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A return to anti-suit injunctions?

30 March 2017 Features
By Sabina Adascalitei LLB, LLM, MCIArb

The UK’s decision to withdraw from the EU has given rise to questions regarding the impact on anti-suit injunctions and whether these may become available to English Courts again.

English Common Law Approach

Anti-suit injunctions were available where a party to a contract containing an exclusive jurisdiction clause in favour of the English Courts commenced proceedings before a different court, in breach of the clause. Furthermore, English Courts would also issue anti-suit injunctions when the conduct of one of the parties was deemed vexatious or oppressive and essentially, constituted an equitable wrong. The reasons underlying the role of anti-suit injunctions can be explained through the fact that foreign courts could not be trusted to uphold a jurisdiction agreement or have the power to prevent vexatious or oppressive conduct. The English Courts would derive their power to issue anti-suit injunctions simply through its in personam jurisdiction. In essence, the English Courts would not interfere with the jurisdiction of the foreign court, but rather, exercise restrictions on a party over whom the court had jurisdiction.

ECJ Approach

With the EU system in place, anti-suit injunctions were no longer allowed, mainly because the EU system was founded on the pillars of mutual trust. Therefore, if a party wishes to bring their claim in any EU Member State or Iceland, Norway or Switzerland, this will be governed by the Brussels Recast (Regulation (EU) No. 1215/2012) (previously the Brussels Regulation/Regulation No. 44/2001) or the Lugano Conventions, which provide that the defendant should be sued in their country of domicile. Furthermore, if proceedings between the same parties, with regard to the same matter are commenced in two EU Member States or EFTA countries, the rule is that the court first seized shall determine whether it has jurisdiction and while this happens, any proceedings started at a later stage, in a different court, will be stayed.

The case of Turner v Grovit represents a key example of the English Courts being precluded from issuing anti-suit injunctions where another Member State court was first seized, even in breach of an exclusive jurisdiction clause. This decision has been perceived as not placing enough weight on the importance of the exclusive jurisdiction clauses. These concerns have increased even more with the approach taken by the ECJ in Allianz SpA v West Tankers Inc. This case prohibited the use of anti-suit injunctions to uphold arbitration proceedings under the umbrella of the Brussels regime. The same reasoning was applied as in Turner v Grovit, even though Article 1(1)(d) of the Brussels Regulation expressly stated that its provisions will not apply to arbitration.

These issues were addressed by the Brussels Recast. Firstly, the ECJ decision in Erich Gasser v MISAT has been reversed, to the effect that the court nominated by the parties in an exclusive jurisdiction clause will be the one to hear the case, even if a foreign court has been first seized. Secondly, Recital 12 has been inserted to address the arbitration exception, that has supported the broad view that there might be a return to anti-suit injunctions in the context of arbitration (Gazprom).

The Future of Anti-Suit Injunctions Post-Brexit 

The so called “return of anti-suit injunctions” will depend on the outcome of the Brexit negotiations. The UK would have the following options:

  1. Agree to continue the Brussels Recast regime;
  2. Adopt the Lugano Convention that operates similarly to the Brussels Recast;
  3. Adopt The Hague Convention on Choice of Court Agreements 2005, which is applicable to jurisdiction and enforcement where parties have agreed on an exclusive jurisdiction clause;

If none of the Conventions would represent an attractive option, it is likely that the English courts will revert to the common law position and namely, to the principles of forum conveniens/forum non conveniens. Furthermore, if the Brussels Recast will no longer apply, parties to an arbitration agreement providing for a seat of arbitration anywhere in England, will be able to rely on anti-suit injunctions to protect the arbitration proceedings.

Conclusion

Should anti-suit injunctions become available to English courts with a view to protecting arbitration agreements irrespective of where the foreign proceedings are brought, it would bring significant advantage and enable London to continue being the top choice seat for arbitrations. However, it should be noted that it is likely anti-suit injunctions would not be the decisive factor when choosing London as the seat of arbitration.

Sabina Adascalitei LLB, LLM, MCIArb
Research and Academic Affairs Coordinator
E: sadascalitei@ciarb.org