain the proceedings under EC Regulation 44/2001 (the Brussels Regulation).
In this case London arbitration proceedings had been commenced between charterers and owners according to the English law and London arbitration clauses in the charterparty. The charterers’ insurers brought proceedings to recover from owners amounts paid to the charterers under the insurance policies by way of subrogation before the Italian courts.
The issue which arose was therefore whether the Italian proceedings should be restrained in favour of London arbitration proceedings. The question has been referred by the House of Lords to the European Court of Justice. The leading speech given by Lord Hoffman emphasizes the distinction between arbitration proceedings and litigation, and the non-applicability of the Brussels Regulation to arbitration.
In Noble Assurance Co and another v Gerling-Konzen General Insurance Co – Butterworths Law Direct 23.2.07 the first claimant, a company based in Vermont, was the captive insurer of the second claimant, Shell Petroleum Inc, which was incorporated in Delaware. The defendant was an international reinsurance company with a United Kingdom branch based in London. The first claimant issued a policy providing coverage for various entities beyond Shell itself. The policy provided for London Arbitration. It also provided for New York Law. The defendant provided a $US50m layer of reinsurance, subject to an excess of $US100m.
When a claim was brought, the first claimant paid, and sought to recover 56% of the sum reinsured by the defendant. The defendant paid only half of that sum, disputing the parties covered by its reinsurance. The dispute was referred to arbitration in London, arbitrators finding in favour of the claimant. The defendants brought proceedings in Vermont, seeking to restrain enforcement of the award, seeking rescission of one of the contracts, vacatur of the award in the arbitration, a declaration rendering the certificate policy void, damages and costs. By a letter of November 2006, the first claimant gave notice that it was beginning a new arbitration, essentially in relation to the defendant’s complaint in the Vermont proceedings. The claimants obtained an anti-suit injunction in London relating to the Vermont proceedings, on a temporary basis. The instant hearing concerned whether the order should be continued.
The Commercial Court gave declaratory relief. It emphasised that this case was one of a London reinsurer, doing business on the London market, who had been held in arbitration proceedings under the Arbitration Act 1996 to have provided certain coverage to the reinsured, and who was attempting to nullify the result by bringing suit in another jurisdiction that was contrary to the matters determined by the arbitrators. For a London reinsurer to behave in that way was properly to be described as vexatious, oppressive and an abuse of process and/or unconscionable. It was also objectionable that the reinsurer should seek in those proceedings to make allegations of misrepresentation, non-disclosure and bad faith, when it had the opportunity to make such allegations in the arbitration but had chosen not to. It was equally objectionable that the reinsurer should seek to join the ultimate insured. The court therefore had jurisdiction to grant the injunction.
5.3 INJUNCTION RESTRAINING PROCEEDINGS
In Benfield Holdings Ltd and others v Richardson and others – Butterworths Law Direct 22.2.07 there were parallel proceedings in England and New York arising out of the same underlying dispute. Deposition in the New York proceedings was sought of a number of witnesses. The second and third defendants applied successfully without notice to the English court for an interim order restraining the second claimant from deposing those witnesses for the purposes of the New York proceedings pending trial (which was due to take place in March 2007) in the English court of liability issues in the English proceedings. The second claimant sought to set aside that injunction.
The Queen’s Bench court held that, in the circumstances of the case, no good reason had been put forward for seeking depositions, certainly not before the March trial, from the four witnesses. To do so would be disruptive of the English proceedings, and would be procedurally and forensically unfair and oppressive to the second and third defendants. Material factors included that the English proceedings were the lead proceedings in which the liability disputes between the parties could expect to be resolved, and that trial would take place on an expedited basis in the near future. The injunction would therefore continue in force.
5.4 STAY OF PROCEEDINGS
In Sony Computer Entertainment Ltd v RH Freight Services Ltd and others – Butterworths Law Direct 26.2.07 a dispute arose under the CMR concerning a consignment of cargo carried from Reading to Tilburg, in the Netherlands, which was hijacked by armed men and stolen. The claimant contended that the loss was due to the wilful misconduct of the carrier, within the meaning of art 29 of the Convention, and that as a result the limits of recovery in the Convention did not apply. In March 2006, the third defendant issued proceedings in the Netherlands, seeking a declaration of non-liability or, alternatively, a declaration that it was entitled to limit its liability under the Convention. The claimant was not a defendant to those proceedings, but related companies were. Later the same month, the claimant began the instant action in London. In July 2006, proceedings were begun in the Dutch court against the claimant. The third defendant sought the same relief in those proceedings as in the other Dutch proceedings. It applied in the English action for a declaration that the English court had no jurisdiction, or that it should exercise its discretion not to exercise jurisdiction. The first and second defendants made similar applications. The primary basis was that there should not be duplication of proceedings.
The Commercial court held, on the facts, that the arguments were overwhelmingly in favour of the English court granting the applications for staying the action. Although the first and second defendants were based in England, they had applied to stay the English action for sound reasons. The incident which gave rise to the claim took place in Belgium, very close to the Dutch border. There was little significant difference between the disclosure obtainable in Dutch and English litigation, or in the recovery of costs.