Arbitration News: Anti-arbitration and anti-suit injunctions

Two recent cases have shone light on the English court’s approach in granting anti-arbitration and anti-suit injunctions. Despite some concerns with the controversial nature of anti-arbitration injunction they remain a possible tool to restrain another party from commencing or participating in arbitration proceedings. Anti-suit injunctions, when ordered by the court, prevent the opposing party from bringing or continuing proceedings in a different jurisdiction. The English courts have remained firm in recent years by setting a very high standard to be met to grant an anti-suit injunction.

Sabbagh v Khoury and others [2018]

In this case the English Commercial Court granted the claimant an interim anti-arbitration injunction to restrain the defendants from proceeding with arbitration seated in Lebanon. The defendants in the English court proceedings (the claimants in the Lebanese arbitration) had asked the courts to rule on whether the claimant was bound to an arbitration clause found within the dispute resolution clauses of the articles of association of the 8th Defendant. Although the courts of England and Wales were not the supervising court of the arbitration, the court was bound by the Court of Appeal’s earlier decision in this case which found that the claimant was not bound by the articles of association and as such not bound by the arbitration clause. The judgement noted that it would be ‘vexatious and oppressive’ for the defendants to continue with the Lebanese arbitration as their future conduct was uncertain and this would lead to wasted resources. The judge concluded that the best way to appreciate matters where the court is not the supervising court of the arbitration is to conclude the matters as they would have done if the Lebanese court had jurisdiction to rule on the matter. The matter at hand was to ensure that the conclusions were correct under Lebanese law, not which court has jurisdiction to decide so.

Atlas Power v National Transmission and Despatch Company Ltd [2018]

The English High Court granted the claimant an anti-suit injunction to restrain the defendant from challenging an LCIA Award in Pakistan (or any jurisdiction that is not England and Wales). The defendant argued that under Pakistani law, the parties cannot exclude the jurisdiction of the courts of Pakistan and as such the choice of London as the seat could not give rise to exclusive jurisdiction over the dispute. The claimant successfully argued that the seat of the arbitration was London. The argument was supported by the decision in the Court of Appeal in C v D [2008] which affirmed that the English courts did have exclusive supervisory jurisdiction over the arbitration.

Conclusion

These cases serve as an important reminder to:

• Clearly define the seat of the arbitration in the arbitration agreement, and
• Clearly draft the terms in the arbitration agreement.

This should ensure that the delays and additional costs of two concurrent proceedings does not occur.

For further information on any of the issues covered here please contact Antony Smith (a.smith@beale-law.com / +44 (0) 20 7469 0406).

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