QLU Summer 2017: A High Court reminder on injunctive relief

QLU Summer 2017: A High Court reminder on injunctive relief

The High Court serves up a reminder that a consideration of whether an injunctive relief is necessary is to be determined by reference to the facts as they are at the time of the hearing as distinct from a consideration of prior breach or deterrent for potential future breach

Sam Purpose AS v Transnav Purpose Navigation Ltd (The “Sam Purpose”) [2017] EWHC 719 (Comm)

Facts

Owners of the vessel brought a substantial claim against Charterers for wrongful repudiation of a charterparty in London arbitration in accordance with the charterparty terms. Charterers made a counterclaim and issued proceedings in the Nigerian High Court to arrest The Sam Purpose allegedly only to secure their claim. The arrest was granted. Charterers then issued proceedings in respect of their substantive claims in Nigeria.

Owners applied for an anti-suit injunction in the English High Court to restrain the Nigerian proceedings on Tansnav’s substantive claims. Charterers did not appear at the hearing, but produced a skeleton argument in which they argued that under Nigerian law, it was impossible to obtain the arrest of a vessel without also commencing substantive proceedings there. This was accepted as common ground.

The English High Court therefore granted a temporary anti-suit injunction preventing Charterers from continuing the proceedings in Nigeria.

Tansnav however then in clear breach of the injunction applied fornjudgment in default on its substantive claims against Sam. Sam warned Transnav that it would take proceedings against the individuals concerned at Transnav for Contempt of Court.

Owners applied to the Nigerian Court to challenge jurisdiction and Charterers applied to withdraw its application for Judgment in default keeping in place its arrest for security.  Before the court in Nigeria had a chance to hear both applications however, Owners also applied to the English High Court for a final anti-suit injunction restraining Charterers from continuing the Nigerian proceedings and ordering Charterers to take positive steps to discontinue those proceedings in their entirety.

Judgment

The judge declined to grant the final anti-suit injunction in the form of an order that the Nigerian proceedings be discontinued in their entirety.

The court would not restrain a party to an arbitration clause from arresting a vessel in another jurisdiction where the sole purpose of the arrest was to obtain reasonable security for the claim to be arbitrated or litigated in England. Where, however, the claimants’ actions went beyond simply seeking reasonable security for the arbitration proceedings, there was a breach of the arbitration clause which the English court would restrain. The consideration of whether injunctive (or further injunctive) relief was necessary was to be determined by reference to the facts as they were at the time of the hearing. If, by that stage, the foreign court had changed its position so that there was now no risk to the arbitration and no risk of the claim ending up in whole or in part elsewhere, then there would be no need for injunctive relief.

As a matter of principle an injunction ought not to be granted simply to punish the foreign party for its earlier misconduct or to serve as a deterrent lest it might consider embarking upon further misconduct in the future.  The question was whether the injunction was necessary (Kallang Shipping v Axa (The Kallang No. 1) [2007] 1 Lloyd's Rep 160, applied).

The judge nevertheless invited Counsel for Sam to put forward suggestions for the continuation of some form of negative relief to stop any further action other than to stay the current proceedings in the light of Transnav’s earlier breach, should Counsel be so inclined to do so. 

Comments

The assessment of whether an arrest is for the sole purpose of securing the claim to be arbitrated might be influenced by the act of the party in question during the period subsequent to the arrest and prior to the time of hearing.

The above decision should be contrasted with Kallang, where an order for arrest granted by the Dakar court was solely for securing the claim under arbitration; however, Axa (the cargo insurers in that case) insisted upon a Senegalese bank guarantee and rejected the letter of undertaking offered by the American Club (the owners’ P&I Club) which was clearly a sufficient guarantee. As a result, the arrest was interpreted by the court as going beyond simply seeking security for the purpose of London arbitration.

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