Enter to open, tab to navigate, enter to select
No anti-suit injunction to restrain New York proceedings (Commercial Court)
Practical Law UK Legal Update Case Report 5-581-3345 (Approx. 4 pages)
No anti-suit injunction to restrain New York proceedings (Commercial Court)
| Published on 17 Sep 2014 • England, Wales |
In Rochester Resources Ltd and others v Lebedev and another [2014] EWHC 2926 (Comm), the Commercial Court considered an application for an anti-suit injunction to restrain New York court proceedings brought in breach of an arbitration agreement.
Speedread
The Commercial Court has refused to grant an anti-suit injunction restraining New York court proceedings in favour of arbitration.
LL commenced proceedings in the Supreme Court of New York against VV and LB under an investment agreement. VV and LB applied to the Commercial Court for an anti-suit injunction restraining the New York court proceedings, under section 37 of the Senior Courts Act 1981 (SCA) or section 44 of the Arbitration Act 1996 (AA). VV and LB argued that they and LL were bound by an arbitration agreement contained in a related Acquisition Agreement between two companies, Rochester and Coral.
In refusing the anti-suit injunction, Jonathan Hirst QC (sitting as a Deputy High Court judge) held that VV and LB had not established to a high degree of probability that they and LL were bound by the arbitration agreement.
The decision highlights again the importance of the wording of the arbitration clause. Parties should attempt to pre-empt the situation that arose in this case by trying to ensure that all relevant parties are parties to the arbitration agreement. (Rochester Resources Ltd and another v Lebedev and another [2014] EWHC 2926 (Comm).)
The Commercial Court has refused to grant an anti-suit injunction restraining New York court proceedings in favour of arbitration.
LL commenced proceedings in the Supreme Court of New York against VV and LB under an investment agreement. VV and LB applied to the Commercial Court for an anti-suit injunction restraining the New York court proceedings, under section 37 of the Senior Courts Act 1981 (SCA) or section 44 of the Arbitration Act 1996 (AA).
VV and LB argued that they and LL were bound by an arbitration agreement contained in a related Acquisition Agreement between two companies, Rochester and Coral. Although they were not parties to the Acquisition Agreement, VV and LB asserted that they and LL were the ultimate beneficiaries of Rochester and Coral and that Rochester and Coral had contracted as agents for them.
It was common ground that, to grant an anti-suit injunction, VV and LB had to establish that there was a "high degree of probability" that both they and LL were bound by the arbitration clause in the Acquisition Agreement (Transfield Shipping Inc v Chiping Xinfa Huayu Alumina Co [2009] EWHC 3629 (Comm), discussed in Legal update, Test for granting anti-suit injunction in breach of alleged arbitration agreement).
Jonathan Hirst QC (sitting as a Deputy High Court judge) held that that test was not satisfied here. The arbitration clause covered disputes arising "between the Parties" and LL was not one of "the Parties".
The same applied to VV and LB. Accordingly, the application under section 37 SCA failed. So too did the application under section 44 AA, which did not apply in any event, following the Supreme Court's judgment in Ust-Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk Hydropower Plant LLP [2013] UKSC 35, discussed in Legal update, Ust-Kamenogorsk v AES anti-suit injunction: full update.
The decision highlights again the importance of the wording of the arbitration clause. Parties should attempt to pre-empt the situation that arose in this case by trying to ensure that all relevant parties are parties to the arbitration agreement.
For resources on drafting arbitration agreements, see International arbitration clauses toolkit. For detailed discussion on anti-suit injunctions in the English courts, see Practice note, Remedies for breach of the arbitration agreement: anti-suit injunctions in the English courts.