An anti-suit injunction is an order that one party must not commence proceedings in another jurisdiction. If proceedings have already begun in a foreign jurisdiction, the anti-suit injunction can order a party to take no further action in those proceedings.
Anti-suit injunctions are often used in international arbitration to uphold the agreement between the parties to refer their disputes to arbitration. It prevents one party from ignoring that agreement and pursuing litigation through their home courts, or a court in another jurisdiction they perceive to be favourable.
The role of the courts of England and Wales
The courts of England and Wales have a supervisory function in international arbitration. Under section 44 of the Arbitration Act 1996 the courts have the power to grant interim injunctions and section 37 of the Senior Courts Act 1981 gives the courts power to grant injunctions where it is just and convenient to do so.
One of the key issues for applicants to bear in mind when seeking an anti-suit injunction is to make the application promptly. The further the foreign proceedings have advanced, the more difficult it becomes to obtain the order.
Since the UK left the European Union, the courts of England and Wales have greater scope to grant anti-suit injunctions. Previously, their hands were tied by a series of decisions of the Court of Justice of the European Union1 which limited their ability to grant anti-suit injunctions. It was difficult to prevent parties from taking steps in litigation before the courts of EU and EEA Member States.
Now that the UK has left the EU, the courts of England and Wales can depart from EU case law, and anti-suit injunctions are available in a wider range of cases.
Why would a party apply for an anti-suit injunction?
The reason a party applies for an anti-suit injunction is to put a stop to the foreign proceedings. This is usually because the proceedings have been started in the other party’s ‘home’ jurisdiction, which may be perceived to be an unfair forum for the other party. There may be corresponding practical issues such as language and translation, and the logistics of attending hearings which further escalate the costs of the proceedings unfairly for one party.
The other main reason for restraining foreign litigation is that the parties specifically agreed to arbitration in the first place. There were good reasons for agreeing to refer disputes to arbitration, including the neutrality and confidentiality of the forum, and the relative ease of enforceability of arbitration awards. For more of the advantages of arbitration generally, please see our in depth guide to arbitration.
The anti-suit injunction also acts as a protective measure. If the injunction is granted, and the opposing party continues the foreign proceedings anyway, the judgment will likely be unenforceable in England.
The anti-suit injunction serves to mitigates the risk that parallel proceedings in different jurisdictions may result in incompatible judgments on the same issues.
Challenges in obtaining an anti-suit injunction
The applicant will usually have to provide a cross-undertaking in damages as a condition of granting the anti-suit injunction. That means that if the injunction is discharged and the respondent suffers damage as a result, the applicant might have to compensate the respondent for those losses. With that in mind, the merits of anti-suit injunction should be given careful consideration before the application is submitted to court.
There is a potential philosophical problem about a court in one jurisdiction restraining the court’s powers in another jurisdiction. At first glance, it looks like an afront to comity. However, the anti-suit injunction is granted in personam, which means that it is aim at the party prosecuting the foreign claim and is not binding on the foreign court.
Contractual and non-contractual cases
Anti-suit injunctions can be granted in contractual or non-contractual cases.
The relevant contractual cases have an exclusive jurisdiction clause in the contract, or a written arbitration clause.
In contractual cases, the courts of England and Wales will usually intervene to hold the parties to their agreement. The party who has brought the foreign proceedings will need to show that there are strong reasons to override the contractual bargain. This is a high hurdle, and what is considered to be a sufficiently ‘strong reason’ is fact-specific to each set of circumstances.
In non-contractual cases, the applicant needs to show that the English court has sufficient jurisdiction to grant an injunction against the respondent. The applicant will also need to show that pursuit of foreign proceedings is vexatious, oppressive, or unconscionable.
Breaching an anti-suit injunction
Failure to comply with an anti-suit injunction is serious and is likely to be deemed to be contempt of court. The party in breach may have its assets frozen, forced to pay a fine, or even face a custodial sentence.
Sanctions-related disputes involving anti-suit injunctions
Sanctions were imposed on Russian persons and Russian entities following Russia’s invasion of Ukraine in 2022. Since the sanctions took hold, there has been a rise in applications for anti-suit injunctions in the courts of England and Wales, and elsewhere.
The reason for that is that the Russian Arbitration Procedural Code was altered in light of the imposition of sanctions. Under Article 248 the Russian courts now have exclusive jurisdiction over disputes between Russian entities and foreign entities, if the dispute arises from the impact of the foreign sanctions. Effectively, that renders arbitration agreements that provide for arbitration outside of Russia inoperable.
This played out in a trilogy of cases in the courts of England and Wales, when DeuscheBank AG, UniCredit Bank GmbH, and Commerzbank all brought similar claims against RusChemAlliance LLC. Read our summary of those cases here.
Each of the cases contained materially similar facts. RusChemAlliance pursued court proceedings in Russia in breach of the parties’ agreement to refer disputes to ICC arbitration seated in Paris. The reason the issue came before the courts in England and Wales was that the relevant advanced payment guarantees (that contained the agreement to arbitrate) were governed by English law.
In all three cases, the anti-suit injunction was granted, and RusChemAlliance was restrained from pursuing court proceedings in Russia. UniCredit’s case went all the way to the Supreme Court, where the highest court in England and Wales gave its comments on the governing law, and the appropriate forum in which to bring the anti-suit claim. Read a summary of the decision in our article here.
Notably, this was the first time that an English court held that it had jurisdiction to grant final anti-suit injunction relief in respect of an arbitration agreement seated outside of England and Wales.
Our expertise
At Rahman Ravelli we have experience in applying for anti-suit injunctions on behalf of our clients. As we mentioned earlier, it’s imperative that you act quickly if you want to restrain foreign proceedings. Any delay could be fatal to the application. We will act urgently to make a robust application for you, and defend your agreement to refer disputes to international arbitration.
Please get in touch with one of our team to discuss your case and we will be happy to advise on the next steps.
Source
- C-185/07 Allianz v West Tankers [2009] ECR I-00663), C-536/13 Gazprom ECR-I-000316, C-159/02 Turner v Grovit [2004] ECR I-03565
