ANTI-SUIT INJUNCTIONS AND OTHER JURISDICTIONAL REMEDIES

IN THE MARINE CONTEXT

Sean Gibbons, Partner, Stephenson Harwood

I intend to address in this talk some of the history behind the anti-suit injunction remedy that is
available before the English Courts; how applications for stays of proceedings inter-relate with
this remedy; recent developments, in particular the European Court’s decisions curtailing the
availability of the remedy within Convention/Regulation countries; and the OT Africa Line v.
Magic Sportswear & Others case that went before the Court of Appeal last year and which is of
particular interest as the English proceedings are going “head to head” with Canadian
proceedings.

Origins of anti-suit injunctions

English Courts have exercised a jurisdiction to restrain proceedings in a foreign court and to stay
domestic actions since at least 1821. In Bushby v. Munday (1821) 5 Madd. 297, Vice-Chancellor
Leach stated the following:

“… this Court has full authority … to order Defendants to take, or to omit to take, any
steps and proceedings in any other Court of Justice, whether in this country, or in a
foreign country.”

The view adopted (which remains the same today) was that the relief sought, whether it be an
injunction or a stay, operated in personam and was not intended to interfere with the other Court.
Therefore, what needed to be determined was whether the ends of justice required the issue of an
injunction or a stay depending on the circumstances of the case. In Bushby, the Vice-Chancellor,
in deciding that an injunction should be granted, made findings that the English Court was a more
convenient jurisdiction and that the proceedings in Scotland, due to procedural law, were less
likely to lead to the truth. The Judge concluded that the English Court should pursue its superior
methods for determining both law and fact.

The same test developed for both anti-suit injunctions and stays. It was laid down by Lord Justice
Scott in St. Pierre v. South American Stores [1936] 1 KB 382 per Scott LJ:

“In order to justify a stay two conditions must be satisfied, one positive and the other
negative: (a) the defendant must satisfy the Court that the continuance of the action would
work an injustice because it would be oppressive or vexatious to him or would be an
abuse of the process of the Court in some other way; and (b) the stay must not cause an
injustice to the plaintiff. On both the burden of proof is on the defendant.” (p. 398)

Where these requirements were met, the Court would exercise its discretion in granting a stay or
restraining the foreign proceedings.

Recent developments

Despite the remedy being available in the English Courts for over 180 years now, it would be
correct to say that it is only in the last 20 years that English law has reached any sort of firm
conclusions as to the basis of the exercise of the jurisdiction, and in particular its relationship both
to the doctrine of forum non conveniens and the power to stay English proceedings themselves.

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The main principles which govern the English Court’s ability to grant anti-suit injunctions have
been developed in a series of leading cases over the past 20 or so years, such as SNI Aerospatiale
v. Lee Kui Jak [1987] AC 871, Continental Bank v Aeakos [1994] 1 WLR 588, The “ANGELIC
GRACE” [1995] 1 Lloyd’s Rep 579, Airbus Industrie Gie v. Patel [1999] 1 AC 119, Donohue v.
Armco [2000] 1 Lloyd’s Rep 579 and [2002] 2 Lloyd’s Rep 425 and Turner v. Grovit [2002] 1
WLR 107 (subsequently overturned by the ECJ at [2005] 1 AC 101). The OT Africa Line case in
which we were involved and which I will discuss in detail later demonstrates the application of
the principles developed over these cases.

SNI Aerospatiale v. Lee Kui Jak

In the Aerospatiale case, Lord Goff identified four principles which were relevant to a
consideration by a Court as to whether an anti-suit injunction should be granted. These are as
follows:

1. The jurisdiction is to be exercised when the ends of justice require it.

2. Where the Court decides to grant an injunction restraining proceedings in a foreign Court,
its order is directed not against the foreign Court, but against the parties so proceeding or
threatening to proceed.

3. An injunction would only be issued restraining a party who is amenable to the jurisdiction
of the Court, against whom an injunction would be an effective remedy.

4. Since such an order indirectly affects the foreign Court, the jurisdiction is one which must
be exercised with caution.

The Aerospatiale case is particularly important and justifies a brief review of the background and
decision of the Privy Council.

A helicopter manufactured by a French company (SNI) was owned by an English company and
operated and serviced by a Malaysian company. It crashed in Brunei, killing a successful local
businessman. His widow and his estate commenced several sets of proceedings, as follows:

(i) In Brunei against the Malaysian company and SNI;

(ii) In France against SNI; and

(iii) In Texas against SNI (and its associated companies) and the Malaysian company and its
associates.

SNI applied to the Brunei High Court for an order restraining the widow/the estate from
continuing with the Texas proceedings. The application was dismissed and SNI appealed. The
Brunei Court of Appeal dismissed SNI’s appeal against the refusal to grant an injunction – it
appears to have decided that, having regard to the work done by the widow’s/estate’s Texas
attorneys, Texas had become the appropriate and natural forum. SNI appealed to the Privy
Council.

The Privy Council allowed SNI’s appeal, holding that;

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(i) In considering whether an injunction should be granted to restrain a party beginning or
pursing an action in another jurisdiction, the Court did not proceed on the same principles as
those applied when granting a stay of proceedings on the grounds of forum non conveniens;

(ii) The authorities showed that:-

(a) an injunction would be granted where justice required that a party amenable to the
jurisdiction of the Court should be restrained from proceeding in a foreign jurisdiction, and

(b) although the issue of whether a party’s action was oppressive or vexatious was important
in determining whether the interests of justice required that party to be restrained from
proceeding in the foreign jurisdiction, the Court must also consider the injustice to that party (if
restricted to the natural forum for determining the dispute) if that restriction would unjustly
deprive him of advantages he would have in the foreign forum.

(iii) Brunei, not Texas, was the “natural forum” for the trial of the action against SNI and the
work already undertaken by the Texas lawyers was insufficient to make that Court the natural
forum for the determination of the dispute.

(iv) It would be oppressive for the widow/the estate to be allowed to continue the Texas
proceedings because of the serious injustice to SNI in not being able to claim in those
proceedings any indemnity or contribution from the Malaysian company for any liability SNI
might have to the widows/the estate. The Court also noted that SNI had given certain
undertakings which in effect ensured that any advantage to the widow/the estate in proceeding in
Texas would also be available in the proceedings in Brunei. In such circumstances, no injustice
would be caused to the widow/the estate by being restrained from proceeding in Texas and
therefore an anti-suit injunction would be appropriate.

Exclusive jurisdiction clauses

I address below in a little more detail each of the four principles identified by Lord Goff in the
Aerospatiale case. In doing so, I will concentrate on circumstances where there is an exclusive
jurisdiction clause in favour of the English Courts (because this was the type of clause in the OT
Africa Line v. Magic Sportswear case). Where there is no such “contractual bargain” between the
parties, the relevant considerations (along traditional lines) will principally centre on whether the
pursuit of proceedings in the foreign Court is vexatious or oppressive.

As to exclusive jurisdiction clause cases, the anti-suit injunction remedy has been the subject of
considerable litigation. As a result, there are clear principles applicable. In Donohue v. Arnco
[2002] 1 Lloyd’s Rep 425, Lord Bingham described the principle as follows:

“If contracting parties agree to give a particular Court exclusive jurisdiction to rule on
claims between those parties, and a claim falling within the scope of the agreement is
made in proceedings in a forum other that which the parties have agreed, the English
Court will ordinarily exercise its jurisdiction (whether by granting a stay of proceedings
in England, or by restraining the prosecution of proceedings in the non-contractual forum
abroad, or by such other procedural order as is appropriate in the circumstances) to secure
compliance with the contractual bargain, unless the party suing in the non-contractual
forum (the burden being on him) can show strong reasons for suing in that forum. I use
the word “ordinarily” to recognise that where an exercise of discretion is called for, there
can be no absolute or inflexible rule governing that exercise, also that a party may lose his
claim for equitable relief by dilatoriness or other unconscionable conduct. But the general

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 rule is clear: where parties have bound themselves by an exclusive jurisdiction clause,
effect should ordinarily be given to that obligation in the absence of strong reasons
for departing from it.” (emphasis added)

The burden of establishing the “strong reasons” rests firmly on the party in breach of the
jurisdiction clause. Immediately after the passage quoted above, Lord Bingham stated:

“Whether a party can show strong reasons, sufficient to displace the other party’s prima
facie entitlement to enforce the contractual bargain, will depend on all the facts and
circumstances of the particular case”.

Mr Justice Aikens had earlier summarised this principle in OT Africa Line v. Hijazy & Others
[2001] 1 Lloyd’s Rep 76, as follows:

“If the English Court is satisfied that there is a valid exclusive jurisdiction clause in
favour of the English Court that has been broken by one of the parties to the clause, then
the English Court will give effect to it by granting an anti-suit injunction unless “special
countervailing factors” or “good reason” or “strong reason” or “strong cause” is shown
why the injunction should not be granted”.

I will now look in more detail at each of the four principles stated by Lord Goff in the
Aerospatiale case.

1. Ends of justice

The concept “the ends of justice” is to be interpreted flexibly. As Lord Scarman has put it:

“But the width and flexibility of equity are not to be undermined by categorisation.
Caution in the exercise of the jurisdiction is certainly needed: but the way in which the
judges have expressed themselves from 1821 onwards amply supports the view for
which the defendants contend that the injunction can be granted against a party
properly before the court, where it is appropriate to avoid injustice.” (Castanho v
Brown & Root [1981] AC 58 at 81; see also British Airways v Laker Airways [1985]
AC 81 per Lord Diplock)

Where a party has a contractual right not to be sued in a foreign jurisdiction, justice requires that
an injunction be granted in the absence of “strong reasons” for not granting one. (See Donohue v.
Armco.)

The granting of an anti-suit injunction is not inevitable, but the fact that a foreign court (applying
its own rules) has assumed jurisdiction, does not provide “strong reasons”. Nor does the fact that
in certain scenarios, the English Courts will not enforce foreign jurisdiction clauses: in most cases
where an English Court might be required to decline to enforce a foreign jurisdiction clause, it
would be because the English Court is obliged to do so by virtue of a Convention or European
Council Regulation.

An issue which arose in the recent OT Africa Line v Magic Sportswear litigation was whether the
fact that legislation in the foreign country permits the overriding of a jurisdiction clause provides
the required “strong reason”. As we shall see shortly, the Court held in that case that it did not.
But this is not necessarily a rule of general application: the position might be different if, for
example, the relevant foreign law made special provision for consumers or employees to be able

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to override a jurisdiction clause. In such a case, the “ends of justice” might be served by refusing
to grant an anti-suit injunction.

The ends of justice is undoubtedly a relevant consideration, but one that will only apply in
certain very specific situations.

2. In personam nature of anti-suit injunction

The traditional view of the nature of an anti-suit injunction is that it operates in personam: it is
addressed to the party, not to the foreign court. Some commentators have said that this traditional
view is now wholly undermined by the European Court of Justice (ECJ) decision in Turner v.
Grovit [2004] 2 Lloyd’s Rep 169 (which I will mention further below when discussing
developments within Convention/Regulation countries). Essentially, what the ECJ decided was
that the anti-suit remedy was incompatible with EC law, in particular the Judgments
Convention/Regulation. However, the ECJ did not (and did not have to) determine whether or not
the traditional view of the nature of an anti-suit injunction was correct. It merely considered
whether the granting of an anti-suit injunction was permissible under the Convention/Regulation.

The ECJ did not conclude (even in the context of the Brussels Convention) that the traditional
English view was incorrect. The English courts have always recognised that an anti-suit
injunction, although directed at the parties rather than the foreign court, may involve indirect
interference with the foreign court. Of course, it is precisely for this reason that issues of comity
arise.

In the Turner v. Grovit case, the Advocate-General of the ECJ opined that the result of an anti-
suit injunction was “direct interference” with the foreign court. However, this part of his opinion
was not adopted by the ECJ.

In any event, the decision of the ECJ in Turner v. Grovit was a decision on the interpretation of
the Brussels Convention and has no bearing on cases where the exercise of jurisdiction in the
foreign court is not governed by the Brussels Convention or the Lugano Convention or Council
Regulation 44/2001 (see below).

3. Injunction must be an effective remedy

It is not necessary for a Claimant to demonstrate that an injunction can be enforced against the
person or assets of the Defendants in the jurisdiction at the time at which the order is made. An
injunction may be effective for a number of reasons. At one extreme, it may be effective because
the Court can and will commit individual Defendants or directors of companies to prison or
sequestrate assets. At the other extreme, it may be effective because the Defendant, although
immune from all possible sanction, chooses to comply with it. In international commercial
litigation, a Defendant may well fall somewhere between these two extremes. Foreign Defendants
will frequently not be present or have assets in England at the time in which an injunction is
granted, but may well feel constrained to comply with the injunction because, for example:

(i) They do not want to be precluded from defending the claim;

(ii) They do not want to preclude themselves from ever travelling to or acquiring assets in
England in the future; or

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(iii) They are concerned not to damage their reputation because they have subsidiary
companies within the jurisdiction.

In Derby & Co v. Weldon (Nos 3 & 4) [1990] Ch 65, Lord Donaldson stated a number of
principles relevant to this issue:

(i) He stated that “Courts assume, rightly, that those who are subject to its jurisdiction will
obey its orders”, and added: “it is only if there is doubt about whether the order will be obeyed
and if, should that occur, no real sanction will exist, that the Court should refrain from making an
order which the justice of the case required”.

Although the Court was considering the principles in the context of the granting of a Mareva
injunction (freezing order), the issues are the same in the context of an anti-suit injunction. The
Judge concluded by saying: “A sufficient sanction exists in the fact that, in the event of
disobedience, the Court could bar the Defendants’ right to defend … this is not a consequence
which [the Defendant] could contemplate lightly as it would become a fugitive from a final
judgment given against it without its explanations having been heard and which might well be
enforced against it by other Courts”.

A Claimant and the Court are of course entitled to rely on the assumption that the order will be
complied with.

4. Comity

In exercising the jurisdiction to grant an anti-suit injunction, the Court must have regard to
comity. However, comity does not require that there be no indirect interference with the foreign
Court. It simply requires the English Court to consider whether such indirect interference as will
result from the grant of the anti-suit injunction is justified in the circumstances of the case.

The correct general approach to comity was stated by Lord Goff in Airbus Industrie v. Patel
[1999] 1 AC 199 as follows:

“As a general rule, before an anti-suit injunction can properly be granted by an English
Court to restrain a person from pursing proceedings in a foreign jurisdiction in cases of
the kind and the consideration of the present case, comity requires that the English forum
should have a sufficient interest in, or connection with, the matter in question to justify
the indirect interference with the foreign Court which an anti-suit injunction entails.

In an alternative forum case, this will involve consideration of the question whether the
English Court is the natural forum for the resolution of the dispute.”

In the Airbus case, the House of Lords was faced with the question of whether or not proceedings
in Texas by English Claimants in respect of an aircraft crash in India could be restrained by an
anti-suit injunction.

An Airbus had crashed in India. Among those killed or injured were two families of Indian origin
who were British citizens living in London. An Indian Court found that the cause of the crash had
been pilot error, and the Defendant commenced proceedings in India against the employers of the
pilots and against the airport authority. The claim against the employers was settled.
Subsequently, the Defendants commenced proceedings in Texas against a number of parties,
including Airbus who had designed and assembled the aircraft in France.

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Suing in Texas conferred various advantages. Texas did not recognise the principle of forum non
conveniens. In Indian proceedings, various orders were made including an injunction purporting
to restrain the victim/their families from claiming damages against Airbus except in the Indian
Court.

Airbus then commenced proceedings in England with the purpose of enforcing the Indian
judgment against the victims/their families and obtaining an injunction restraining them from
continuing with the Texas action on the grounds that pursuing that action would be contrary to
justice and/or vexatious or oppressive. At first instance, the English Court declined to enforce or
recognise the Indian judgment and refused an injunction. The Court of Appeal allowed Airbus’
appeal against the lower Court’s refusal of an injunction. However, the victims’/their families’
appeal to the House of Lords was allowed.

The House of Lords held that, as a general rule, it was contrary to the doctrine of comity for an
English Court to grant an anti-suit injunction to restrain proceedings in a foreign jurisdiction
unless the English forum had a sufficient interest in, or connection with, the matter in question to
justify such interference. Where the English Court had no interest in the matter and was no longer
being asked to enforce the jurisdiction of the Indian Court, the grant of an anti-suit injunction to
restrain the victim/their families from proceeding in Texas was inconsistent with comity
notwithstanding that India, the natural forum for the dispute, was unable to grant Airbus the
effective relief and that the Texas proceedings might be regarded as oppressive due to, among
other things, the absence of the doctrine of forum non conveniens.

A number of factors are relevant when this general approach to comity is adopted.

Connection between dispute and forum

The nature of the connection between the dispute and the foreign forum is relevant. This will
include consideration of where the parties to the dispute reside and where the events that gave
rise to the dispute occurred. However, no special consideration is given to a foreign plaintiff
suing in his “own” Court.

The Courts will be cautious, thereby reflecting the importance generally attributed to the location
of the Defendant: “presence” of the Defendant within the jurisdiction (under traditional rules) and
“domicile” under the Convention/ Regulation have long been recognised as sufficient to found
jurisdiction: “presence” or “domicile” of the Plaintiff had not. Of course, other considerations,
such as the domicile of the insurers of the foreign plaintiff, will not be relevant. The domicile of
an insurer is irrelevant to the underlying dispute.

Whether injunction sought before or after failed jurisdiction challenge

Whether the injunction is sought before or after a failed jurisdiction challenge in the foreign court
is relevant. However, the significance of this factor will depend on the similarity or otherwise of
the principles applied by the foreign court and those applied in England. Mr Justice Thomas
summarised the position as follows in Akai v. People’s Insurance Co Ltd [1998] 1 Lloyd’s Rep
90:

“If the party applying for a stay or an injunction has already litigated the issue of
jurisdiction in another state and failed, this will be a significant factor counting against
him if that Court has applied principles relating to jurisdiction similar to those applied by
this Court. Where the foreign court is not bound to apply such principles or has not

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 applied such principles, the fact that the issue of jurisdiction has been litigated in another
state will not generally be significant.”

In the Aerospatiale case itself, the injunction was granted after the Defendants in the Texas
proceedings had exhausted their remedies in that state.

The connection between these factors (“before or after” and “similarity of principles”) is obvious.
If an English Court grants an injunction after a foreign court applying the same principles has
come to a different conclusion, this necessarily suggests that the foreign court is wrong. If it does
so after the foreign court applying different principles has come to a different decision, there is no
such implied criticism. The different conclusions will simply reflect the application of the
different principles.

(Although we will look at this issue again later when we come to consider the O.T. Africa Line v.
Magic Sportswear case, I should stress here that, so far as this general approach to comity is
concerned, there appears to be no material difference between the position here and the position
in Canada. I refer to the 1993 Canadian case, Amchem Products Inc v. British Columbia (Workers
Compensation Board). The Canadian Court will consider whether a foreign court applied similar
principles to those applied in Canada. If it did not, it will consider whether the foreign result was
consistent with Canadian principles. If the principles were different and the result inconsistent
with Canadian principles, considerations of comity will not prevent the grant of an anti-suit
injunction.)

Where the English Court is enforcing an English jurisdiction clause, the injunction is far less
likely to offend the foreign court than an injunction granted on other grounds. Lord Justice Millett
was particularly forthright in his judgment in The “ANGELIC GRACE” [1995] 1 Lloyd’s Rep 87:

“In my judgment, the time has come to lay aside the ritual incantation that this is a
jurisdiction which should only be exercised sparingly and with great caution. There have
been many statements of great authority warning of the danger of giving an appearance of
undue interference with the proceedings of a foreign court. Such sensitivity to the feelings
of a foreign court has much to commend it where the injunction is sought on the ground
of forum non conveniens or on the general ground that the foreign proceedings are
vexatious or oppressive but where no breach of contract is involved. In the former case
[i.e. involving submissions of forum non conveniens], great care may be needed to avoid
casting doubt on the fairness or adequacy of the procedures of the foreign court. In the
latter case [i.e. involving submissions of vexatious or oppressive conduct], the question
whether proceedings are vexatious or oppressive is primarily a matter for the court before
which they are pending. But in my judgment 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. … I cannot accept the proposition that
any court would be offended by the grant of an injunction to restrain a party from
invoking a jurisdiction which he had promised not to invoke …”.

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We have now looked at the way the English Courts approach the remedy of anti-suit injunctions.
As I mentioned above, these four Aerospatiale principles are still applicable in all cases where the
European Council Regulation 44/2001 is not applicable. There have, however, been significant
developments in the last year or so with regard to the granting of anti-suit injunctions in cases
where EC Regulation 44/2001 applies. Before I address the issues in the OT Africa Line v Magic
Sportswear matter, I will look at these developments.

Anti-suit injunctions and the ECJ

In recent years, the reach of the ant-suit injunction has been limited by the European Court of
Justice in the context of European proceedings. This is because of the existence within the
European Union of provisions which determine conflicts of jurisdiction arising between two EU
countries. These were laid down in the Brussels Convention on Jurisdiction and Judgments in
Civil and Commercial Matters 1968 (the “Brussels Convention”) and in the 1988 Lugano
Convention of the same name. These have now largely been replaced by the European Judgments
Regulation 44/2001, which contains near-identical provisions.

Gasser v MISAT

The effect on anti-suit injunctions of these measures was considered by the ECJ in Gasser v
MISAT [2005] 1 QB 1. In that case, the relevant contract contained an Austrian jurisdiction
clause. In spite of this, proceedings were commenced in Italy. A second set of proceedings was
commenced eight months later in Austria. The two sets of proceedings were between the same
parties and involved the same subject matter.

The central question was whether the Austrian court should allow its proceedings to continue,
because of the Austrian jurisdiction clause in the contract, or whether it should stay the action
because the matter was already before the Italian court (i.e., the Italian court was ‘first seised’).
This involved considering the relationship between two provisions of the Brussels Convention.

Under Article 21, if proceedings involving the same parties and subject matter are started in two
Contracting States, the courts in the second State must stay their proceedings in favour of the first
court. Looking at Article 21 alone, the Austrian court should stay its proceedings.

However, if under Article 17 the parties agree that the courts of a particular Contracting State will
have jurisdiction over any disputes, then that State’s courts will have exclusive jurisdiction. The
question is how this “exclusive” jurisdiction relates to the jurisdiction that another court has by
virtue of being first seised of the claim.

In theory, the court first seised should respect the jurisdiction clause, and if necessary decline
jurisdiction. But in practice different countries approach the validity of jurisdiction agreements in
different ways. What happens then?

Suppose, for example, that a contract has an English jurisdiction clause, but proceedings are
commenced in another Contracting State, followed by a second set of proceedings in England,
based on the jurisdiction clause. This is what happened in Continental Bank v Aeakos [1994] 1
WLR 588. In that case, the Court of Appeal decided that Article 17 takes precedence over Article
21, and deprives other Contracting States of jurisdiction, even the court first seised. The Court
went on to issue an anti-suit injunction, requiring the defendant to stop the foreign proceedings.
(This was followed in OT Africa Line v Hijazy and Others [2001] 1 LLR 76, a case where we

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acted for OT Africa Line. It is very like that, if decided today, the English Court's ruling would
be different.)

However, the ECJ’s decision in Gasser v MISAT undermined that approach. The ECJ decided
that: (a) despite the fact that an exclusive jurisdiction clause provides that disputes must be
referred to the second court, that court must stay its proceedings until the first court has ruled on
jurisdiction – in other words, Article 21 trumps Article 17; (b) this is the case however long the
first court takes to reach a decision; (c) if the first court finds that it has jurisdiction, its judgment
must be recognised by all other Member States (including the second court).

Gasser v MISAT did not directly address the question of anti-suit injunctions, but it underlined the
principle that the court first seised should decide any questions as to its own jurisdiction. It
appears that the principles of Gasser deprive the English court of jurisdiction to grant an anti-suit
injunction, because in granting such an injunction the Court reviews the jurisdiction of the court
first seised.

Turner v Grovit

The ECJ considered ant-suit injunctions more directly in Turner v Grovit [2005] 1 AC 101. Mr
Turner, a British citizen domiciled in the United Kingdom, was recruited in 1990 as solicitor to a
group of undertakings known as the Chequepoint Group, which was controlled by a Mr Grovit.
Turner was initially employed in London but then transferred to the Madrid office, but without
any change to his employment contract, which was subject to English law.

Turner handed in his notice, and in March 1998 he commenced proceedings in the Employment
Tribunal in London, alleging that there had been breaches of his contract of employment, which
were tantamount to dismissing him. He claimed that there had been attempts to involve him in
unlawful conduct in relation to deductions from wages. The defendants disputed jurisdiction but
their objections were dismissed by the Tribunal and subsequently by the Employment Appeal
Tribunal. In May 1999 the Employment Tribunal held that the plaintiff had been unfairly and
wrongfully dismissed and awarded him damages.

However, in October 1998 the defendants had commenced legal proceedings against Turner in
the Madrid court, alleging that Turner was in breach of contract. The damages claimed
substantially exceeded those awarded to Turner by the Employment Tribunal.

Turner took no part in the Spanish proceedings. He applied to the court in England for an anti-suit
injunction, restraining the defendants from continuing the action in Spain. That order was
granted, and upheld by the Court of Appeal. Underlying the grant was the Court of Appeal’s
finding that it was “plain that the Spanish proceedings were launched in bad faith in order to vex
the plaintiff in his pursuit of the application before the Employment Tribunal here”.

The defendants brought the Spanish proceedings to an end (without waiving any right to bring a
further action). They then appealed to the House of Lords against the anti-suit injunction. They
argued that the anti-suit injunction interfered (albeit indirectly) with the Spanish court’s
jurisdiction, and that such interference was contrary to the regime for deciding questions of
jurisdiction established by the Brussels Convention 1968.

The House of Lords referred to the ECJ the question: is it inconsistent with the Brussels
Convention for UK Courts to grant restraining orders against defendants who are threatening to
commence or continue legal proceedings in another convention Country when those defendants

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are acting in bad faith with the intent and purpose of frustrating or obstructing proceedings
properly before the English courts?

The ECJ answered the question in the affirmative. It held that the Convention system is based on
the trust which the Contracting States accord to one another’s legal systems. With very limited
exceptions, the Convention does not permit the jurisdiction of a court to be reviewed by a court in
another Contracting State.

The ECJ stated that:

“a prohibition imposed by a court, backed by a penalty, restraining a party from

commencing or continuing proceedings before a foreign court undermines the latter
court’s jurisdiction to determine the dispute. Any injunction prohibiting a claimant from
bringing such an action must be seen as constituting interference with the jurisdiction of
the foreign court which, as such, is incompatible with the system of the Convention.”

The court went on to add that such interference could not be justified by the fact that it was only
indirect and was intended to prevent an abuse of process by the defendant. The judgment as to the
abusive nature of the conduct implied an assessment of the appropriateness of bringing
proceedings before a court of another Member State, and such an assessment ran counter to the
principle of mutual trust which underpins the Convention.

Accordingly, the ECJ held that the Convention is to be interpreted as precluding the grant of an
injunction whereby a court of a Contracting State prohibits a party to proceedings pending before
it from commencing or continuing legal proceedings before a court of another Contracting State,
even where that party is acting in bad faith with a view to frustrating the existing proceedings.

The broad conclusion that anti-suit injunctions are incompatible with the Convention system
certainly restricts the circumstances where such an order will be granted by the English Courts.
But there remain two areas where anti-suit injunctions may still be granted. These are (1) in the
context of arbitration, and (2) where non-EU countries are concerned.

Anti-suit injunctions and arbitration

The first area where such injunctions are still available is where the relevant contract involves
either Convention countries or non-Convention countries and the injunction is issued because the
defendant commences proceedings in a Convention state in breach of an agreement to arbitrate
in England. The significance of this is that the Brussels Convention/Judgments Regulation regime
does not apply to arbitration. However, it can still be argued that such an injunction will interfere
with the foreign court’s acceptance that it has jurisdiction under the Convention.

The Hari Bhum

In the 2004 case of The Hari Bhum [2004] 1 Lloyd’s Rep 206, proceedings were started in
Finland against the Through Transport Club. The Club obtained an anti-suit injunction from the
High Court in England, arguing that the claim fell within an arbitration clause in the Club’s rules.
On appeal, the Court of Appeal set aside the anti-suit injunction. (The main reason for this was a
complex issue as to whether the claim was correctly characterised as a claim under the contract.)
But, importantly, the Court of Appeal held that nothing in the Judgments Regulation prevented
the Courts from granting an injunction to restrain a claimant from bringing proceedings in
another Member State which would be in breach of an arbitration agreement. Moreover, nothing
in the reasoning in Turner v Grovit or Gasser v MISAT changed that position.

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The Front Comor

So in principle such orders were still available, as was demonstrated in the later case of The Front
Comor [2005] 2 Lloyd’s Rep 257. In August 2000, the m.v. Front Comor collided with a jetty at
a refinery in Sicily. The owners of the refinery (who were also the charterers of the vessel),
suffered losses including repair costs and business disruption. They made a claim for some of
these losses against their insurers. They also brought arbitration proceedings in London against
the vessel’s owners for their uninsured losses, relying on the arbitration clause contained in the
charterparty between them and the vessel’s owners.

Three years later, the insurers (who had become subrogated to the rights of the refinery owners)
brought a recovery action against the vessel’s owners. Rather than do so through arbitration in
London, they commenced proceedings in Sicily. In response, the vessel’s owners obtained an
anti-suit injunction restraining the insurers from continuing the proceedings in Sicily on the
grounds that the insurers were bound by the arbitration agreement between the refinery and the
vessel’s owners. The injunction was granted without notice to the insurers, who subsequently
brought an application to set it aside.

The insurers argued that Turner v Grovit made it impossible for the court to grant an anti-suit
injunction, because proceedings had already been commenced in Sicily. They relied on evidence
that the Italian court would consider the injunction as an infringement of the sovereignty of Italy,
and an interference with the Italian court’s jurisdiction, thus drawing directly on the ECJ’s view
in Turner v Grovit. By granting an anti-suit injunction the English Court was pre-empting the
Italian court’s consideration of the arbitration clause.

Mr Justice Colman rejected these submissions and upheld the anti-suit injunction. He held that he
was bound by the Court of Appeal’s ruling in The Hari Bhum.

The case demonstrates that, at least for the present, courts are free to grant anti-suit injunctions in
the circumstances of The Front Comor. However, this may still be open to challenge in the ECJ.

The current state of the law leads to a peculiar position. The ECJ has definitively ruled that an
anti-suit injunction interferes with a foreign court’s jurisdiction and is incompatible with the
Judgments Regulation. Its conclusions are limited to circumstances where the foreign
proceedings are brought in breach of an exclusive jurisdiction clause or are oppressive, and
designed to frustrate other proceedings. But what difference does it make if the proceedings are in
breach of an arbitration clause? Does this mean that the foreign court’s jurisdiction is any less
undermined? The ECJ’s palpable hostility to the anti-suit injunction will no doubt one day
encourage a litigant to test the conclusions expressed in the The Front Comor and The Hari Bhum
in the ECJ.

Anti-suit injunctions and non-EU countries

The second area in which the anti-suit injunction is alive and kicking is in relation to non-EU
countries, where the Brussels Convention/Judgments Regulation do not apply. This area is well
illustrated by the proceedings in the UK and Canada in O. T. Africa Line v Magic Sportswear. (I
should declare an interest in that I act for O.T. Africa Line in these proceedings.) The facts were
as follows.

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Cargo was shipped from New York to Liberia on a vessel owned by the claimants (“OTAL”).
OTAL is an English company. The first defendant, Magic Sportswear, a New York corporation,
was the shipper. The second defendant, Blue Banana, a Liberian corporation, was the receiver.
The third and fourth defendants were the insurers, and the fifth was the insurers’ agent. These
three companies are Canadian companies.

The Bill of Lading was issued in Toronto, where the freight was payable. It contained an
exclusive English law and jurisdiction clause. In spite of the jurisdiction clause, in August 2003
Magic Sportswear and Blue Banana (it is understood via insurers) commenced proceedings in
Canada against OTAL, alleging short delivery. They relied upon s 46 of the Canadian Marine
Liability Act 2000. This section permits a claimant to commence proceedings in Canada in spite
of a foreign jurisdiction or arbitration clause in certain specified circumstances. These include (1)
where the defendant has a place of business in Canada and (2) where the contract was entered
into there.

In September 2003, OTAL issued proceedings in England against Magic Sportswear and Blue
Banana, seeking a declaration of non-liability and an anti-suit injunction and damages. They
obtained leave to serve out of the jurisdiction, and an anti-suit injunction. Magic Sportswear and
Blue Banana did not contest the jurisdiction of the English Court.

In the Canadian proceedings, OTAL challenged the jurisdiction of the Canadian Courts. On 22
December 2003, that challenge was rejected. Madame Prothonotary Milczynski said that the
Marine Liability Act:

“clearly removes the determining or binding effect of a forum selection clause in a bill of
lading”

She also found that Canada was the appropriate forum for the trial of the claim. OTAL appealed
to the Federal Court, which dismissed the appeal on 23 August 2004. OTAL has further appealed
to the Canadian Federal Court of Appeal, and that appeal is down to be heard later this month.

In April 2004, OTAL obtained leave to join the 3rd-5th defendants (insurers/insurers' agent), and
to serve out of the jurisdiction. They alleged the tort of inducing a breach of contract, and also
sought a third party costs order against the 3rd-5th defendants.

The defendants applied for orders that: (1) service of the claim form be set aside against the
insurers; (2) the proceedings against Magic Sportswear and Blue Banana be stayed; (3) the anti-
suit injunction against Magic Sportswear and Blue Banana be discharged. The claimants sought:
(4) an anti-suit injunction against the 3rd-5th defendants.

On 3 November 2004, Mr Justice Langley held at first instance ([2005] 1 Lloyd’s Rep 252):

(1) service of the claim form against the 3rd-5th defendants would be set aside only in relation to
the tort claim (inducing a breach of contract). By virtue of the Private International Law
(Miscellaneous Provisions) Act 1995, the law applicable to the tort was Canadian law. The
bringing of proceedings in a manner expressly permitted by Canadian law could not be a tort
under Canadian law. So far as the third party costs order was concerned, there was a good
arguable case that such an order would be made against the insurers.

(2) A stay was refused. There had to be an exceptional justification for an English Court to stay
its proceedings where there was an exclusive English jurisdiction clause. There was no such

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exceptional justification in this case. The Canadian proceedings did not provide such an
exceptional justification, and the connections with Canada were tenuous.

(3) Strong reasons were required for the Court not to give effect to an exclusive jurisdiction
clause. There were no such strong reasons justifying setting aside the anti-suit injunction.

(4) There was a good arguable case that it was the insurers who were seeking to conduct the
Canadian proceedings in the name of Magic Sportswear and Blue Banana. There is jurisdiction to
injunct those who threaten or intend to assist others to breach an injunction. In this case, insurers
were acting deliberately, and it was a fair inference that unless restrained they would pursue the
Canadian proceedings in breach of the injunction restraining Magic Sportswear and Blue Banana.

The overriding issue was whether the prospect of a clash between the two jurisdictions was so
exceptional as to justify the Court in departing from the manner in which it would otherwise
proceed. The judge held that it was not.

The defendants appealed to the Court of Appeal. On 13 June 2005, the appeal was dismissed
([2005] 2 Lloyd’s Rep 170). The Court of Appeal agreed that there was no exceptional reason
justifying imposing a stay in spite of the exclusive jurisdiction clause. The possibility of a clash
of jurisdictions was no justification for a stay. Nor was the existence of the Canadian legislation a
sufficiently strong reason.

Similarly, the Canadian law and Canadian connections were not a sufficiently strong reason for
not granting an injunction.

Longmore LJ stated:

“It goes without saying that any court should pay respect to another (foreign) court but, if
the parties have actually agreed that a foreign court is to have sole jurisdiction over any
dispute, the true role of comity is to ensure that the parties’ agreement is respected. … It
is not a matter of an English court seeking to uphold and enforce references to its own
courts; an English court will uphold and enforce references to the courts of whichever
country the parties agree for the resolution of their disputes. This is to uphold party
autonomy not to uphold the courts of any particular country. …
The corollary of this is that a party who initiates proceedings in a court other than the
court which has been agreed with the other party as the court for resolution of any
dispute, is acting in breach of contract. The normal remedy for this breach of contract is
the grant of an injunction to restrain the continuance of proceedings unless it can be
shown that damages are an adequate remedy; but damages will not usually be an adequate
remedy in fact, since damages will not be easily calculable and can indeed only be
calculated by comparing the advantages and disadvantages of the respective fora. This is
likely to involve an even graver a breach of comity than the granting of an anti-suit
injunction.” (p. 179)

It was argued for the cargo interests that to grant an injunction would inevitably be regarded in
Canada as a breach of comity because the Canadian courts, by reason of section 41 of the Marine
Liability Act, had no other option than to exercise the jurisdiction vested in them by the statute.
Lord Justice Longmore commented on this argument:

“This is … only a correct statement of the position once the cargo-interests have decided
to invoke the court’s jurisdiction. The Canadian court does not become involved unless
the cargo-interests choose to involve it; it is the exercise of that choice, contrary to the

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 cargo-interests’ contractual obligations, which the English court restrains by granting an
injunction. Once one appreciates this, one can see that the injunction granted by the judge
is not, in any way an attack on the legislature or the courts of Canada or a breach of
international comity; it is merely restraining a party to a contract from doing something
which he has promised not to do.” (p. 179)

He went on:

“In the present case there is no doubt that the Canadian courts have jurisdiction; the only
question is whether a party is to be allowed to invoke that undoubted jurisdiction. If he
has agreed not to do so, there is no impropriety in his being restrained from so doing.” (p.
180)

Lord Justice Longmore concluded:

“It is to be hoped that the Canadian courts will not see this decision as an interference of
any kind even if the cargo-insurers or their lawyers were to choose to categorise it that
way. Freedom of contract is usually much valued in all common law systems; of course if
England were to enact the Hamburg Rules or the equivalent of their jurisdictional
provisions, there would be no problem. But until that time comes, the maintenance of the
principle that parties should be free to choose the courts where their disputes are to be
resolved must be of paramount importance and cannot be reduced to a mere legal
aspiration.” (p. 180)

Similarly, Rix LJ said:

“It goes without saying that the Canadian courts are familiar with the doctrine of the anti-
suit injunction, and understand that, even though it has an indirect effect on litigation in
their courts, it is in no way intended to interfere with the jurisdiction of those courts, as
distinct from seeking to address a perceived injustice in the conduct of litigants.” (p. 186)

A point stressed by Magic Sportswear was the undesirability of parallel proceedings in two
jurisdictions. On this aspect, Rix LJ said:

“Although it would be unfortunate to have parallel proceedings in two jurisdictions, and

although cargo interests were, by a period of about a month, the first to bring their claim
in Canada, a jurisdiction clause would be rendered entirely nugatory if a party could
prevent litigation in an agreed forum by the simple expedient of commencing its claim in
a non-contractual forum.” (p. 181)

Longmore LJ pointed out that an anti-suit injunction might prevent this prospect:

“It is only by granting an injunction that it will be possible to avoid duplicity of

proceedings. If these English proceedings are not to be stayed, as I do not think they
should be, they will inevitably continue. Whether or not the judge was right to describe
the prospect of the same claim proceeding in both England and Canada with the risk of
different outcomes as “appalling” (para 38), it is certainly uncommercial and undesirable.
It is only if injunctive relief is granted that the prospect can be avoided.” (p. 180)

(The Court of Appeal noted that it appeared to be the case that if the situations were reversed a
Canadian Court would come to the same conclusion. It referred to Amchem Products v British
Columbia (Workers Compensation Board) [1993] 1 SCR 897 and to Z. I. Pompey Industrie v

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ECU-Line NV (2003) 224 DLR (4th) 577 (SCC), 2003 SCC 27. Canadian lawyers will be better
placed than I am to determine whether this is correct.)

The insurers applied to the House of Lords for permission to appeal the Court of Appeal's
decision. Permission to appeal was refused.

Conclusion

The anti-suit injunction is no longer of importance in the context of EU litigation. For the present,
it is still important within the EU so far as arbitration is concerned (although that is an aspect
which has not yet been considered by the ECJ.)

However, where the competing fora are not within the EU, the anti-suit injunction remains an
important weapon in the armoury of a litigator or arbitrator. It is interesting to note that the latest
version of the draft UNCITRAL Convention on Carriage of Goods includes provisions which
would, in certain circumstances, permit the overriding of exclusive jurisdiction or arbitration
clauses. Of course, this Convention is still only in draft, and it remains very early days. But if it is
ever adopted, it may be that the O. T. Africa Line v Magic Sportswear litigation provides an
illustration of jurisdiction disputes which may, in future, become much more common.

Sean Gibbons
Stephenson Harwood
June 2006

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