Anti-suit injunctions in support of foreign-seated arbitration?

Although the English courts frequently grant anti-suit injunctions (ASIs) to support arbitrations with seat in England, what is their approach if the seat is abroad? This novel issue, with potential relevance to current Russia-related disputes, arose in SQD v QYP [2023] EWHC 2145 (Comm)

Background

The dispute arose from an agreement between SQD and QYP (the "Agreement") relating to an overseas project. The Agreement was governed by English law, and provided for ICC arbitration seated in Paris. A dispute arose concerning whether SQD could lawfully pay QYP. QYP then  commenced court proceedings in its home jurisdiction alleging that the arbitration clause was unenforceable on the basis that it would not have access to justice in an ICC arbitration in Paris.

In response SQD commenced ICC arbitration in Paris, and also applied to the English High Court seeking an ASI to compel QYP to discontinue the foreign court proceedings. In that application, it emerged that SQD had done so precisely because an ASI would not be available from the French courts.

ASI refused as it would clash with the seat’s approach

Generally, the English courts will readily grant an ASI where the seat is in England if (a) there is a “high degree of probability” that there is a breach of a relevant arbitration agreement and (b) there are no exceptional circumstances which militate against the grant of relief. Bright J noted that the facts were such that, had the seat been in England, the ASI very likely would have been granted ([17], [31]).

The seat was, however, abroad. How should the court proceed in such a case? In the judge’s view it did not follow that the same approach applied ([36]). Ultimately, he refused to grant the relief sought, taking into account the following key considerations:

• The power to grant ASIs arises from s.31 Senior Courts Act 1981 (Ust-Kamenogorsk [2013] UKSC 35 at [48]). Although the power to grant an ASI in support of a foreign-seated arbitration therefore existed (subject to the need to establish a ground for permission to serve out under CPR 6.36/PD6B), previous high authority on the use of s.31 to grant interim injunctions in such cases emphasised the need for caution “lest it cut across the grain of the chosen curial law” [38-41]. In the judge’s view it was also instructive that similar points of caution had been made by the DAC reports in relation to the introduction of ss.2(3) and 44 of the Arbitration Act 1996. These indicated that “it would not be appropriate for the English courts to grant relief in the context of a foreign-seated arbitration if to do so might give rise to a “conflict” or “clash” [43-45]
• In this case, the evidence was that an ASI would simply not, on a fundamental level, be available in France as that jurisdiction had a “philosophical objection” to them.([81] –[85]). In the light of that evidence, Bright J was therefore driven to the conclusion that he should not grant the ASI. To do so would, first, give rise to a conflict or clash with the approach of the curial (French) law. Second, given the parties had chosen a seat in which an ASI could not be granted, refusal would show proper deference to the objective intention of the parties [94-98] .
• In reaching this conclusion, the judge rejected SQD’s argument that the fact that the arbitration agreement was governed by English law should have been determinative. Whilst that may have provided SQD with a requisite gateway for service out, the judge noted that this did not remove the need for England to be the “proper forum” for relief. Also, the UKSC’s approach to ASIs in Enka [2020] UKSC 38 implied that the remedy is one tied to the seat, rather than applicable law.
• Furthermore, the fact that an ASI might be obtained from the arbitral Tribunal (or an emergency arbitrator) under the ICC Rules did not, in the judge’s view, provide a basis upon which to say that the parties would also not object to an ASI being granted by the English courts. To do so would be drawing a “false equivalence”. There  were “real differences between orders granted by courts and those made by arbitrators” ([100]-[104), including a penal notice and the threat of contempt of court that would accompany a court order.

Comment

Bright J’s judgment is novel given, as he noted, an apparent dearth of English authority on applications for an ASI where the seat is foreign. His decision that deference should be paid to the position in France (irrespective of the governing law of the arbitration agreement) shows a strong curial centric approach. This seems consistent with English authority; in the domestic seat context it having been made clear that the English courts’ robust ASI jurisdiction, and overall approach, applies irrespective of the arbitration agreement’s applicable law (see Enka [2020] UKSC 38 at [173-185].

That said, the decision, perhaps, does not entirely shut the door on the possibility of such an ASI in support of other, foreign, seats of arbitration. If the evidence had showed that an ASI was not available under the curial law for other, less trenchant, reasons (for example because urgent relief was not, practically available) then Bright J’s judgment at least alludes to the possibility that the equation might be different ([77-78]). And, in the present climate, it’s a point which it is at least possible the court might return to. The report does not mention the overseas jurisdiction involved but the fact pattern of QYP’s breach is one which businesses are frequently seeing being played out in Russia related disputes (due to local Russian mandatory jurisdiction rules). Where those arbitration agreements have seats from which an ASI is not obtainable, the degree to which the English courts can assist (assuming action in England makes tactical sense to a case) might not be an entirely academic matter.

Shortly after the High Court's decision, in September, the Court of Appeal allowed an appeal against Bright J's ruling in SQD. See here for our post on that decision and a further High Court decision on similar facts in which an ASI was granted.

However, in another case decided in September (G v R [2023] EHWC 2365), also involving a Paris seated ICC arbitration agreement, the High Court again refused, following a full inter-partes hearing, an ASI against court proceedings commenced in Russia (despite having initially granted it pending that hearing). In the judge’s ruling he, amongst other things, concluded that England was not the appropriate forum and distinguished the CAs ruling in SQD on the basis that it was given ex parte (without representation of the defendant). See here for our post on that decision.