HK Court Grants Anti-Suit Injunction as Interim Measure

In GM1 v KC [2019] HKCFI 2793, the Hong Kong High Court dealt with an application by the Plaintiff for an anti-suit injunction to require the Defendant to take all necessary steps to withdraw or seek a stay of legal proceedings commenced by the Defendant against the Plaintiffs in a Mainland Court, and to restrain the Defendant from commencing or pursuing on the Mainland or elsewhere any other proceedings relating to disputes, claims, differences or controversies arising out of a guarantee entered into between the Defendant and the Plaintiff, otherwise than by arbitration in accordance with the terms of the Guarantee.

The Defendant argued that where a party seeks an anti-suit injunction to restrain foreign proceedings based on an arbitration agreement, the proper jurisdiction basis was section 21L of the High Court Ordinance, not s.45 of the Ordinance (with reliance placed on Ever Judger Holding Co Ltd v Kroman Celik [2015] 3 HKC 246, where Lam J observed that he had doubts whether an anti-suit injunction falls within the remedy of “interim measure” under s.45 of the Ordinance since an anti-suit injunction was not concerned with the institution and prosecution of arbitral proceedings but with the restraint of pursuit of other proceedings in breach of an arbitral agreement).

The High Court disagreed, citing The Angelic Grace [1995] 1 Lloyd’s Rep 87 and Donahue v Armco Inc [2002] CLC 440. In the former case, Millett LJ stated that the Court had “undoubted jurisdiction” to restrain a party from taking or continuing proceedings in a foreign court in breach of an agreement to refer the dispute to arbitration. Millett LJ stated:

“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…where an injunction is sought to restrain a party from proceeding in a foreign Court in breach of an arbitration agreement governed by English law, the English Court need feel no diffidence in granting the injunction, provided that it is sought promptly and before the foreign proceedings are too far advanced.”

The High Court noted that these principles have been applied in Hong Kong, for example in the recent case of Giorgio Armani SpA v Elan Clothes Co Ltd [2019] 2 HKLRD 313, where the Court observed that is had the power under both section 45 of the Arbitration Ordinance and section 21L of the High Court Ordinance to grant an anti suit injunction as an interim measure in relation to arbitral proceedings (referring to The Angelic Grace and other cases such as Compania Sud Americana de Vapores SA v Hin Po International Logistics Ltd (2016) 19 HKCFAR 586, and Ever Judger Holding).

In relation to s.45 of the Ordinance, the High Court noted that it should be read in the light of the object and principles of the Ordinance, being to facilitate the fair and speedy resolution of disputes by arbitration without unnecessary expense, and that the Ordinance is based on the important principle that the parties to a dispute should be free to agree on how the dispute should be resolved. The Court stated [@14]:

“An injunction to enforce the positive promise of a party to arbitrate disputes and the negative right not to be vexed by foreign proceedings can be viewed as an interim order which maintains the status quo of parties which have already commenced their arbitration, as in this case, in accordance with the rights conferred under their arbitration agreement. The anti-suit injunction restrains a party from commencing proceedings instituted in breach of the arbitration agreement, the continuation of which must inevitably prejudice the arbitral process, the tribunal’s conduct of the arbitration, and the orders to be made by the tribunal in the process. In my judgment, the Injunction sought is within the scope of the interim measures covered by section 45 of the Arbitration Ordinance, and the Court has jurisdiction to make such an order under the section.”

See also the review of this case by Herbert Smith Freehills, who conclude:

“The decision reflects the long-standing pro-arbitration approach of the Hong Kong courts and confirms that arbitration clauses are not to be interpreted narrowly, but may cover claims against the non-contracting affiliates or associates of a contracting party. The decision also reiterates that in considering an application for an anti-suit injunction, the question for the Court remains whether or not its jurisdiction is invoked, and the fact that the foreign Court would assume jurisdiction and refuse to stay the foreign proceedings is not relevant.”

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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