England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand. London. WC2A 2LL
		22/11105

Mr Justice Morison:

1. This is an application for an anti suit injunction.
2. In late July 2005, the court was asked to rule on a challenge to the jurisdiction of this court by the defendant. The challenge was dismissed by the court. The facts giving rise to the challenge, the arguments advanced on behalf of the parties and the reasons for the decision are set out in the judgment delivered ex tempore.
3. I will not repeat in this Judgment the background to the dispute between the parties. Suffice it to say the court [Morison J.] concluded that England was the appropriate natural forum for the trial of the action. There was no appeal. After the judgment there was some discussion about what would happen to the proceedings commenced by Astra against Cadre in Romania and the position was left open pending instructions from Astra. In late October it became clear that Astra were determined, despite losing their jurisdictional challenge, to pursue the Romanian action. Accordingly, Cadre issued the present application. Initially, the application was due to be heard by Aikens J. on 9 November 2005. During the arguments of counsel he concluded that he could not fairly adjudicate on it without a sight of the approved judgment of the court given on 29 July 2005. Neither party had requisitioned an official transcript of the judgment. He adjourned the hearing and it came back before me by which time there was an approved version of the judgment, which is annexed hereto as Appendix A.
4. Both parties, through their counsel, lodged skeleton arguments with the Court, which have been a great help and I would like to thank them for that.
5. Mr Kulkarni, in an able and concise submission, on behalf of Cadre, submitted that there were five findings made by the court at the hearing on 29 July 2005, which were of importance to the present application:

(1) English Law was the law chosen as the governing law of the contract: paragraph 12.

(2) England is the appropriate and natural forum for the trial of the dispute: paragraphs 13 and 17.

(3) The defendants have indulged in forum shopping: paragraph 15.

(4) Cadre were entitled to be apprehensive about the outcome of the dispute were it to be tried in Romania and that stemmed largely from their belief that "they are going to be deprived of the benefit of having their contractual relations with Astra determined in the courts by the application of English law, that being the choice under the contract."

(5) The Judgment Regulations do not apply as Romania is not a member of the EU, although it is due to become one in January 2007.

6. In considering an application for an anti suit injunction, in essence, the court embarks on a two stage process: first, is England the appropriate and natural forum for the trial of the action, which was determined by the court on 29 July 2005, and to which the answer is 'yes'; and, second, whether "the ends of justice" require the grant of an injunction: see Airbus lndustrie GIE v Patel [1999] l AC at page 139 per Lord Goff; and Donohue v Armco [2002] 1 Lloyd's Reports 425 at paragraph 19, per Lord Bingham. This latter requirement is sometimes characterised as the Claimant having to show that it is unconscionable for the defendant to continue with the foreign proceedings. The claimant did not need to go so far as to show that it would be 'vexatious' for the foreign proceedings to continue.
7. Mr Kulkarni submitted that the following factors were significant:

(1) The defendant is persisting with the Romanian proceedings in utter disregard of a clear statement by the English court that it is the appropriate forum for the dispute. Such conduct is to be regarded as oppressive, vexatious or unconscionable.

(2) The continuation of the Romanian proceedings will create a multiplicity of proceedings with the attendant unnecessary costs and delay and the problems of having to call witnesses before more than one court, with the attendant risk of inconsistent results in different jurisdictions. This factor was regarded as important by the Privy Council and the House of Lords: see Societe Aerospatiale v Lee Kai Jak [1987] 1 AC page 871, per Lord Goff at pages 900G - 902G. By proceeding in Texas, which was not the natural forum, the plaintiffs' conduct "should properly be described as oppressive".

In Donohue v Armco [2002] 1 Lloyd's Law Reports 202, the House was faced with an exclusive jurisdiction clause which bound Mr Donohue and three of the Armco companies but which, if enforced, would require the case to be tried in England, which was not the natural forum for the dispute, and would lead to a multiplicity of actions. Lord Bingham put it this way, at paragraph 34 of his judgment:

"It seems to me plain that in a situation of this kind the interests of justice are best served by the submission of the whole dispute to a single tribunal which is best fitted to make a reliable, comprehensive judgment on all matters in issue. A procedure which permitted the possibility of different conclusions by different tribunals, perhaps made on different evidence, would in my view run directly counter to the interests of justice. "

(3) The manner in which the proceedings were commenced in Romania shows a clear attempt at a pre-emptive strike to prevent this court or the Turkish court from taking jurisdiction. And, further, in those proceedings Astra are endeavouring to persuade that court that the ITC conditions which were admittedly included in the contract did not "remove the application of Romanian law on the contractual issues". In other words, by maintaining the proceedings in Romania Astra are seeking to deprive Cadre of their right to have their dispute determined in accordance with the law of their agreement. Cadre are entitled to such indemnity under the contract as English law affords them. The position of Astra is quite inconsistent: in these proceedings they accept that English Law applies; yet in Romania their lawyers are saying something different.

(4) There is nothing in the contractual documents to suggest that the parties agreed to resolve their disputes in Romania. On the contrary, ITC Hull Clause 280, which was expressly incorporated into the contract, states that

"This insurance is subject to English law and practice. "

8. Ms Blanchard, in a forceful and comprehensive submission on behalf of Astra, submitted that the 'touchstone' for the court's decision was 'caution'. This court should not interfere with the proper processes of foreign courts, even indirectly by making in personam orders against parties to proceedings in such courts. The fact that there are two sets of proceedings afoot does not of itself and necessarily lead to 'the conclusion that an injunction would be an appropriate remedy. Astra have done nothing wrongful or wrong by pursuing proceedings in Romania; they were entitled to start proceedings in the place where they conduct their business: their 'home' court. The way they have pursued those proceedings has not been unconscionable: the issues in the action will be familiar to the Commercial Court in England. Astra say that there was no binding agreement between the parties; pre-conditions to liability under the insurance were not met; premium had not been paid and the policy could not bite until after premium had been paid; and there was material non-disclosure. Further, the manner in which the court has exercised its jurisdiction cannot be criticised. If Cadre wish to stop the proceedings in Romania or to challenge the court's jurisdiction it should go to Romania and argue the matter before that court.
9. There is a distinction to be drawn between 'the natural forum' and 'the most natural forum' . The most natural forum would be Turkey where Cadre are based and where the vessel which sank was based.
10. In establishing unconscionability the burden of proof was upon the claimants. There is nothing unconscionable or improper in Astra asserting that Romanian Law applies and the pursuit of the action there is not in and of itself unconscionable. There is no evidence before the court to establish that Romanian Law is any different from English Law and therefore there is no evidence of prejudice. There were potential advantages in having the action tried in Romania: principal among these are that the costs would be lower and the language of documents and witnesses from Astra's side would not require translation. She also submitted that Cadre had been guilty of unacceptable delay in making this application.

Decision

11. The parties were in agreement about the legal principles which 1 must apply. Are the ends of justice to be met by the grant of an injunction and would it be unconscionable for Astra to continue the proceedings in Romania?
12. I agree with Ms Blanchard that the jurisdiction to grant an anti suit injunction must be exercised with caution [see the judgment of Lord Bingham in the Donohue case [at paragraph 19]:

The jurisdiction of the English Court to grant injunctions. both generally and in relation to the conduct of foreign proceedings, has been the subject of consideration by the House of Lords and the Privy Council in a series of decisions in recent years ...

Those decisions reveal some development of principle and there has in other decisions (for example, Mercedes Benz A.G. v. Leiduck, [1995] 2 Lloyd's Rep. 117; [1996] A.C 284) been some divergence of opinion. But certain principles governing the grant of an injunction to restrain a party .from commencing or pursuing legal proceedings in a foreign jurisdiction, in cases such as the present, as between the Armco companies and these PCCs, are now beyond dispute. They were identified by Lord Goff of Chieveley giving the opinion of the Judicial Committee of the Privy Council in Aerospatiale (at p. 892):

(l) The jurisdiction is to be exercised when the ends of justice require it.

(2) Where the court decides to grant an injunction restraining proceedings in a foreign court, its order is directed not against the foreign court but against the parties so proceeding or threatening to proceed.

(3) An injunction will only be issued restraining a party who is amenable to the jurisdiction of the court, against whom an injunction will be an effective remedy.

(4) Since such an order indirectly affects the foreign court, the jurisdiction is one which must be exercised with caution."

13. I further accept that, on the face of it, the mere existence of a foreign action even where this court has concluded that the appropriate and natural forum is England does not of itself lead to the grant of an anti suit injunction:
14. In the Lee Kui Jak case at pages 895 - 896 Lord Goff said this:

"In practice, however, the principle so stated would have the effect that, where the parties are in dispute on the point whether the action should proceed in an English or a foreign court, the English court would be prepared, not merely to decline to adjudicate by granting a stay of proceedings on the ground that the English court was forum non conveniens, but, if it concluded that England was the natural forum, to restrain a party from proceeding in the foreign court on that ground alone. Their Lordships cannot think that this is right. Not only does it conflict with the observation of Brett MR. in Hyman v. Helm, 24 Ch.D. 531, 537, referred to above: but it leads to the conclusion that, in a case where there is simply a difference of view between the English court and the foreign court as to which is the natural forum, the English court can arrogate to itself by the grant of an injunction, the power to resolve that dispute. Indeed, in a passage in his speech in British Airways Board v. Laker Airways Ltd [198] AC 58, 80, Lord Diplock appears to have been ready to give credence to this approach. But, with all respect, such a conclusion appears to their Lordships to be inconsistent with comity, and indeed to disregard the fundamental requirement that an injunction will only be granted where the ends of justice so require. Furthermore, if it were right, it would lead to the remarkable conclusion that, in a case such as MacShannon v. Rockware Class Ltd. [1978] A.C 795, the Scottish court, having concluded that Scotland was the natural forum for the trial of the action, might for that reason alone grant an interdict restraining the plaintiffs from proceeding in England.

15. And there are other such statements to a similar effect: see OT Africa Line v Magic Sportswear [2005] 2 Lloyd's Law Reports 170 at paragraph 31 where Longmore LJ said:

"31. As a broad proposition of law, an anti-suit injunction may be granted where it is oppressive or vexatious for a defendant to bring proceedings in a foreign jurisdiction but Societe Nationale Industrielle Aerospatiale v Lee Kui Jak and Another [1987] AC 871 emphasised that the mere fact that the English court refused a stay of English proceedings on the grounds of forum non conveniens did not itself justify the grant of an injunction to restrain foreign proceedings. The doctrine of comity requires restraint since (a) another jurisdiction may take the view that the courts of that jurisdiction are an equally (or even more) appropriate forum than the English court and (b) any anti-suit injunction can be perceived as an, at least indirect, interference with such foreign court .... "

16. The principles which apply were recently re-stated by the Court of Appeal in the case of Seismic Shipping v Total E & P [2005] 2 Lloyd's Law Reports 359 at paragraphs 43 -45:

43. The owners submitted to the judge that, having granted a limitation decree, proceedings in Texas designed to obtain judgment for more than the limited amount decreed was unconscionable and he should grant an injunction to restrain the further conduct of those proceedings. The judge refused to grant an injunction .and the question in this part of the appeal is whether he should have done so.

44. The judge summarised the relevant principles in para 29 of his judgment by reference to Andrew Smith J's summary of them, which was approved by this court, in Royal Bank of Canada v Centrale Raiffeisen-Boerenleenbank [2004] J Lloyds Rep 471. They are set out in para 8 of the judgment of Evans-Lombe J in this court:

(i) Under English law a person has no right to be sued in a particular forum, domestic or foreign, unless there is some specific factor that gives him that right, but a person may show such a right if he can invoke a contractual provision conferring it on him or if he can point to clearly unconscionable conduct (or the threat of unconscionable conduct) on the part of the party sought to be restrained: Turner v Grovit [2002] 1WLR 107, 118C at para 25 per Lord Hobhouse.

(ii) There will be such unconscionable conduct if the pursuit of foreign proceedings is vexatious or oppressive or interferes with the due process of this Court: South Carolina Insurance Co v Assurantie Maatschappij de Zeven Provincien NV [1987] AC 24 at page 41D; Glencore International AG v Exter Shipping Ltd [2002] 2 All ER (Comm) 1, 14a at para 42.

(iii) The fact that there are such concurrent proceedings does not in itself mean that the conduct of either action is vexatious or oppressive or an abuse of court, nor does that in itself justifY the grant of an injunction: Socite Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] AC 817 at page 894C; Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd [1999] 1 Lloyds Rep 767 at 781; Airbus Industrie GIE v Patel [1999] 1 AC 119 at 1 33G/H

(iv) However, the court recognises the undesirable consequences that may result if concurrent actions in respect of the same subject matter proceed in two different countries: that "there may be conflicting judgments of the two courts concerned" or that there "may be an ugly rush to get one action decided ahead of the other in order to create a situation of res judicata or issue estoppel in the latter": see The Abidin Daver [1984] AC 398 at pages 423H-424A per Lord Brandon.

(v) The court may conclude that a party is acting vexatiously or oppressively in pursuing foreign proceedings and that he should be ordered not to pursue them if (a) the English court is the natural forum for the trial of the dispute, and (b) justice does not require that the action should be allowed to proceed in the foreign court, and more specifically, that there is no advantage to the party sought to be restrained in pursuing the foreign proceedings of which he would be deprived and of which it would be unjust to deprive him: Societe Aerospatiale, ibid at 895D and 896F-G.

(vi) In exercising its jurisdiction to grant an injunction, "regard must be had to comity and so the jurisdiction is one which must be exercised with caution":

Airbus Industrie, ibid at 133F Generally speaking in deciding whether or not to order that a party be restrained in the pursuit of foreign proceedings the court will be reluctant to take upon itself the decision whether a foreign forum is an inappropriate one: Turner v Grovit, ibid at para 25.

That seems to me to be a correct summary of the principles which have been developed to assist the court to decide whether to grant an anti-suit injunction to restrain foreign process in the exercise of the power conferred on the court under section 27 of the SCA 1981 to grant an injunction "in all cases in which it appears to the court to be just and convenient to do so. As the judge put it in para 30 of his judgment, the essential touchstone is whether there has been unconscionable conduct or the threat of unconscionable conduct. "

17. I shall seek to apply those principles to the facts of this case. In the first place the court has already determined that the appropriate natural forum for the trial of the dispute between the parties is England and that decision has not been appealed. I reject Ms Blanchard's attempt to draw a distinction between the· natural and appropriate forum and the most natural and appropriate. In the eyes of English law there is no 'good' 'better' 'best' concept about the forum. The natural and appropriate forum does not admit of any qualification. To have two actions going at once in two different jurisdictions is quite undesirable because of the objections referred to in the authorities: the risk of conflicting decisions, the costs of waging war on two fronts and the duplication of evidence and the equal risk that the evidence would be different in the two courts. This is a weighty factor, although of itself it is not enough. As was said by the Court of Appeal in the Seismic case

"(v) The court may conclude that a party is acting vexatiously or oppressively in pursuing foreign proceedings and that he should be ordered not to pursue them if (a) the English court is the natural forum for the trial of the dispute, and (b) justice does not require that the action should be allowed to proceed in the foreign court, and more specifically, that there is no advantage to the party sought to be restrained in pursuing the foreign proceedings of which he would be deprived and of which it would be unjust to deprive him: Societe Aerospatiale, ibid at 895D and 896F-G."

18. There was no good reason for Astra to seek to have the dispute determined in Romania. Its avowed aim was to prevent proceedings in this jurisdiction. or in Turkey. It asserted no positive case for starting the action in Romania at that time and I described this conduct as forum shopping. Astra had written no letter before action; their decision was taken apparently purely because of the threat of action against them in another jurisdiction. Whilst it is true that there are examples of similar· behaviour in our courts, it is all a matter of degree and depends on the precise facts. The way the action was started is of relevance in considering whether there was some advantage to Astra to start the proceedings in Romania. In my view, the proceedings were started as a 'defensive' step to prevent other courts from taking jurisdiction, rather than because Astra thought that Romania was the natural and appropriate forum. There is no true juridical advantage to Astra to maintain the proceedings in Romania, save on the question of costs; yet by pursuing the proceedings there after this court has determined that the appropriate forum is England, costs would greatly increase. The costs advantage is more apparent than real. .It would not be unjust to deprive Astra of the opportunity to continue their action in Romania. The proceedings there are at an early stage; Cadre have taken no steps in the action there and the case has been removed from the list pending this decision, until sometime next year. Very little costs will have been incurred by Astra so far. They have not invested heavily in the Romanian proceedings, so far as I am aware. As I see it, the only juridical advantage which Astra will lose is the chance to persuade the court there that English law does not apply to the contractual relations between the parties. But, having regard to Astra's position in this court, that is not a legitimate advantage. On the contrary, by pursuing that case in Romania [and not here] Astra are, in my judgment, acting unconscionably. They are acting cynically ..
19. As to the suggestion that there has been delay in seeking the injunction, I regard that submission as hopeless. After the ruling in July it was anticipated that instructions about the continuation of the Romanian proceedings would be obtained by Astra and notified to Cadre's advisers. As late as 21 October 2005 the position was unclear .. In my view Cadre have acted promptly. I regret that Astra were not prepared to abandon the Romanian proceedings when they lost their challenge to this court's jurisdiction. Because they are intent on proceeding with the case in Romania unless restrained by this court, an anti suit injunction should be granted. I would, of course, be prepared to accept an undertaking in lieu of an injunction.
20. Nothing that is said in this judgment implies any disrespect to the Romanian courts. No criticism has or could be made of them in acting as they have done. They must apply their own rules of procedure and take jurisdiction where those rules so provide. Whether or not Cadre could challenge the assumption of jurisdiction is another matter which will not arise.
21. I would like to give directions for the trial of the action and would hope that the parties could assist me on that when this judgment is handed down.