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A Global Perspective on Anti-Suit Injunctions

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About The Author

Alexios Ektor Koursopoulos (Former Private International Law Editor)

Alexios is a law graduate from Sussex University. Soon after completing his LLB, Alexios began working on his own medical start-up. Alongside his LLB, Alexios has successfully managed promotion companies in Brighton after working his way up the ladder, managing over 100 people at times. Outside the law, Alexios kick-boxed for a few years in Greece and still enjoys the odd training session when his schedule allows it.

We cannot forget the need to use the law as a shield, but we must remember other forces of the law.

Janet Reno

Anti-suit injunctions are a form of interim remedy that can be traced back to the fifteenth century, where they were used as a judicial tool to settle disputes between equity and common courts.  As the law has evolved, so have anti-suit injunctions; they are now regularly used as a means of interim relief in dispute resolution following a breach of an arbitration agreement.

This article will discuss anti-suit injunctions from a critical and global standpoint: it begins by considering the overall current role of anti-suit injunctions in arbitration before reflecting upon the principle of comity, which provides the main source of scepticism towards anti-suit injunctions. It will then examine the common and civil law approaches to the matter, with a view to outlining in what circumstances parties should favour each system.

What is an Anti-Suit Injunction?

In cases where litigation proceedings are brought before a court by a party – the breaching party – in violation of an arbitration agreement, it may be possible for the other party – the applicant – to file for dismissal of those proceedings. However, there are several jurisdictions, typically considered not to be ‘arbitration-friendly’, which do not permit, or are rarely welcoming to, such applications.

Therefore, the alternative solution for the applicant is to apply for an anti-suit injunction. This must be granted by the court where, according to the jurisdiction clause in the arbitration agreement, the arbitration is supposed to be seated. It seeks to restrain the other party from progressing the litigation.

Anti-Suit Injunctions as Remedial and Tactical Tools

A breaching party might, purely for tactical reasons, violate an arbitration agreement by bringing foreign proceedings when they fear the applicant may be able to make an arbitral claim against them. Such proceedings, which are typically without cause, represent an attempt to frustrate the applicant’s arbitral claim through the harnessing of the principle of lis alibi pendens outlined in Article 27(1) of Regulation 44/2001 (Brussels Regulation I), which holds that:

Where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established.

With the purpose being to frustrate and delay the anticipated arbitral claim, the breaching party will typically bring proceedings in jurisdictions renowned for not being ‘arbitration-friendly’ or for having slow judicial systems that, invariably, take a significant period of time to determination whether they possess sufficient jurisdiction to resolve the case.

Italy is one of the most frequent forums for such claims, leading to such proceedings being typically referred to as ‘Italian Torpedoes’. The case of Transporti Castelletti v Hugo Trumpy [1999] is a well-cited example, where the Italian Supreme Court of Cassation took over ten years to decide that it actually had no jurisdiction to hear a claim involving an English jurisdiction clause. Anti-suit injunctions, therefore, provide an invaluable counteractant against ‘Italian Torpedoes’ by halting the disruptive proceedings and enabling the applicant to bring an arbitral claim in the manner originally agreed.

However, those wishing to file for anti-suit injunctions in front of courts of European Union Member States have faced difficulties in recent years. The CJEU’s relatively strict interpretation of Article 27(1) of Brussels Regulation I – which it justified in Turner v Grovit [2004] using public law arguments about protecting courts from foreign interference – usually results in the temporary block of action to the courts of the Member State referred to in the arbitration agreement’s jurisdiction clause. This precludes it granting anti-suit injunctions, or any other form of interim relief.

This position was reinforced by the decision in Generali Assicurazioni Generali v West Tankers [2009], in which the CJEU held that the granting of an injunction to prevent a party from bringing or continuing litigation in breach of an arbitration agreement (like ‘Italian Torpedoes’) is incompatible with Brussels Regulation I. It was a decision that highlighted the issues faced by the courts when applying the arbitration exception outlined in Article 1(2)(d) of Brussels Regulation I, which simply holds that 'this Regulation shall not apply to … arbitration'.

While this provision was simple and clear, the lack of detail on how the exclusion should be applied in practice meant that the boundaries between the jurisdiction of Member State courts to act in support of arbitration in accordance with national law and their jurisdiction to act under Brussels Regulation I was unclear.

The West Tankers decision, which sought to provide some clarity on these boundaries, was heavily criticised by the international arbitration community on the grounds that its extension of the scope of Brussels Regulation I undermined the efficiency of arbitration agreements. As Victoria Clark argued, it effectively granted parties the freedom to simply ignore arbitration agreements and litigate in their preferred jurisdiction, thereby tacitly endorsing ‘forum shopping’.

Indeed, the intense outcry that followed West Tankers heavily informed the European Commission’s changes to Brussels Regulation I, the recast version of which (Regulation 1215/2012; Brussels Regulation II) became enforceable on 10 January 2015.

Brussels Regulation II mirrors much of its predecessor, but contains a new Recital – Recital 12 – which aims to provide clarification upon the interpretation and application of the arbitration exception. This Recital partially dealt with the problems caused to anti-suit injunctions by West Tankers, as it is provided that ‘Italian Torpedoes’ will not block courts of other member states from considering the validity of an arbitration agreement. However, as Clark notes, it still remains unclear whether anti-suit injunctions in cases of arbitration breaches are prohibited under the recast Regulation.

Anti-Suit Injunctions Scepticism and the Principle of Comity

The principle of comity is undoubtedly one of the main sources of scepticism towards anti-suit injunctions. Embodying the idea that courts should not act in a way that demeans the jurisdiction, laws, or judicial decisions of another jurisdiction, the principle was concisely defined by the US Supreme Court in Hilton v. Guyot [1895] as:

neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws.

Accordingly, it has been argued that the mere existence of the concept precludes the granting of an anti-suit injunction order. The extent to which this argument has been accepted has differed between jurisdictions, typically based on whether they are common law or civil law systems.

Common and Civil Law Approaches around The Globe

Generally, anti-suit injunctions are connected to common law systems; they can be considered as a correlative to the concept of forum non conveniens concept which grants the common law courts the ability to deny jurisdiction in favour of a more suitable forum with consideration to public and private interest factors. That said, the denial of jurisdiction under this concept is limited to the forum’s jurisdiction and it thus cannot interfere with the foreign court or its proceedings. As a result, as Marco Stacher explains:

[An] antisuit injunction, where the domestic court expresses that it deems itself to be the proper court, can thus be described as an offensive form of the forum non conveniens tool.

Antisuit injunctions, therefore, fit into and are part of, a more versatile perception of jurisdiction that typically exists in common law jurisdictions.

England and Wales (Common Law)

Indeed, English courts have traditionally granted anti-suit injunctions in cases where a litigant held the right to not be counter-sued in a foreign court; usually, this is where an enforceable arbitration clause existed or where an agreement confers rights to English courts. Anti-suit injunctions therefore may be granted liberally but not blindly. The courts will consider special factors which make it suitable for the case to be decided by the court, including the validity of the agreement to arbitrate and its operability

The principle of comity, meanwhile, has historically not been a decisive factor, receiving its first recorded, and brief, mention by Toulson LJ in Noble Assurance v Gerling-Konzern General Insurance [2006] EWHC 253 (Comm), which dealt with an application for an injunction regarding litigation proceedings brought before the US courts.

USA (Common Law)

US courts seem comfortable in using anti-suit injunctions to protect arbitral agreements from counteracting litigation, even in cases where the arbitration in need of protection is to take place outside the US. In contrast to the UK, the US courts will consider comity concerns as part of a holistic inquiry that examines all compelling interests in their whole.

The case of Ibeto Petrochemical Industries v M/T Beffen [2005] illustrates the US approach to anti-suit injunctions in arbitration. Here, a claimant who had purchased contaminated oil brought action against the defendant, the transporter of the oil, in the courts of Nigeria and New York whilst simultaneously commencing arbitration in London. Subsequently, the claimant discontinued the proceedings in London and New York and decided to proceed with litigation in Nigeria. The defendant then successfully sought to compel the arbitration in London via an order of the New York District Court, where an anti-suit injunction was granted.

On appeal, the Second Circuit in Ibeto Petrochemical Industries v M/T Beffen [2007] affirmed the decision, with the caveat that the District Court should have – to take into account comity concerns – granted a narrower injunction that prevented litigation only until the arbitration in London was concluded, thereby underlining that it was only the parties, and not the Nigerian courts, that were affected.

Indeed, in other US cases, comity has been a decisive factor: in LAIF X v Axtel [2004], the Second Circuit affirmed a decision which refused an ant-suit injunction due to the need to respect principles of international comity.

Germany (Civil Law)

In jurisdictions based upon the Civil Law, the landscape differs significantly. The approach of German courts towards anti-suit injunctions is demonstrated by the Dusseldorf Regional Court of Appeal’s decision in Re the Enforcement of an English Anti-Suit Injunction Case [1997] ILPr 320. Here, the court refused to follow an anti-suit injunction granted by the English courts which sought to prevent a German citizen from bringing legal proceedings before the German courts disregarding an arbitral agreement which referred the parties to arbitrate in London. The decision was based on the fact that the injunction in discussion would provide an infringement of the sovereignty of the German State and the jurisdiction of the German court.

Generally, the German courts interpret the exception contained in Article 1(2)(d) of Brussels Regulation I narrowly. It is viewed as not imbuing courts with the power to grant anti-suit injunctions in the context of arbitration, on the grounds that the question that should be considered in these cases – on the validity and binding effect of the arbitration agreement – does not fall within the scope of the pending litigation.

Therefore, it follows that – because German law views the fact that a foreign court has declared its jurisdiction under a violation of an arbitration agreement as justifying the application of the Article 1(2)(d) of Brussels Regulation I exception – merely alleging the existence of an arbitral agreement would result into the exemption of any proceedings deriving from the Brussels Regulation I.

Switzerland (Civil Law)

Switzerland is a renowned venue for arbitration but it does not offer as a remedy anti-suit injunctions on both an international and national level. Indeed, the Swiss legal framework celebrates the principle of sovereignty and emphasises heavily that its arbitral institutions and courts should only be able to decide upon their own jurisdictional competence. Thus, Chapter 12 of the Swiss Federal Code on Private International Law does not provide a framework that would allow the courts to prevent foreign proceedings or to block a party from arbitrating.

It also follows that, even though Switzerland is a party to the Lugano Convention – which extends the application of the Brussels Regulations, in both its past and recast form, to the members of the European Free Trade Association (EFTA) – the Swiss legal system lacks the necessary tools to allow anti-suit injunctions.

Conclusion

Clearly, the courts in the common law jurisdictions of the UK and US – the latter being more sensitive towards comity concerns – are more comfortable in issuing anti-suit injunctions than their Continental Europeans counterparts like Germany and Switzerland.

Whether one system or the other is preferable depends on the interests at stake in each particular case. In cases where there is minimal risk of countering litigation like ‘Italian Torpedoes’ – in that the applicant can be fairly confident that the court where the improper litigation is filed will dismiss the suit – forums like Germany and Switzerland offer an excellent option for arbitration. In contrast, in cases where a party decides that an anti-suit injunction may be needed to protect their interests, the US and UK courts may be preferred.

Ultimately, it is clear that managing international disputes can be a complex and time-consuming process. The first step to successful international dispute management must therefore always be for the parties to construct their arbitration agreements carefully, potentially including additional contractual mechanisms that lessen the likelihood of requiring anti-suit injunctions.

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Tagged: Commercial Law, Courts, Dispute Resolution, European Union, International Law, Justice, Litigation, Public Law, Trade

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