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Anti-suit injunctions – the English position
A presentation to the Istanbul meeting of the
AIDA Reinsurance Working Party
Michael Mendelowitz
Partner
Norton Rose LLP
3 May 2012
Key points
Restraining court proceedings commenced in breach of arbitration
agreement
• Three different regimes
 Stay of court proceedings in UK under section 9 of Arbitration
Act 1996
 Anti-suit injunctions restraining foreign court proceedings in
– EU Member States where Regulation EC44/2001 (“Brussels I”)
applies
– Rest of world
• Anti-suit injunctions no longer granted where Brussels Regulation
applies, but available with respect to other jurisdictions
• “Arbitration exception” to Brussels Regulation
 Front Comor case shows exception currently of limited effect
 Practical solutions and proposals for EU legislative reform
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Foreign proceedings commenced outside EU

English courts have – and will exercise – power to grant
injunctions restraining party over whom court has personal
jurisdiction from commencing or continuing foreign court or
arbitral proceedings in breach of agreement requiring dispute
to be litigated or arbitrated exclusively in England

Statutory sources of courts’ power
 Section
37 of Senior Courts Act 1981: “The High Court may
… grant an injunction … in all cases where it appears …
just or convenient to do so.”
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Foreign proceedings commenced outside EU
(continued)
Statutory sources of courts’ power (continued)
 Section
44 of Arbitration Act confers equivalent powers on
court in relation to arbitral proceedings, but
– Only interim (not final) injunctions possible
– Court can only act if tribunal itself is powerless or ineffective
– Unless case is urgent, permission of tribunal or agreement of
parties required
– Court’s power is discretionary and may be excluded by
agreement of parties
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Juridical basis for exercise of court’s powers

Breach of contract
 Lord
Millet in The Angelic Grace [House of Lords, 1995]:
“There is no good reason for diffidence in granting an injunction
to restrain foreign proceedings on the clear and simple ground
that the defendant has promised not to bring them.”

Vexatious or oppressive conduct
 For
example, foreign proceedings commenced by third party
who has colluded with defendant to impede or frustrate English
arbitration: BNP Paribas v Russian Machines [Commercial
Court, 2011]
 But
in absence of exclusive English jurisdiction or arbitration
clause, merely commencing proceedings in another available
jurisdiction is not of itself vexatious or oppressive: Highland
Crusader v Deutsche Bank [Court of Appeal, 2009]
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Practical issues to note
●
English court must have jurisdiction in personam over target of
injunction
 Usually
established by submission to jurisdiction as part of
arbitral agreement which applicant is seeking to enforce
 But
may be necessary to invoke “long arm” jurisdiction against
non-domiciled respondents who dispute jurisdiction, or third
parties

Remedy is equitable and therefore discretionary, but will be
granted fairly readily where
 Claimant
can demonstrate existence of arbitration agreement
 Application
 No
for anti-suit relief brought promptly
substantial risk of injustice caused by inconsistent decisions
involving interests of third parties
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Practical issues to note (continued)
• In Sulamerica Companhia Nacional de Seguros and Others v Enesa
Engenharia SA and Others [Commercial Court, 19 January 2012],
injunction granted restraining continuation of proceedings in Brazil despite:
 insurers, insureds and subject matter of insurance (Jirau hydro-electric
project) all located in Brazil;
 CAR insurance policy subject to Brazilian law and exclusive jurisdiction
of courts of Brazil; and
 arbitration clause (which provided for seat of arbitration to be in London)
arguably limited to disputes over quantum, following failure of mediation
● Comment:
 Continues trend of English cases holding that seat of arbitration highly
significant in determining arbitral law to be applied
 Insurance arrangements (including arbitration clause) – and English
litigation – acknowledged to be led by London reinsurance market
 Reinsurers may have achieved dubious jurisdictional victory on basis of
unclear contract drafting
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Proceedings commenced in another
EU Member State

Brussels I Regulation effectively precludes anti-suit injunctions,
even when foreign proceedings have been commenced in bad
faith: Turner v Grovit [European Court of Justice, 2004] (decided
under equivalent provisions of 1968 Brussels Convention)

But Regulation excludes from its scope “arbitration” (Article I(ii)(d))

Allianz SpA (formerly Riunione Adriatica de Sicurta SpA) v West
Tankers Inc (“The Front Comor”) [ECJ, 2009]
 Vessel
owned by West Tankers and chartered to Erg Petroli SpA
collided with jetty in Syracuse, Sicily owned by Erg
 Charterparty
 Erg
commenced arbitration in London seeking damages
 West
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provided for London arbitration under English law
Tankers counterclaimed declaration of non-liability
Proceedings commenced in another
EU Member State (continued)
 Erg’s
insurers (having indemnified their insured) commenced
subrogated proceedings (so-called “Italian torpedo”) in Tribunale
di Siracusa against West Tankers
 West Tankers obtained anti-suit injunction in English courts
 On appeal, House of Lords referred question to ECJ: is anti-suit
injunction in support of arbitration agreement consistent with
Brussels Regulation?
 ECJ took narrow view of exception in Article I(ii)(d):
– What must be considered is not application for anti-suit
injunction itself, but nature of proceedings against which such
injunction directed
– Exception therefore does not apply to dispute concerning
jurisdiction involving determination of validity or scope of
arbitral agreement where such determination arises as
incidental question in claim for damages
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Proceedings commenced in another
EU Member State (continued)
 Rationale

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of ECJ: if anti-suit injunction could be granted in
circumstances of this case, achievement of objective of
Regulation – i.e. unification of jurisdiction conflict rules in civil
and commercial matters – might be prevented
Consequences of Front Comor decision
 Challenge to continuation of proceedings in Tribunale di
Siracusa must be brought before that court, which alone has
power to determine matters relating to its own jurisdiction
 More generally, English courts may not grant injunctions to
restrain proceedings brought in court of another EU Member
State in breach of agreement to arbitrate disputes in England
Subsequent developments – EU legislation

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European Commission adopted Heidelberg Report (2007 study
evaluating application of Brussels I Regulation) and published
Green (Consultation) Paper in April 2009, proposing (inter alia):
 Partial deletion of current arbitration exception, bringing all
arbitration-related court proceedings within scope of Regulation
 Exclusive jurisdiction to be granted to courts of Member State of
place (i.e. seat) of arbitration in respect of all court proceedings
in support of arbitration (subject possibly to contrary agreement
between parties)
 Introduction of uniform criteria for determination of place of
arbitration
 New provision requiring court seised of proceedings brought in
breach of arbitral agreement to stay those proceedings pending
decision on issue by court at place of arbitration
Subsequent developments – EU legislation
(continued)
Reaction mixed – in particular, arbitral community argued
against
 Removal of arbitration exception
 Apparent abandonment of Kompetenz-Kompetenz principle
(arbitral tribunal’s power to rule on its own jurisdiction)
• Commission’s proposals published on 14 December 2010
 Arbitration exception to be retained but amended
 Effect of Front Comor neutralised by provision that proceedings
in court in any other jurisdiction to be stayed where question of
arbitral jurisdiction is before either arbitral tribunal or court at
seat of arbitration
 Next stage will be approval of European Parliament and Council;
said to be expected within next two years (although process has
to date already taken much longer than originally anticipated)

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Subsequent developments – English case law




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Front Comor saga not over yet
While Italian proceedings pending –
 insurers joined by Commercial Court as parties to English
arbitration (October 2007);
 tribunal rendered award (October 2008) declaring West Tankers
not liable to Erg for loss arising out of collision
West Tankers commenced proceedings in Trieste (February 2009)
for recognition and enforcement of arbitral award under New York
Convention
 Insurers have challenged Convention application
 No determination yet
On 24 January 2012, Court of Appeal affirmed decision of
Commercial Court entering judgment in favour of West Tankers to
enforce award
Subsequent developments – English case law (cont’d)
 Insurers’
argument that declaratory awards not subject to
Section 66 of Arbitration Act (because not enforceable in same
way as monetary or coercive award) rejected
 Toulson LJ: “[I]n this case the owners perceive that there may
be a possible advantage to them in having the award in the
form of a judgment and the insurers evidently perceive a risk
that the owners may be right. The reason has to do with a
jurisdictional battle which has already taken the case to the
House of Lords … and to the European Court of Justice ….”
● Commercial Court has recently (4 April) held arbitrators may
award damages to West Tankers for breach of obligation to
arbitrate – such award could include
 costs incurred by reason of Italian proceedings; and
 indemnity against any sums payable to insurers following
proceedings to enforce Italian judgment (important if West
Tankers has assets elsewhere – particularly in Italy)
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Conclusions
But what if “Italian torpedo” succeeds and Tribunale di Siracusa
eventually holds West Tankers liable on merits of case?
 Application for enforcement of Italian judgment in England bound
to fail because inconsistent with finding of arbitral tribunal and
decisions of English courts (and presumably vice versa for
request for recognition of English judgment in Italy)
 Party in position of West Tankers may protect itself by obtaining
– (from arbitral tribunal) declarations of non-liability plus
entitlement to indemnity against any damages awarded by
foreign court; and
– (from English court) judgment recognising and enforcing
arbitrators’ declarations
● But latest decision of Commercial Court likely to be appealed
● Better solution: acceleration of amendment of Brussels I
Regulation to clarify and reform scope of arbitration exception

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Our international practice
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Disclaimer
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developments in the law. It does not contain a full analysis of the law
nor does it constitute an opinion of Norton Rose LLP on the points of
law discussed.
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