Anti-suit injunctions have long been a useful tool for parties with a contractual arbitration clause when facing a counterparty that is intent on commencing proceedings in a foreign jurisdiction. However, in 2009 two cases, West Tankers1 and National Navigation,2 significantly narrowed the scope of an English court to grant an anti-suit injunction against a party located in an EU member state.
English law allows a court to grant an anti-suit injunction to prevent a party from bringing or continuing proceedings in a court where such proceedings are in breach of an arbitration agreement.3
At EU level, it has previously been found that anti-suit injunctions are generally inconsistent with the EU Regulation on Jurisdiction, Recognition and Enforcement of Decisions in Civil and Commercial Matters (44/2001), which determines the jurisdiction of courts over civil and commercial matters and provides for mutual recognition and enforcement of judgments within the European Union.4 However, the regulation contains a notable exception: it does not apply to arbitration.5
Therefore, English courts have been accustomed to granting antisuit injunctions within the European Union where the subject matter of the suit is arbitration, but West Tankers and National Navigation have significantly limited the courts’ ability to grant this remedy.
In West Tankers, a vessel owned by West Tankers was chartered to Erg Peroli. The vessel collided with a jetty owned by Erg. The charterparty was governed by English law and contained an arbitration clause, with London as the seat of the arbitration.
Multiple sets of proceedings were issued, including a claim by Allianz, Erg’s insurers, before an Italian court to recover amounts paid to Erg under the relevant insurance policies. West Tankers commenced proceedings in the United Kingdom. It sought (i) a declaration that Allianz was bound by the arbitration agreement, and (ii) an anti-suit injunction requiring Allianz to discontinue the Italian proceedings on that basis.
The matter was referred to the European Court of Justice (ECJ) for a ruling on the issue of whether, in reliance on the arbitration clause, an anti-suit injunction was available to West Tankers. The ECJ held that the granting of an anti-suit injunction restraining proceedings in an EU member state was inconsistent with the regulation because although there was a carve-out in the regulation for arbitration proceedings, the effect of granting the anti-suit injunction undermined the purpose of the regulation (ie, the principle of mutual trust between courts of EU member states and the unification of confl icts of laws in Europe).
The ECJ held that the Italian proceedings for damages fell within the scope of the regulation, as they concerned a claim in tort. The preliminary issue of whether the Italian court could rule on its own jurisdiction also fell within the regulation; otherwise, the decision would amount to “stripping that court of the power to rule on its own jurisdiction”.
Endesa held a bill of lading and National Navigation owned a vessel, the Wadi Sudr. Endesa purchased coal to be shipped by National Navigation under the bill of lading. Endesa claimed that National Navigation had discharged a cargo of coal at a port short of the contractual port of discharge. The bill of lading allegedly contained an arbitration clause with London as the seat of arbitration.
Multiple proceedings were issued. Endesa made an application to the Spanish court for the arrest of the vessel and to claim damages for late delivery. National Navigation issued proceedings in the United Kingdom on the same day, seeking a declaration of non-liability, and asserted that the terms of the bill of lading had been agreed in London. National Navigation then commenced an arbitration and court proceedings in London in an effort to establish English law as the law of the contract. National Navigation also sought a declaration that the arbitration clause was incorporated and an anti-suit injunction.
In a preliminary ruling on the validity of the arbitration clause, the Spanish court determined that the arbitration clause had not been validly incorporated into the bill of lading, and that by commencing the action in the English court, National Navigation had waived its reliance on an arbitration clause. However, it granted a stay until the English court ruled on its competence as court first seized. In the English proceedings, the case went to the Court of Appeal, which held that both the proceedings commenced in the Spanish court and that court’s preliminary ruling on the validity of the arbitration agreement (and its own jurisdiction) fell within the regulation. The fact that the preliminary issue dealt with matters relating to arbitration did not mean that it was covered by the arbitration exception. Accordingly, the English courts were bound to recognize the judgment of the Spanish court in relation to the incorporation of the arbitration clause. That decision gave rise to an issue estoppel in the arbitration proceedings, such that the English court was bound by the Spanish court’s decision that no arbitration clause was incorporated into the bill of lading.
These cases appear to have decided the English court’s position on anti-suit injunctions in relation to arbitration within the European Union. An anti-suit injunction will not be granted where parallel proceedings are commenced in an EU member state in breach of an arbitration agreement. Consequently, if parallel proceedings are commenced in the court of one EU member state and that court determines that it has jurisdiction, the court of another EU member state is bound to follow that decision, despite the fact that the arbitration agreement may be valid in the latter’s jurisdiction. Furthermore, the court of the latter state must recognize the judgment issued in the former state.
An exception appears to remain where the foreign parallel proceedings deal solely with the issue of whether an arbitration agreement exists between the parties. However, even a preliminary ruling on the validity of an arbitration clause, as in National Navigation, must be recognized if the overall subject matter of the foreign suit falls within the regulation.
Anti-suit injunctions are still available as a remedy from the English courts where proceedings are brought in a non-member state in breach of an arbitration agreement.
The availability of the remedy was recently confirmed in AES UST-Kamenogorsk Hydropower Plant LLP v UST-Kamenogorsk Hydropower Plant JSC.6 AES sought relief from the English court to restrain JSC from continuing proceedings in Kazakhstan, relying on the incorporation of an arbitration agreement between the parties. The Kazakh court had ruled that the arbitration clause was invalid and had made various findings against AES. However, at all times AES maintained that the Kazakh court did not have jurisdiction to hear the claim and sought an anti-suit injunction from the English court. No arbitration proceedings had been commenced by AES in England at the time.
Following the principle laid down in Turner v Grovit, in which it was found that a party was entitled to protect a contractual right not to be sued in a foreign country by virtue of the existence of an arbitration clause, the English court granted the anti-suit injunction restraining the proceedings in Kazakhstan, even though there were no actual or proposed arbitration proceedings.
The recent decision clarifies that anti-suit injunctions can still be obtained to restrain proceedings brought outside the European Union in breach of an arbitration agreement. It also reinforces the position that a party which has contractually agreed to deal with disputes by arbitration need not necessarily commence arbitration proceedings in order to protect its contractual right.