English Court Grants Anti-Suit Injunction

In Seniority Shipping Corporation SA v City Seed Crushing Industries Ltd, m.v. “Joker” [2019] EWHC 3541 (Comm), the English Court dealt with an application by the owner of a vessel for an anti-suit injunction to restrain proceedings brought by Seed City in Bangladesh in breach of an arbitration agreement incorporated by reference in the bills of lading, finding that the arbitration agreement had been effectively incorporated and granted the injunction.

Facts

During its voyage, the Joker suffered a collision in the waters of Bangladesh, which resulted in damage to the Defendant’s cargo.  As a result, the Defendant issued proceedings in the Supreme Court of Bangladesh, which resulted in an arrest order made against the Joker.  Seniority Shipping then issued proceedings in the English court and filed an application for an anti-suit injunction, on the basis that claims should have been referred to arbitration, arguing that the voyage charter was governed by English law and disputes were agreed to be settled in London and that the bills of lading incorporated the arbitration agreement by reference.

Decision

The Court considered two issues, first, whether the choice of law clause contained in the voyage charter was incorporated the express choice of English Law and, second, whether it should accede to the Claimant’s application for an anti-suit injunction.  The Defendant made no appearance in these proceedings.

Whether the Clauses were incorporated in the Bill of Lading

In determining whether the Clauses were incorporated in the Bill of Lading, the Baker J observed that according to Art. 10(1) of the Rome I Regulation, this issue would be determined in accordance with English law subject to Art 10(2) of the Rome I Regulation, which provides that the effectiveness of the incorporation of the choice of English law from the voyage charter would be determined by reference to the law of Bangladesh (i.e. the law of the country in which City Seed has habitual residence) if it was unreasonable to apply English law to that question.

The Court found that it was eminently reasonable and in accordance with the ordinary expectations of international trade to determine the effectiveness of the incorporation by reference to English law.  Accordingly, it was open to the Defendant, as a buyer, to specify and agree contract terms by which it was bound, holding that the Defendant was bound by the Clauses and was obliged to refer the dispute to arbitration in London. 

Should an anti-suit injunction be granted?

In respect to whether an injunction restraining the Defendant from continuing the proceedings in Bangladesh should be ordered, Baker J drew parallels with the facts of the case and with the decision in The Angelic Grace [1997] 1 Lloyd’s Rep 87, observing that in the absence of any issue of appropriate forum, the question of whether an injunction should be granted will depend on whether the applicant has participated in underlying proceedings to the extent that it would be inappropriate to grant relief as it would amount to or seen to be interfering or that there exists some other good reason that the defendant should not be restrained.

On the facts, participation in the Bangladesh proceedings was minimal, and any participation by the Claimant was merely to maintain the status quo. Further, there was evidence to show that the Claimant took timely actions to protect its interests by seeking an interim injunction. Despite some passing correspondence indicating that it would instruct counsel and challenge jurisdiction, the Defendant had failed to participate in the proceedings and therefore, there was nothing to indicate any other good reason indicating that the injunction ought not to be granted.

Anti-Suit Injunctions in Hong Kong

Hong Kong courts regularly deal with applications for anti-suit injunctions applying principles from The Angelic Grace: see Dickson Valora Group (Holdings) Co Ltd & Anor v Fan Ji Qian [2019] 2 HKLRD 173, Ever Judger Holding Co Ltd v Kroman Celik Sanayii Anonim Sirketi [2015] 2 HKLRD 866; and GM1 v KC [2019] HKCFI 2793. See below.

About Phillip Rompotis

Phillip practices as a barrister and arbitrator in Hong Kong. He has over 25 years’ litigation and arbitration experience in commercial disputes relating to construction & engineering, financial services, joint venture & shareholders agreements, technology, trusts, property and landlord & tenant. He is a Fellow of the Chartered Institute of Arbitrators, the Hong Kong Institute of Arbitrators, the Singapore Institute of Arbitrators, the Malaysian Institute of Arbitrators, and a member of various lists/panels of arbitrators.

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