Verity Shipping S.A. and others v N.V. Norexa and others [2008] EWHC 213 (Comm)
In this case the Owners applied to continue an anti-suit injunction in London prohibiting the Cargo Interests from prosecuting proceedings in the Antwerp Court. Mr Justice Teare held that the risk of inconsistent judgments, which might cause a third party to suffer an injustice, was a strong cause or good reason to discontinue the anti-suit injunction. In addition, Mr Justice Teare held that the Owners should have applied for an injunction long before they did, having waited some three years from commencement of the Antwerp proceedings before making their application.
The facts
Verity Shipping S.A. were the Owners and Managers of The ‘Skier Star’. By a voyage charterparty dated 12 December 2004 the vessel was chartered to an Argentine company for the carriage of fresh fruit and vegetables from Campana to Antwerp. Bills of lading were issued in Campana dated 3 January 2005, incorporating the English law and London arbitration clause from the charterparty. N.V. Norexa et al. (cargo interests) claimed to be the holders of the bills of lading and the insurers of the cargo. The cargo was discharged at Antwerp on 20 and 21 January 2005, but was condemned by the Belgian Federal Agency for Food Safety (“FAVV”), who alleged oil vapour contamination.
The proceedings in Antwerp
On 21 January 2005 the Cargo Interests issued proceedings in Antwerp, alleging that the Owners were liable for the loss of the cargo. The Antwerp proceedings were adjourned on 8 February 2005, pending the production of the Court appointed surveyor’s report. The Owners subsequently issued proceedings in Antwerp against FAVV, seeking an indemnity in respect of any liability they might have to the Cargo Interests. The surveyor’s preliminary report was published on 18 April 2006 and, following a series of comments and questions being raised by the Owners and answered by the surveyor, the final report was submitted to the Antwerp Court on 13 March 2007.
The proceedings in London
On 27 November 2007 the Owners informed the Cargo Interests that they would seek an anti-suit injunction in England unless the Cargo Interests agreed to withdraw their claim in the Antwerp Court. The Cargo Interests declined to do so and the Owners, on 21 December 2007, sought and obtained an anti-suit injunction in the Commercial Court in London restraining the Cargo Interests from taking any further steps in the Antwerp proceedings. The Owners subsequently applied to continue the anti-suit injunction.
The present position under English law is that the Court has jurisdiction to grant an anti-suit injunction to enforce an arbitration clause notwithstanding that a defendant has already commenced proceedings in the EU; see The Front Comor [2005] 2 Lloyd’s Rep. 257. (However, the question of whether such a jurisdiction is compatible with the Brussels Regulation has recently been referred to the European Court of Justice; see The Front Comor [2007] 1 Lloyd’s Rep. 391.) The burden rests on the party seeking to resist the anti-suit injunction and proceed elsewhere to demonstrate strong cause or good reason why it should be permitted to break its contract. If the defendant cannot discharge that burden then an anti-suit injunction should be issued and/or upheld.
The submissions in London
1. The risk of inconsistent decisions
The Cargo Interests suggested that there was a risk of inconsistent decisions between the arbitration in London and the proceedings in the Antwerp Court, as FAVV could not be a party to the London arbitration, even though the Owners had sought an indemnity from them. This was, the Cargo Interests submitted, the first “strong cause or good reason” for discontinuing the anti-suit injunction. The Owners’ response to that argument was that if there was such a risk, then that was a risk they were willing to take as the price of enforcing the London arbitration clause.
2. Delay
The Cargo Interests’ second argument was that the Owners had waited until December 2007 to seek an anti-suit injunction in circumstances where they knew, in January 2005, that the Cargo Interests were proceeding against them in Antwerp contrary to the London arbitration clause. The Cargo Interests relied on The Angelic Grace [1995] 1 Lloyd’s Rep. 87, in which Lord Justice Millet said that the English Court need feel no diffidence in granting an anti-suit injunction “provided that it is sought promptly and before the foreign proceedings are too far advanced.” The Owners said in response that in Antwerp they did not have to register their objection to the jurisdiction until after the Court survey process had been completed. In other words they alleged that the survey process was “jurisdiction neutral” and that, following the finalised survey and failed settlement talks, they had promptly sought an anti-suit injunction from the English Court.
3. Time bar
The Cargo Interests’ third argument was that an arbitration claim in London would now be time barred under the one year limitation period provided by the Hague or Hague-Visby Rules. The Owners, on the other hand, pointed out that the Cargo Interests had not obtained a copy of the charterparty and were therefore unaware of the London arbitration clause until it was mentioned by the Owners in November 2007. As such, the Cargo Interests had simply failed to protect their cargo claim in the contractual forum, and the presence of a time bar defence could not amount to a reason, let alone a “strong and good reason”, to refuse the anti-suit injunction.
The Commercial Court’s decision
Firstly, Mr Justice Teare held that by reason of the Owners’ decision to claim against FAVV in Antwerp, there was a risk of inconsistent decisions which might cause an injustice to FAVV. For example, if the London arbitration were to conclude that the loss of cargo was caused by the Owners’ breach of contract, but the Owners persuaded the Antwerp Court to find that FAVV was liable to the Owners, then FAVV may have suffered an injustice. If the Antwerp court tried both the Cargo Interests' claim against the Owners and the Owners' claim against FAVV, there would be no risk of inconsistent decisions and no risk of injustice to FAVV.
Secondly, the Owners did not seek the injunction promptly and before substantial progress had been made in the Antwerp proceedings. Mr Justice Teare added that even if his finding of delay was wrong, the risk of inconsistent decisions and therefore of injustice to a third party, FAVV, amounted by itself to a “strong cause or good reason” for not granting an anti-suit injunction. Mr Justice Teare did, however, dismiss the Cargo Interests’ time bar defence as they were unable to show that they had acted reasonably in not protecting their cargo claims in the contractual forum.
Accordingly, the Court ordered that the anti-suit injunction should not be continued.
Comment
This decision reinforces two key principles which any party considering an application for an anti-suit injunction should bear in mind: firstly, that unless there are exceptional circumstances for doing so, that party should not participate (above and beyond entering an appearance, for example) in proceedings in a non-contractual forum; and: secondly, that party should not delay in making its application.