‘Anti’ – (Anti – Arbitration) Injunction – Ananya Pratap Singh

English High Court: ‘Anti’ – (Anti – Arbitration) Injunction

In Euronav Shipping NV v Black Swan Petroleum DMCC [2024] EWHC 896 (Comm), the English High Court decided a unique question i.e., whether or not to grant an anti-anti arbitration injunction. The case is summarized as under:-

FACTUAL MATRIX

In the facts of the case, Euronav Shipping NV (‘Euronav’), a company which is into the business of storage of oil based fuels entered into a storage agreement with Silk Straits SDN BHD (‘Silk Strait’) a Malaysian company for storage of certain goods in return of storage fee. This storage agreement was amended by an Addendum 1 by which this agreement was made subject to English law while forum conveniens to decide all disputes was agreed to be the High Court of England & Wales. It was further allegedly amended by Addendum 2 by which the governing law of arbitration was agreed to be the English law and the disputes are agreed to be referred to London Maritime Arbitrators Association arbitration(‘LMAA arbitration’).

Separately, Silk Strait entered into an agreement with Black Swan Petroleum DMCC (‘BSP’), by which BSP was permitted to store its fuel oil in the vessels of Euronav in consideration of fee to be paid by BSP to Silk Strait. Due to some documents provided by Silk Strait to BSP which in turn were provided by Euronav to Silk Strait, it was argued that BSP as a bailor knew that its bailed goods to Silk Straits are further sub-bailed to Euronav and therefore, all the terms of the storage agreement between Euronav and Silk Strait including the LMAA arbitration clause are applicable on the relationship between Silk Strait and BSP.

Disputes arose between BSP and Euronav in respect of BSP’s goods stored at Euronav’s vessel and BSP obtained arrest orders of Euronav’s vessel from the High Court of Malaysia. On the other hand, Euronav, relying on LMAA arbitration clause, invoked LMAA arbitration in London against BSP. BSP objected to the jurisdiction of LMAA Tribunal’s jurisdiction and requested the Tribunal to decide this objection as a preliminary issue. This request was rejected by the Tribunal.

Euronav, applied to the High Court of Malaysia for an order staying or striking out the claim in the Malaysian proceedings or for staying proceedings before it in favour of LMAA arbitration due to existence of an arbitration agreement between the parties. On Euronav’s application, Malaysian High Court found that Euronav has submitted to its jurisdiction by filing the said application and therefore stay in favor of arbitration cannot be granted.

This decision of High Court was appealed before the Malaysian Court of Appeal by Euronav which remained pending without any stay in the interregnum. BSP filed an anti-arbitration injunction (‘AAI’) application before the Malaysian High Court seeking stay of LMAA arbitration. This AAI application was allowed by the Malaysian High Court and Euronav was restrained from continuing with the LMAA arbitration until after final determination of Euronav’s appeal before the Malaysian Court of Appeal.

Consequently, Euronav filed an application before the English High Court seeking an ‘Anti’ – (Anti – Arbitration) Injunction in support of LMAA arbitration which was decided in the present proceedings.  

ISSUE

Whether, in the present facts, the English High Court can and should grant ‘Anti’ – (Anti-Arbitration) Injunction in favour of LMAA Arbitration?

POSITION OF LAW

PARTIES CONTENTIONS

• Before the English High Court, Euronav inter alia contended that BSP’s AAI application was made in breach of an arbitration agreement that is binding as between Euronav and BSP in the events that have happened and there are no strong reasons why the ‘Anti’ – (Anti – Arbitration) Injunction should not be granted. Alternatively it submitted that even if there is no arbitration agreement that is binding between Euronav and BSP, the injunction it seeks should nonetheless be granted because the AAI Order application is vexatious and oppressive.
• Per contra, BSP contended that if a court has real and cogent doubts about the existence of an arbitration agreement  based on the material currently available, then the burden to prove to a high degree of probability that there exists an arbitration agreement will not be discharged. It was further contended that there is no relevant arbitration agreement that applies between the parties, BSP’s conduct is neither vexatious or oppressive so as to entitle Euronav to the injunction sought even though there is no relevant arbitration agreement between Euronav and BSP and in any event the injunction sought should not be granted as a matter of discretion because of its impact on the comity of this court with the High Court of Malaysia and/or because Euronav has voluntarily submitted to the jurisdiction of the High Court of Malaysia and/or Euronav’s delay in commencing these proceedings

CONCLUSIONS

• If an ‘Anti’ – (Anti-Arbitration) Injunction were to be granted, it would impact on the comity between the English and Malaysian courts in a manner that is inappropriate. This is so because currently the order made by the High Court of Malaysia restrains Euronav from taking any steps in the arbitration until after final determination of the appeal, whereas Euronav seeks to restrain the AAI application in the Malaysian proceedings over which there is otherwise no challenge and thereby seeks to circumvent the conclusion that Euronav has voluntarily submitted to the jurisdiction of the High Court of Malaysia, which it is entitled to protect by prohibiting a party over which it has jurisdiction from continuing duplicative proceedings and which BSP has a legitimate juridical interest in preserving and protecting.
• If the ‘Anti’ – (Anti-Arbitration) Injunction is made, then it would result in duplicative proceedings with all the consequences that will or may follow as a result.  The effect of such an order will be to facilitate the conduct of duplicative proceedings in which Euronav hopes to obtain a favourable liability award before the Malaysian court has been able to adjudicate on the issues that arise in proceedings in respect of which Euronav has submitted to the jurisdiction of that court. That is to encourage not discourage duplicative proceedings with all the problems and expense that follows. Therefore, even if it is wrong to think that the interference with comity is greater and more objectionable than in most applications of this nature, it is nonetheless material to the exercise of discretion that the consequences of granting the order sought will be that duplicative proceedings will continue. That is an outcome that most courts would wish to avoid. That is particularly so here, where it is clear that each party perceives there to be an advantage in delaying the proceedings it objects to.
• Euronav has been held voluntarily to have submitted to the jurisdiction of the Malaysian courts. That order is binding on the parties unless it is overturned on appeal because it has not been stayed or suspended pending appeal. Having voluntarily submitted to the jurisdiction of the High Court of Malaysia, it is vexatious and oppressive for Euronav then to seek orders from the English court that will enable it to continue to pursue the arbitration at the same time and in relation to the same issues. That is all the more the case where Euronav has resisted the resolution of the jurisdiction issue by the arbitral tribunal as a preliminary issue and the stay of the arbitral proceedings until at least the determination of the appeal in Malaysia. However, if the Malaysian appeal succeeds, there will have been a change of circumstances that may merit a different outcome.  
• Given the conclusion of the High Court of Malaysia that Euronav has voluntarily submitted to its jurisdiction in relation to the dispute between the parties, BSP is fully entitled to invoke the jurisdiction of that court to protect the jurisdiction of that court, to give fill effect to the juridical advantages that it has obtained as a result of Euronav’s voluntary submission, and to avoid the consequences that follow from the commencement or continuation of duplicative proceedings. It is obviously vexatious for BSP to be required to defend the arbitral proceedings whilst at the same time prosecuting the Malaysian proceedings, where the claimant in the arbitral proceedings (Euronav) has voluntarily submitted to the jurisdiction of the Malaysian High Court in relation to those proceedings.
• Euronav could have issued this application on or shortly after BSP has filed it’s claim in the Malaysian proceedings while led to Euronav’s vessel arrest or when BSP informed the Tribunal that it intended to contest the jurisdiction of the Tribunal on the basis that there was no valid arbitration agreement between the parties or, on when Euronav applied to the High Court of Malaysia for an order staying or striking out the claim in the Malaysian proceedings. This delay is a factor is to be taken into account when considering how best to respond to this application as a matter of discretion, not least because the Malaysian courts are now heavily engaged in the proceedings there both at first instance and appellate level in a way that simply would not have been so had Euronav applied for and obtained AAI relief much sooner than it did.
• It is no more objectionable for BSP to seek the orders it seeks from the Malaysian courts than it would be for such relief to be sought from the English Court in relation to a foreign seated arbitration. Whilst a court might be tempted not to make such an order without first giving the parties an opportunity to apply to the tribunal for orders that would avoid duplicative proceedings either by determining its jurisdiction as a preliminary issue or by staying the proceedings, that point does not arise here. BSP applied for both but without success.

HELD

In summary, the English High Court held that if the ‘Anti’ – (Anti-Arbitration) Injunction is granted, the English High Court would be approving the continuation of the race to judgment that the Court has identified and actively facilitating the possibility of conflicting judgments and findings with all the consequences that flow from that. This according to the Court is something that simply cannot be justified where, as here, the applicant (Euronav) for such an order has voluntarily submitted to the jurisdiction of a court that otherwise has jurisdiction to determine the dispute. However, the discretionary consideration ought to be weighed differently if the Court of Appeal of Malaysia overturns the order of the Malaysian High Court but unless and until that occurs it would be a wrong exercise of discretion to make such an order.