The power to grant anti-suit injunctions where arbitration is on foot

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

In considering an application to continue an anti-suit injunction restraining proceedings brought in China where arbitral proceedings were on foot, the Commercial Court has confirmed in Southport Success SA v Tsingshan Holding Group Co Ltd [2015] EWHC 1974 (Comm) that the power to grant an anti-suit injunction under section 37 of the Senior Courts Act 1981 is distinct from that arising under section 44 of the Arbitration Act 1996.

Section 37 of the Senior Courts Act 1981 empowers the court to grant an injunction restraining a party from pursuing foreign proceedings if such proceedings have been brought in breach of a contractual agreement to refer disputes to arbitration. The court also has the power under section 44 of the Arbitration Act 1996 to grant an interim injunction for the purposes of and in relation to arbitral proceedings which are on foot. The defendants in this case sought to challenge the jurisdiction of the court to grant an anti-suit injunction on the basis that, where an arbitration is on foot, the conditions set out in section 44 must be satisfied even if an injunction is in fact granted under section 37.

Mr Justice Phillips upheld the reasoning of the Supreme Court in Ust-Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk Hydropower Plant LLP [2013] UKSC 35 that the power to grant an interim injunction under section 44 was not intended either to exclude the court's general power to act under section 37 in circumstances outside the scope of section 44, or to duplicate part of the general power contained in section 37. Phillips J found Lord Mance’s conclusion in that case that:

“where an injunction is sought to restrain foreign proceedings in breach of an arbitration agreement - whether on an interim or a final basis and whether at a time when arbitral proceedings are or are not on foot or proposed - the source of the power to grant such an injunction is to be found not in section 44 of the [Arbitration Act], but in section 37 of the [Senior Courts Act]. Such an injunction is not 'for the purposes of and in relation to arbitral proceedings', but 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”

to be “irresistible”. He further clarified that there is no requirement to have regard to the requirements of section 44 when considering granting an injunction under section 37.

This article first appeared on The Injunctions Blog: http://theinjunctionsblog.com/.