Arbitration: anti-suit injunctions to restrain foreign court proceedings in breach of an arbitration agreement.
Through Transport Mutual Insurance Association
(Eurasia) Limited v New India Assurance Association
Company Limited
UK Court of Appeal
Arbitration seems to have survived another ambush and lives on, possibly stronger than ever. Its latest escape is recorded in a recent Court of Appeal decision in the UK and in a European context, but the general principles are just as applicable in Australia and our region.
The case is Through Transport Mutual Insurance Association (Eurasia) Limited v New India Assurance Association Company Limited, sometimes referred to as The Hari Bhum, the name of the ship carrying the cargo which disappeared and which gave rise to the litigation.
The case is valuable because it gives us some, but not complete, clarity on how the courts will handle the situation where there are arbitration and Scott v Avery clauses in a contract, where one party wants the parties held to arbitration, but the other party has started and wants to bring or continue with court proceedings in a foreign country.
Will the former be able to get what is called an anti-suit injunction to restrain the latter from continuing with its court proceedings in the foreign court and drag him back to face the music in England or wherever the contract provided?
Equally, would that party be able to compel the other party to abandon its foreign court proceedings and face arbitration where the contract provided?
For a some years, the English courts and English practitioners were faced with a major problem thrown up by two decisions of the European Court of Justice when they, the English courts, were deciding whether to grant injunctions to restrain parties from continuing with foreign court proceedings.
The cases in the European Court of Justice Those two decisions, Erich Gasser GmbH v. MISSAT Srl 1 (Gasser) and Turner v. Grovit2, had decided that anti-suit injunctions should no longer be issued in one jurisdiction, say England, to restrain a party from continuing with proceedings in another, say Spain, when the two countries were covered by the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters of 1968, namely the European Community countries.
In Gasser, the European Court of Justice had held that an Austrian Court should not have issued an anti-suit injunction to restrain a company from proceeding in an Italian court, even although the injunction had been based on the ground that there was a clause in the parties’ contract conferring exclusive jurisdiction over disputes on the Austrian courts.
This decision was based was on the ground that ‘mutual trust and confidence’ had to be given by the courts of one contracting state to those of another, ie by Austria to Italy. In Turner v. Grovit, the House of Lords had wondered if it should issue an anti-suit injunction to stop a company from continuing with proceedings in a Spanish court when they had been brought in that court vexatiously and to avoid proceedings in England.