Stop that litigant! The importance of English anti-suit injunctions during COVID-19

With the litany of disputes arising out of COVID-19, many parties are forum shopping to identify the jurisdiction they perceive to be the most favourable to them to determine their disputes. English anti-suit injunctions are a powerful and important tool in a litigant’s toolbox to secure the contractually agreed forum or otherwise to avoid vexatious or oppressive proceedings.

What is an anti-suit injunction?

An anti-suit injunction is an order that prohibits a party from commencing or continuing proceedings in another jurisdiction or forum.

Reasons for an anti-suit injunction

There are many reasons for seeking anti-suit injunctions, including:

  • To secure the contractually agreed forum
  • To benefit from substantive or procedural advantages of proceedings in England or to avoid substantive or procedural disadvantages of proceedings in a foreign jurisdiction
  • To avoid perceived injustice in a foreign jurisdiction
  • To save time and/or expense
  • To act defensively and prevent enforcement of a foreign judgment

The application

The English court can only grant an anti-suit application where it has personal jurisdiction over the respondent. Where English proceedings are already afoot, this requirement should be easily satisfied. Where there are no existing proceedings, personal jurisdiction presently depends upon whether or not the matter falls within the EU Brussels I Regulation, although parties should be mindful of the upcoming impact of Brexit. Personal jurisdiction under the Brussels I Regulation may be satisfied for example where the respondent is domiciled in England or the action relates to a contract to be performed in England. Outside of the Brussels regime, jurisdiction is satisfied if the English court provides permission for service of the claim form out of the jurisdiction under the Civil Procedure Rules.

There are two grounds upon which to pursue an anti-suit application:

1. Breach of a binding contract

This is the most common application where the applicant must show that the respondent is bound by and in breach of a jurisdiction clause by commencing or threatening to commence proceedings in a foreign court. A valid exclusive jurisdiction clause will normally be enforced unless there is a strong reason not to do so. Examples of strong reasons not to do so may include improper conduct by the applicant (i.e. not giving full and frank disclosure in the application, a delay in making the application or participation in the foreign proceedings), or prejudice to third parties. Where there is a non-exclusive jurisdiction clause, applications typically arise post commencement of proceedings in the contractually agreed forum, for example, where a respondent has commenced foreign proceedings seeking to restrain proceedings in England or a respondent has later commenced parallel proceedings in a foreign jurisdiction.

2. Vexatious and oppressive proceedings

Where there is no contractual agreement, parties seek to show that the foreign proceedings are vexatious or oppressive. Examples of vexatious or oppressive foreign proceedings have included re-litigating matters already the subject of a decision of the English court and proceedings seeking to circumvent the English court’s jurisdiction.

In both cases, the court will exercise its discretion whether or not to grant the application, which involves it taking into account factors such as comity and any disadvantage or prejudice to a respondent by the granting of the application.

Important points to note

A few important points to note when making an anti-suit application include:

1. Delay

Delay can defeat an anti-suit application, so an applicant should not waste time in applying for one. The further advanced the foreign proceedings, the more difficult it will be to restrain a respondent from pursuing them.

2. Participation in foreign proceedings.

Actively participating in the foreign proceeding can defeat an anti-suit application as it can be understood as the applicant having accepted the jurisdiction of the foreign court. Be careful, therefore, with the extent of engagement in a foreign proceeding.

3. Without notice applications

Whilst applications for an anti-suit are normally made with notice to the respondent, one should consider whether the application can be made without notice. This may be justified, for example, given the urgency of the application or if doing so would defeat the purpose of the application. In making an application without notice, however, an applicant must ensure it meets its duty to give full and frank disclosure to the court of all relevant facts and arguments, including those arguments anticipated to be raised by the respondent.

4. Anti-suit injunctions and the EU

National courts in EU Member States are presently unable to grant anti-suit injunctions restraining court proceedings in another Member State (Turner v Grovit [2004]). It remains to be seen whether EU anti-suit injunctions will become available again post Brexit.

5. Binding on the party not the foreign proceedings

Anti-suit injunctions bind the party against whom they are made. They do not bind the foreign court or its proceedings, although they can influence decisions of the foreign court.

6. Breach of an anti-suit injunction

Breach of an anti-suit injunction amounts to contempt of court, which can lead to sanctions such as fines, imprisonment and asset seizure. This is a strong incentive for a respondent to comply with the terms of an anti-suit injunction and is what makes such injunctions a powerful tool for a litigant.

7. Enforcement

Even when an anti-suit injunction is breached by a respondent, the injunction can be used defensively i.e. by preventing the enforcement of a foreign judgment in England and other jurisdictions where the anti-suit can be recognised.

Anti-suit injunctions and arbitration

Parties who have entered into an agreement to refer disputes to arbitration can enforce that agreement by an anti-suit injunction in the same way as one enforces an exclusive jurisdiction clause. Relief will normally be granted unless there is a strong reason not to grant the relief sought.

In applying for and obtaining the relief, there is no requirement for arbitration to have already been commenced or even contemplated because the agreement to arbitrate itself amounts to a negative promise not to bring the foreign proceedings (see Ust-Kamenogorsk Hydropower Plant v AES Ust-Kamenogorsk Hydropower Plant LLP [2014]).

In the same manner as for jurisdiction clauses above, national courts in EU Member States are presently unable to grant anti-suit injunctions restraining court proceedings in another Member State in breach of an arbitration clause in a contract (see ECJ decision in Allianz SpA v West Tankers Inc (Case C-185/07) and Nori Holdings Ltd v Bank Otkritie Financial Corporation [2018]).

These are very controversial decisions and again it remains to be seen whether such injunctions will become available again post Brexit. In the meantime, however, EU law does not prohibit an anti-suit injunction being issued by an arbitral tribunal and the tribunal’s award being enforced in EU Member States under the 1958 New York Convention (“Gazprom” OAO v Lietuvos Respublika (C-536/13)).

Comment

Securing the right jurisdiction is critical to the outcome of your dispute. In the chaos of COVID-19, be alert to any actual or threatened proceedings in a foreign jurisdiction that breach the contractually agreed forum or are otherwise vexatious or oppressive.

It is imperative to the success of an English anti-suit injunction to take immediate legal advice and act swiftly to obtain the injunction. An applicant should also be careful with its participation in foreign proceedings so as not to be considered as having submitted to the jurisdiction of the foreign court.

For now, anti-suit injunctions are impermissible between the courts of EU Member States, but watch this space on the impact of Brexit. In the meantime, in arbitration a party may seek an anti-suit injunction from a tribunal for enforcement in a Member State under the 1958 New York Convention.

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