Anti-Suit Injunctions – the importance of prompt action

Friday 13 November 2015

Essar Shipping Ltd v Bank of China Ltd [2015] EWHC 3266 (Comm)

A recent decision of the Commercial Court in London has highlighted the need to act promptly if applying for an anti-suit injunction in matters where foreign proceedings have been started in breach of a competing jurisdiction clause.

The Defendant Bank commenced proceedings in China under a bill of lading which did not, according to Chinese law, incorporate a law and arbitration clause. The Claimant company disputed the jurisdiction of the Chinese courts, claiming that the bill of lading had a valid arbitration clause that had been properly incorporated according to English law, which was the governing law of the contract (similarly validly incorporated under English law but not under Chinese law). Under English law, there was a potential time bar expiring in January 2015. The Chinese courts ruled that they had jurisdiction, this decision was subsequently appealed and remains extant.

Rather than applying in London for an anti-suit injunction at the same time, or shortly after disputing the jurisdiction of the Chinese courts, the Claimant company waited until the summer of 2015 to apply. This was before a decision had been reached by the Appellate Court in China.

Mr Justice Walker has refused the Claimant company’s application for an anti-suit injunction because it had not been made “promptly”. He has held that the Claimant’s decision to defer issuing a claim form pending the result of the jurisdictional challenge in China was not a good reason not to issue an application for an anti-suit injunction in London for three reasons both individually and in conjunction with each other:

1. the Claimants’ decision was inconsistent with Angelic Grace (Aggeliki Charis Cia Maritima SA v Pagnan SpA [1995] 1 Lloyd’s Rep 87) in that it is not a question of whether it is reasonable to apply to the foreign court, nor of whether there will be long delay in the foreign court, but a question of whether the application in the High Court has been made promptly;

2. there was no objective justification for thinking that the Chinese jurisdictional challenge would be resolved speedily; and

3. there was no objective justification for thinking that the Chinese jurisdictional challenge would be successful.

It is notable that Walker J did not accept that prejudice to the Defendant bank was a necessary component in judging the Claimant’s delay. It was argued by the Defendant bank that there was prejudice insofar as, had the Claimant’s application been brought earlier, the bank would have had the opportunity to protect time in England by ascertaining the position there and appointing an arbitrator. The Defendant had to show that it was not unreasonable to have omitted to bring arbitration proceedings prior to the expiry of the time bar. Walker J held that, in circumstances where deployment of anti-suit injunctions against cargo owners was not unusual, it was unreasonable to ignore the danger that such an injunction might be sought in the present case.

Thomas Cooper LLP acted for Bank of China Limited.