Posts Tagged Anti-suit injunction

Nori Holdings: High Court holds that West Tankers is still good authority even following Brussels I Recast. (Told you so).

In [2018] EWHC 1343 (Comm) Nori Holdings v Otkritie  Males J follows exactly the same line as mine in commenting on West Tankers – specifically the bodged attempt in Brussels I Recast to accommodate the concerns over West Tankers’ sailing the Brussels I ship way too far into arbitral shores.

For my general discussion of the jurisdictional /arbitration issues see here. A timeline:

  • When the Council came up with its first draft of what became more or less verbatim the infamous recital 12 I was not enthusiastic.
  • When Wathelet AG in his Opinion in Gazprom suggested recital 12 did overturn West Tankers, I was not convinced. (Most of those supporting this view read much into recital 12 first para’s instruction that the Regulation does not impede courts’ power ‘from referring the parties to arbitration’).
  • Indeed the CJEU’s judgment in Gazprom did not commit itself either way (seeing as it did not entertain the new Regulation).
  • Cooke J was on the right track in Toyota v Prolat: in his view the Recast did not change West Tankers.
  • Males J confirms: West Tankers is still good authority. At 69 ff he does not just point out that Wathelet was not followed by the Court. 92 ff he adds five more reasons not to follow the suggestion that West Tankers has been overruled. He concludes ‘that there is nothing in the Recast Regulation to cast doubt on the continuing validity of the decision in West Tankers (Case C-185/07) [2009] AC 1138 which remains an authoritative statement of EU law’.

I agree.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Heading 2.2.2.10.2.

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Pretty pennies and exclusive choice of court. BDO Cayman v Argyle Funds

In BDO Cayman v Argyle Funds, reported  by Harneys, the Grand Court of the Cayman Islands followed English and Australian authority in having an anti-suit injunction followed by a cost order against the party that had infringed choice of court. Costs including not just the domestic proceedings (that would be obvious) but also the foreign proceedings (here: in the US).

It is this type of measure which makes jurisdictions stand out and be noticed in civil procedure regulatory competition – not, as I flagged earlier, half-baked attempts to add some gloss via international business courts.

Geert.

 

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Learn your lines, son!: the (ir)relevance of grammar for choice of court underlined in Global Maritime Investments.

These general terms and conditions will be governed by and construed in accordance with English law. 

With respect to any suit, action or proceedings relating to these general terms and conditions each party irrevocably submits to the jurisdiction of the English courts.”

In Anchorage, the High Court had already dismissed a semantic approach to choice of court agreements in contracts (and choice of court clauses) subject to English law. In Global Maritime Investments Cyprus v O.W., Teare J considered in summary judgment, sought by GMI, whether the aforementioned clause is exclusive, and if not, whether proceedings commenced by GMI in England, block any future proceedings on the same (or wider) contractual issues sought by OW in Denmark. GMI had started proceedings in England following OW’s November 2014 filing for bankruptcy in Denmark. OW had initiated proceedings in Denmark in March 2015. At issue was among others the ‘netting-out’ provisions between parties (effectively, a final settlement of reciprocal dues in different currencies, with derivatives of commodity transactions being the underlying transactions between the parties in this case).

Teare J held that the clause even if not so phrased verbatim, was meant to be exclusive, among others in line with what ‘the reasonable commercial man’ (the bonus mercator, if you like) would have understood the clause to be, especially under the lex contractus, English law. All the more so in light of the use of ‘irrevocably’. At 51 he does offer sound commercial advice to avoid disputes such as the one at issue: it is desirable to employ transitive language, such as in ‘each party agrees to submit all claims’.

I do not think there is justification for the Court not to have considered the impact of the Brussels I (and /or Recast) Regulation on the clause: the judgment keeps entirely shtum about it. Under the rules of the Regulation, all clauses are considered exclusive unless specifically stated. Saying that the clause expressis verbis amounts to non-exclusivity, would be quite a stretch. (I agree it is not clearly worded exclusively – however that is exactly where the Brussels I Regulation is of assistance).

It is quite clear to me that this judgment (issued 17 August – I have delayed reporting for exam reasons) will not be the end of the jurisdictional affair. In particular, parties I am sure will be at loggerheads as to what litigation is to be considered ‘relating to these general terms and conditions’, in particular with OW’s insolvency proceedings in the background.

Geert.

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Goldman Sachs v Novo Banco: on ‘Civil and commercial’ in Brussels I, and choice of court transfer

Postscript 4 July 2018. The Supreme Court this morning dismissed the appeal – the Court of Appeal’s judgment stands. In essence, the ruling held that an English court is required by article 3 of the Recognition Directive to recognise the December decision, and must therefore treat the Oak liability as never having been transferred to Novo Banco. Novo Banco was therefore never party to the jurisdiction clause in the facility agreement.

Postscript 8 November 2016 the Court of Appeal held differently – thank you Maria Joao de Matias Fernandes for flagging: with more emphasis laid on the reorganisation Directive, the Court of Appeal held that the choice of court clause had not been transferred and that no prorogation of jurisdiction to the English courts could otherwise be established. The Court of Appeal’s decision has no impact on the High Court’s discusison with respect to ‘civil and commercial’.

In Goldman Sachs v Novo Banco SA, the High Court first of all had to consider the scope of the Brussels I Regulation on the issue of ‘civil and commercial’.  This issue came up following the restructuring of a Portuguese Bank and the role of the Portuguese Central Bank, under its statutory powers, in the transfer of liabilities to a Bridge Bank, ‘Novo Banco’. [For the facts of the case see the judgment itself and see also Christopher Bates’ review, which first alerted me to the case. Mr Bates also reviews the issue of mutual recognition under the Bank Recovery Directive].

Hamblen J (soon to move to the Court of Appeal) in my view justifiably rejected Novo Banco’s arguments that the claim was not civil and commercial, given the statutory intervention of the Central Bank. With reference to the traditional line-up of CJEU precedent (see most recently Fahnenbrock, absent from the High court’s judgment; and Sapir, which does feature heavily) he held that the nature of the claim, in spite of the factual intervention of the Central Bank, is one in debt, which is a claim based on private law rights conferred by the relevant Facility Agreement and a civil and commercial matter. A novation of the Facility Agreement would not change the nature of that claim; nor does a statutory transfer.

Having decided that the claim falls under the Regulation, the High Court subsequently had to decide whether Novo Banco was subject to the choice of court, in favour of the English court, part of the Facilities Agreement. As this is a transfer of claims and not a contractual chain, Refcomp does not apply (Hamblen J did not refer to it). The matter needs to be decided by the lex causae, here the lex contractus: English law. Upon consideration of the various arguments, the High Court held that the choice of court clause had so been transferred together with the original claims.

Finally, the Court rejected a stay on ‘case management’ grounds (see Jong and Plaza for earlier applications).

The case shows how some of the core considerations of Brussels I can create a lot of argument, indeed.

Geert.

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SwissMarine- The High Court declines anti-suit against insolvency proceedings in Denmark.

Much of the analysis in Swissmarine would have been redundant had Denmark been subject to the Insolvency Regulation. Please refer to the judgment for the many lines of arguments by applicants and defendants – Alexis Hogan has good summary over at the RPC blog.

SwissMarine Corporation Limited (“SwissMarine”) applied for an anti-suit injunction against O. W. Supply & Trading A/S (“OW Supply”), a Danish company that had filed for bankruptcy in the Bankruptcy Court of Aalborg, Denmark on 7 November 2014. SwissMarine sought an order restraining OW Supply (i) from proceeding with an action that it had brought in the District Court in Lyngby, Denmark (the “Lyngby action”) and (ii) from commencing any other or further proceedings in Denmark or elsewhere against SwissMarine directed to obtaining a “disputed” sum claimed under an ISDA Master Agreement (the “ISDA Agreement”) or any transaction thereunder. (For a related discussion of the ISDA Agreement, see Anchorage).

Brussels I recast does not apply for the dispute arguably falls under that Regulation’s insolvency exception. The Insolvency Regulation as noted does not apply for Denmark has opted out of it. The High Court held essentially that the Lygnby action is not covered by the jurisdiction agreement because it is not a suit, action or proceedings relating to a dispute arising out of or in connection with the ISDA Agreement or any non-contractual obligations arising out of or in relation to it. The Court followed the defendant’s argument that OW Supply is not seeking to have determined any dispute under the ISDA Agreement or about the parties’ rights and obligations under it, and there is no dispute about their contractual rights and obligations. The question for the Lyngby court will be how the Danish insolvency regime applies to them. In the words of Smith J: ‘The wording (of the choice of court clause in the ISDA Agreement – GAVC) does not bear on the question whether OW Supply can invoke the protection of Danish insolvency rules, or whether the jurisdiction agreement was intended to prevent this. I cannot accept that the parties evinced an intention in the schedule that OW Supply (or SwissMarine) should abandon the protection of its national insolvency regime.’ (at 26) In conclusion, SwissMarine have not shown a sufficient case that the jurisdiction agreement applies to the Lyngby action to justify its submission that it should be granted an anti-suit injunction on the grounds that in bringing and pursuing the action OW Supply is acting in breach of it. (at 29).

Smith J also discusses at length the impact of the Brussels I and Brussels I recast Regulation on the reference, in the choice of court provision of the ISDA Agreement, to ‘Convention’ (ie 1968 Brussels Convention) parties. Athough this discussion had no bearing on the eventual outcome, the Court’s (disputable) conclusion that reference to Convention States should be read as such (and not include ‘Regulation’ States), in my view would merit adaptation, by parties ad hoc or generally, of the relevant choice of court clause.

Geert.

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Arbitral anti-suit injunctions and the Judgments Regulation. Grand Chamber holds they are outside the scope, but not therefore invincible.

The ECJ today has held, in a matter of factly manner (I had suspected the Court would be brief), that the enforcement of arbitral awards falls outside the Brussels I-Regulation, where that enforcement by the court of that State, effectively prohibits the party concerned from taking the case to a court in that very Member State. Rich was the main formula referred to, among the various precedents: ‘reference must be made solely to the subject-matter of the dispute‘ to assess the scope of Brussels I’s arbitral exclusion.

Importantly, West Tankers was distinguished particularly on the basis that in the facts at issue, there was no competing court in another Member State, hence no scope for the principle of mutual trust to be violated. The AG’s review of the impact of the recitals newly added by the Brussels I recast, was not addressed at all by the Court.

The judgment does not solve all outstanding issues, however. Firstly, the Court’s reasoning seems to suggest that where competition with a court in another Member State is at issue, effet utile of the Brussels I Regulation might take the upper hand, as it did in West Tankers. Recognition of the award arguably in such case would amount to anti-suit. Further, the Court (this was a Grand Chamber judgment) points out that the award still has to go through the national court’s standard recognition and enforcement process, outside the framework of Title III of the Regulation, instead governed by national residual law as well as the New York Convention. Both of these (including through ordre public) might still offer quite a remit for the Lithuanian courts to refuse recognition.

Geert.

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Toyota v Prolat and the Brussels I arbitration exception. Plus ça change.

In Toyota v Prolat, the High Court was asked by Toyota to confirm the existence of an agreement between parties to arbitrate. The arbitral panel, already seized by Toyota, agreed that it would be best for the Court preemptively to settle this issue since it suspects any ruling by the tribunal itself will be subject to litigation by Prolat. The agreement (existence of which is disputed by Prolat; it had employed an authorised agent, whose signings on behalf of Prolat are disputed) concerns the delivery of sugar by Toyota to Prolat. Prolat objects to the jurisdiction of the tribunal. It has itself started proceedings in Naples for damages for various alleged wrongdoing by Toyota, whether for breach of contract or tort.

The interest of the case for this blog lies in particular with the concurrent proceedings in Italy and the UK. Should the UK decline? The case is subject to Regulation 44/2001, not to the recast. Cooke J holds that ‘This Court is not being asked to interfere with the functions of the Italian court as no form of anti-suit injunction is being sought against Prolat. This Court is being asked to determine whether or not there is an arbitration agreement and to make a declaration in the light of its conclusion.West Tankers is therefore distinguished.  Would, had it applied, Regulation 1215/2012 made a difference? Cooke J held that it would not: ‘Article 1(2)(d) remains unchanged from the earlier Regulation but is more fully explained in paragraph 12 of the Preamble. I was also referred to Article 73 which states that the Regulation will not affect the application of the New York Convention. (…)‘ (at 16)

He concludes ibidem ‘Although it is not yet in force, it was suggested that some might regard the new Regulation as declaratory of the existing state of the law. . The jury on that, as is well-known, is out.

Cooke J further explores the issue of the applicable law to the contract per its putative law (Article 10(1) Rome I). Firm and justifiable conclusion (at 18) there, is: English law.

Geert.

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