Anti-Suit Injunctions Overview

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1 Anti-Suit Injunctions Overview ICC Lex Mercatoria Minsk, 28 November 2014 Maria Gritsenko

2 Roadmap Anti-suit injunctions By the courts example of England Legal Basis and Test Intra-EU Position West Tankers Post West Tankers - Ust-Kamenogorsk Against non-parties - Ingosstrakh Procedure and Sanctions By the arbitrators Commercial arbitrations ICSID arbitrations Anti-arbitration injunctions

3 Anti-Suit Injunctions against parties When there is a breach of an exclusive jurisdiction clause or an agreement to arbitrate breach of contract case The Angelic Grace (1995) 1 Lloyd s Rep 87 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 Mid-Gulf International Ltd v Groupe Chimique Tunisien [2010] EWCA Civ 66 Litigation brought to challenge the validity of an arbitration agreement by a party to that agreement will be held to be litigation brought in breach of that agreement

4 Test and Standard of Proof Breach of an arbitration agreement binding the Respondent High degree of probability Rochester Resources Ltd another v Lebedev and another [2014] EWHC 2926: The court refused an anti-suit injunction to restrain NY proceedings as it was not satisfied that there was a high degree of probability that the second and third claimants and the first defendant were bound by the relevant arbitration agreement No strong reason to refuse the relief Bannai v Erez (Trustee in Bankruptcy of Eli Reifman) [2013] EWHC 3689 (Comm): The existence of the Israeli insolvency proceedings did not amount to sufficient good reason for the court not to continue the anti-suit injunction

5 In the EU West Tankers Allianz SpA v West Tankers Inc (Case C-185/07; 2009) Brussels Regulation Court first seized must rule on its own jurisdiction. Other EU courts cannot restrain the Court first seized from considering if it has jurisdiction The arbitration exception ECJ in West Tankers: It was for the Italian court to rule on its own jurisdiction under the Brussels Regulation, which included ruling on the validity and application of the arbitration agreement. The anti-suit injunction was contrary to the mutual trust principle at the core of the Brussels Regulation. Recast Brussels Regulation from January 2015 Clarifies the extent of the arbitration exception.

6 Post West Tankers Ust Kamenogorsk Ust-Kamenogorsk Hydropower Plant JSC v AES Ust- Kamenogorsk Hydropower Plant LLP [2013] UKSC 35 Arbitration clause - ICC arbitration seated in London; court proceedings in Kazakhstan An agreement to arbitrate disputes has positive and negative aspects. A party seeking relief within the scope of the arbitration agreement undertakes to do so in arbitration in whatever forum is prescribed. The (often silent) concomitant is that neither party will seek such relief in any other forum. The anti-suit injunction is for the purposes of and in relation to the negative promise contained in the arbitration agreement not to bring foreign proceedings, which applies and is enforceable regardless of whether or not arbitral proceedings are on foot or proposed.

7 Anti-suit injunctions against non-parties Alternative legal basis - where foreign proceedings are vexatious or unconscionable JSAMC Ingosstrakh Investments v BNP Paribas SA [2012] EWCA Civ 644 LCIA/ London arbitration clause; proceedings in Russia by a non-party Cause of action: right to be protected from vexatious foreign proceedings by a party seeking to affect the benefit of a consensual arbitration agreement An anti-suit injunction should not be granted against a non-party solely because arbitration proceedings involve an associated company Collusion in initiating Russian proceedings in order to frustrate arbitration proceedings and enforcement of any award vexatious proceedings.

8 Procedure and Sanctions Procedural issues of note Service outside the jurisdiction CPR 62.5 application affecting arbitration proceedings seated in England CPR Part 6 e.g., claim in respect of contract governed by English law Applications without notice : Insufficient time to give proper notice (urgency); and/or Giving notice would defeat the purpose of the application (secrecy) Sanction - Respondent may be in contempt of court: Individual - may be fined or imprisoned Corporate - may be fined, directors may be sent to prison or fined, or assets seized

9 Anti-Suit Injunctions by Arbitrators ICC Case No. 8307, Interim Award of 14 May 2001: It is not contested that an arbitrator has the power to order the parties to comply with their contractual commitments. The agreement to arbitrate being one of them, its violation must be dealt with in the same manner when it is patent that the action initiated in a state court is outside the jurisdiction of such court and is therefore abusive. This is also a guarantee of the efficiency and credibility of international arbitration.

10 Anti-Suit Injunctions and ICSID Tokios Tokelés v. Ukraine, ICSID Case No. ARB/02/18 Procedural Order No. 1 The Ukrainian authorities whether judicial or other are, therefore, under the legal obligation to abstain from, and to suspend and discontinue, any proceedings before any domestic body, whether judicial or other, which might in any way jeopardize the principle of exclusivity of ICSID proceedings or aggravate the dispute before it. Procedural Order No. 3 The Tribunal refused to interfere with the criminal proceedings and a tax investigation, due to lack of both necessity and urgency (requirements for granting a provisional measure).

11 Anti-Arbitration Injunctions BCB v Belize, 2013 CCJ 4 (AJ) The right to commence the arbitral proceedings that BCB seeks to exercise arises from a legally binding agreement by the state of Belize to submit to arbitration. No unqualified or indefeasible right to arbitrate but Doctrine of kompetenz-kompetenz determination of their jurisdiction had to be left to the arbitrators

12 Anti-Arbitration Injunctions - England Broadly the same principles apply but the Court will exercise its discretion more sparingly Nomihold Securities Inc v Mobile Telesystems Finance SA [2012] EWHC 130 (Comm): granted injunction restraining an arbitration on the basis that the matters referred to arbitration had already been determined in previous arbitral proceedings. Arbitrations with a foreign seat in exceptional circumstances Excalibur Ventures LLC v Texas Keystone Inc and others [2011] EWHC 1624 (Comm): granted injunction restraining a NY arbitration: Strong case that defendants not party to arbitration agreement Court proceedings in England already on foot Oppressive to have the defendants apply to the NY courts to determine whether they were parties to the arbitration agreement

13 This presentation is for informational purposes only and does not constitute legal advice Contact:

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