INTRODUCTION

An anti-suit injunction is a useful tool through which a party to an arbitration agreement may restrain the pursuit of foreign court proceedings brought in breach of the arbitration agreement. An interesting issue that arose in a recent UK Supreme Court (“UKSC”) decision was whether an anti-suit injunction may be issued where the party seeking to uphold the arbitration agreement has not commenced arbitration and has no intention of doing so.

THE DECISION

The UKSC answered in the affirmative, holding that it had the power to declare that a claim could only be brought in arbitration and injunct the continuation or commencement of foreign court proceedings even where the applicant had not commenced arbitration and had no intention of doing so (see Ust-Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk Hydropower Plant LLP [2013] UKSC 35).

In this case, the appellant sued the respondent in the Kazakhstan courts for breaching a concession agreement which had a London arbitration clause. The respondent’s attempt to obtain a stay of proceedings in the Kazakhstan courts failed. The respondent then brought an action in the English courts for a declaration that the arbitration clause was valid and enforceable and for an anti-suit injunction to restrain the appellant from continuing the Kazakhstan Court proceedings. The English Commercial Court granted the declaration and the anti-suit injunction. The English Court of Appeal dismissed an appeal from this decision. The appellant then mounted a further appeal to the UKSC. One of the arguments that the appellant made on appeal was that an anti-suit injunction could not be issued if there were no current or intended arbitration proceedings.

The UKSC unanimously rejected this argument and affirmed the orders made below in a judgment delivered by Lord Mance. The UKSC first dealt with the position independently of the UK Arbitration Act 1996. The UKSC reasoned that the negative aspect of an arbitration clause (ie the agreement not to commence proceedings other than in arbitration) is as fundamental as the positive (ie the agreement to only bring proceedings in arbitration).

The UKSC also observed that the statements of principle in cases involving anti-suit injunctions where there were existing arbitration proceedings do not suggest that the UKSC’s power was restricted to pending or intended arbitration proceedings. Further, a stay of court proceedings brought in breach of an arbitration agreement is not conditional on the existence of arbitration proceedings. In a similar vein, the existence of arbitration proceedings ought not to be a condition to an anti-suit injunction.

The UKSC then considered the position under the UK Arbitration Act 1996 (“Act”) and held that the Act did not change the UKSC’s view that an anti-suit injunction could be issued in this case. The UKSC considered various provisions of the UK Arbitration Act 1996 and held that none of them precluded the UKSC from exercising its general power to issue injunctions. For example, under section 44(2)(e) of the UK Arbitration Act 1996, the UKSC had the power to grant an interim injunction “for the purposes of and in relation to arbitral proceedings”, which suggested that the UKSC did not have the power under that provision to issue an injunction where there was no pending arbitral proceedings. The UKSC concluded that provisions such as section 44(2)(e) of the UK Arbitration Act 1996 did not exclude the UKSC’s general power under section 37 of the Senior Courts Act 1981 to issue injunctions.

COMMENT

This decision is significant for the UKSC’s recognition that the negative aspect of an arbitration clause is as worthy of protection as its positive aspect. It remains to be seen if the Singapore courts will take the same view as the UKSC. The Singapore courts have issued anti-suit injunctions to restrain foreign court proceedings where arbitration proceedings were pending. For example, in WSG Nimbus Pte Ltd v Board of Control for Cricket in Sri Lanka [2002] 1 SLR(R) 1088, the High Court granted an anti-suit injunction to restrain a party from proceeding with court proceedings in Colombo in breach of a Singapore arbitration clause where arbitration in Singapore was pending.

However, like the UK Arbitration Act 1996, the provision in the International Arbitration Act (Cap 143A, 2002 Rev Ed) on court-ordered interim measures appears to be restricted to measures “for the purpose of and in relation to an arbitration” (see section 12A(2)). As such, a person seeking an anti-suit injunction in the absence of pending or contemplated arbitration proceedings may have to find some other basis for the court to order an anti-suit injunction. One possible avenue is an application under section 4(10) of the Civil Law Act (Cap 43, 1999 Rev Ed). There would, however, be a need to carefully consider the scope and history of section 4(10) of the Civil Law Act (in this regard, reference should be made to the comments of the Court of Appeal in Swift-Fortune Ltd v Magnifica Marine SA [2007] 1 SLR(R) 629 on section 4(10) of the Civil Law Act in a different context).