On 19 July 2019, DLA Piper successfully obtained a final anti-suit injunction order in the High Court before His Honourable Mr Justice Jacobs.
The case raised a number of complex jurisdictional issues in circumstances where the defendant had already issued and serve proceedings in Israel, in breach of an exclusive jurisdiction clause contained in two separate contractual documents. The High Court emphatically rejected the defendant's arguments and reinforced the message that the English courts will uphold the principles of anti-suit relief subject to the usual tests being satisfied.
This judgment will be of particular interest to practitioners and clients alike who undertake cross-border work. In particular, the judgment raises important practical issues for practitioners and clients to be aware of when seeking anti-suit relief, particularly relating to the speed at which such relief is sought and the approach that an applicant should take in relation to proceedings commenced in breach of a jurisdiction clause.
Background
- The parties had entered into a series of settlement agreements in July 2014 relating to the waiver of all claims regarding an aborted property venture in the Russian Federation.
- Settlement agreements No. 1 and 2 provided for any dispute to be resolved by arbitration under the LCIA Rules (with the seat in London) whereas settlement agreement No. 3 was subject to the jurisdiction of the Israeli courts. Complexities arose due to the fact that the contracts were inter-connected.
- The defendants (respondents) commenced court proceedings in Israel in October 2018 alleging fraudulent misrepresentation against the parties to all three settlement agreements. The proceedings were served on the claimants (applicants) on 6 March 2019.
- The claimants made an ex-parte application for an anti-suit injunction at the High Court in London on 21 March 2019 seeking to prevent the defendants from proceeding with litigation in Israel. An interim order was granted by Mrs Justice Cockerill on 22 March 2019 pending the return date hearing.
- The claimants commenced LCIA proceedings in May 2019 alleging that the defendants had breached the terms of settlement agreement No. 1 by virtue of commencing the Israeli proceedings.
Judgment
At the return date hearing on 19 July 2019, Jacobs J ordered the anti-suit injunction order of Cockerill J to be continued. Jacob J held:
- No material delay -
The claimants had not delayed in applying for anti-suit relief and
had done so promptly before the Israeli proceedings were too far
advanced.
Jacobs J held that whilst the claimants had been aware of the overseas proceedings since October 2018 they were entitled to wait until they were actually served with such proceedings in March 2019. Importantly, Jacobs J held that the Israeli proceedings were still at a preliminary stage when the claimants sought anti-suit relief and had not progressed significantly by the return date hearing. - Jurisdiction of the Israeli
court - Jacobs J reaffirmed that it is the duty of an
English court (as court of the seat of the arbitration) to uphold
the principles of anti-suit relief in the context of a clear and
present arbitration agreement. This duty applies irrespective of
whether an overseas court is in the process of determining
jurisdiction.
Importantly, Jacobs J distinguished a key authority (2009) on competing fora as not applicable in the context of a court attempting to seize jurisdiction in breach of a clear and exclusive arbitration agreement. - Risk of multiplicity of
proceedings - Jacobs J noted the potential risks of
multiplicity of proceedings and, in particular, the risk of
inconsistent decisions arising out of the LCIA proceedings and
Israeli proceedings. However, he held that such risk was minimal
and not a strong reason to refuse anti-suit relief.
Jacobs J placed particular emphasis first on the fact that the claimants had already commenced the LCIA proceedings and that therefore there would be a minimum of two sets of proceedings in any event. Furthermore, Jacobs J relied on Skype v Joltid [2009] as authority for stating that multiplicity of proceedings was simply the natural consequence of the parties' contractual agreement (i.e., settlement agreements No. 1 and 2 contained LCIA jurisdiction provisions whereas settlement agreement No. 3 was subject to the Israeli courts) and therefore not "a strong reason" for refusing anti-suit relief.
Practical points
The decision raises important practical considerations when advising on and/or seeking anti-suit relief:
- Delay - Ensure that anti-suit relief is sought promptly. The court held that an applicant was entitled to wait until it was actually served with proceedings but then must act without further delay. In this case, the court held that the applicant had acted promptly after being served in making its application for relief. Care should also be taken that an applicant does not participate, and is not perceived to participate actively in the foreign proceedings (which could suggest that it has accepted jurisdiction of the foreign court). Given that often a party will need to file a defence to prevent default judgment being obtained against it, it will be imperative to act swiftly in seeking anti-suit relief. Acting slowly or actively partaking in overseas proceedings could be fatal to a party's prospects of subsequently obtaining an anti-suit injunction.
- Jurisdiction of the overseas court - If a contract contains a clear and express jurisdictional provision in favour of an arbitral body, then the fact that an overseas court is in the process of determining whether it may determine the dispute is irrelevant for the purpose of determining anti-suit relief. In such circumstances, an English court remains bound to determine the applicant's request for relief pursuant to the usual tests.
- Multiplicity of proceedings - If court proceedings are commenced in breach of an express arbitration provision, an applicant should commence arbitration proceedings without delay. Proceeding in this manner (a) renders the multiplicity argument redundant should the respondent seek to rely on it before anti-suit proceedings (as multiple proceedings are afoot in any event); and also (b) tactically increases pressure on the respondent by forcing them to litigate on two separate fronts.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
