News and insights

What is an anti-suit Injunction?

An anti-suit injunction is an order from the court prohibiting a party from commencing or continuing legal proceedings in a foreign court which are brought in breach of a binding law and jurisdiction clause.

It may also take the form of a mandatory injunction which requires the defendant to take a positive step, such as discontinuing the foreign proceedings.

Is there a breach of an agreement to arbitrate?

The most common scenario arises in respect of contracts of carriage contained in Bills of Lading. Under English law a Bill may purport to incorporate the law and jurisdiction clause of a Charterparty, but the cargo receiver under the Bill of Lading may nevertheless commence proceedings in a foreign court.

In granting the anti-suit injunction, the English court will consider the following:

• Is there a London arbitration clause in the contract of carriage contained in and evidenced by the Bill(s) of Lading?
• Is the defendant bound by any arbitration clause as holder of the Bill(s) of Lading?
• Has any agreement to arbitrate contained in the Bill(s) of Lading been ‘varied or superseded’?

Is there an arbitration clause in the Bill(s) of Lading?

Under English law, where the words of incorporation in a Bill of Lading include a clear reference to the law and arbitration clause of a Charterparty, that clause will be incorporated into the Bill of Lading - see The Rena K [1978] 1 Lloyds Rep 545 at p.551.

Is the defendant bound by the arbitration clause?

Usually the defendant will have relied upon its rights as lawful holder of the Bill of Lading to take delivery of the cargo and to commence the foreign proceedings.

The lawful holder of a Bill of Lading is obliged to resolve any claim under the Bill of Lading in accordance with its terms, including the agreement to resolve disputes in a particular forum – see The Kishore [2016] 1 Lloyd’s Rep. 427 at [31].

Has the arbitration clause been superseded or varied?

It is often the case that a claimant shipowner will issue an LOU in order to avoid, or release the vessel from, arrest. That LOU may be subject to foreign law and jurisdiction.

The wording of the LOU will need to be considered to see whether:

• there could be said to be an agreement (or intention) to abandon the original agreement to arbitrate disputes arising under the Bills of Lading; or
• the law and jurisdiction clause could be construed as applying to all disputes arising under the Bills of Lading, rather than just disputes under the LOU.

Can the defendant establish some strong reason why the application ought to be refused?

Where foreign proceedings are brought in breach of an agreement to arbitrate an anti-suit injunction will usually be granted unless there are “strong reasons” not to do so.

“Strong reasons” usually include:

• The injunction has not been sought promptly, and
• The foreign proceedings are too far advanced.
• See The Angelic Grace [1995] 1 Lloyds Rep 87 at p.96; Donohue v Armco Inc [2002] 1 Lloyd's Rep 425 at [24].

Has the injunction been sought promptly?

Delay in itself can be fatal to an anti-suit injunction application without any other relevant factors being considered. However, the court will look at what has actually happened during the period of the delay which may mean that the anti-suit injunction should not be granted, rather than considering the length of the delay in isolation.

It will be important to explain in a Witness Statement why there was a delay and what happened in that period. Relevant factors could include:

• How far the foreign proceedings have advanced. If they are still at an early stage, no prejudice will be suffered to the defendant by the granting of the anti-suit injunction. Similarly, wasted resources of the foreign court would be minimal.
• Whether the foreign court has engaged with the substantive merits of the case.
• Whether formal steps have been taken by the claimant.
• Whether the claimant has submitted to the foreign jurisdiction.

Has the claimant submitted to the foreign jurisdiction? 

The court will consider all steps taken in the foreign court and the extent to which these were a voluntary submission to the jurisdiction or were mandatory procedural steps in order to best protect the claimants’ position.

For example:

• A challenge to the jurisdiction of the foreign court is unlikely to be a voluntary submission to the foreign jurisdiction.
• Submissions on merits may be seen as a voluntary submission to the foreign court depending on the procedure in that court. In some jurisdictions it is not possible to challenge the jurisdiction of the court before submissions on merits are to be served. Where submissions are compulsory, a court may not find that this is a voluntary submission to the jurisdiction. However, a claimant should not delay in making the anti-suit injunction where submissions are due.

Can an LOU provided by the claimant shipowners result in a submission to the foreign jurisdiction?

This will depend on the wording of the LOU and the circumstances with which it was issued.

Where the claimant shipowner had no other choice but to issue an LOU which, for example, responded to a foreign judgment, an English court may be sympathetic to the commercial pressure put on the claimant owners. It is important to explain this in the Witness Statement and append evidence, such as correspondence negotiating the terms of the LOU.

On notice (inter partes) or without notice (ex parte)?

An ex parte application should ordinarily only be made where there is a need for urgency and there is a risk that notifying the defendant would defeat the purpose of the application (e.g. by causing the defendant to issue an anti-anti-suit injunction). It is advisable to seek foreign legal advice on the risk of an anti-anti-suit injunction.

If there is a need for urgency, you may consider an inter partes application on an expediated basis with service by alternative means.

The procedure for ex parte and inter partes applications are slightly different. It is likely that there will be two or three hearings for an ex parte application to allow the respondents to appear, whereas there may be one or two hearings for an inter partes application, depending on whether it is contested or not. Accordingly, an inter partes application is likely to reduce the number of hearings and the costs overall.

Summary

• Establish that there is a binding law and jurisdiction clause and that the defendants have breached it.
• Don’t delay in making application after being made aware of the defendants’ breach.
• Avoid taking any step in the foreign proceedings beyond challenging the jurisdiction of the foreign court unless you have no choice.

Impact of Brexit and proceedings in Europe

The United Kingdom (UK) is no longer bound by the Lugano Convention 2007 or Brussels Recast Regulations, both of which prohibited the English Courts from granting anti-suit injunctions in relation to proceedings in Member States. However, the UK has applied to accede to the Lugano Convention which, if approved, is likely to prohibit anti-suit relief in relation to actions in court of the EU or Lugano states. We recommend that you check the current position before pursuing the anti-suit injunction in any Member state.

This article was prepared by Bethany Hammerton. Bethany has been involved in numerous successful anti-suit injunction applications, including The Ulusoy-11 [2020] EWHC 3645 (Comm). A link to the judgment can be found here.