The recent case of Daiichi Chuo Kisen Kaisha v Chubb Seguros Brasil SA [2020] EWHC 1223 (Comm) provides an important reminder of the circumstances in which an English court will make or uphold an anti-suit injunction preventing a party from continuing proceedings in a foreign forum.

The judgment is available here. 

The granting of an anti-suit injunction involves the court balancing the competing considerations of (a) upholding the parties’ agreement as to a form of dispute resolution and (b) comity towards foreign courts that may have assumed jurisdiction.

Before considering the facts of the case, it is worth revisiting the core principles behind the granting of anti-suit injunctions in cases where parties have agreed to arbitration.

Anti-suit injunctions: the principles

• Anti-suit injunctions can be granted under section 31 of the Senior Courts Act 1981 which gives courts the power to grant injunctions where it is just and convenient to do so.
• This includes anti-suit injunctions in arbitration cases. The court will ordinarily exercise its discretion to grant an anti-suit injunction to restrain a party from commencing or continuing with foreign proceedings in breach of the arbitration agreement, unless the injunction defendant can show strong or good reasons why the injunction should not be granted.
• An anti-suit injunction can take two forms. The first is a prohibitory injunction restricting a party in English proceedings from pursuing foreign proceedings. However, if a prohibitory injunction may not be enough to ensure that the injunction is practically effective (e.g. where the foreign aciton has a life of its own), the court can also grant a mandatory injunction requiring the party to discontinue the foreign proceedings.
• Anti-suit injunctions involve tensions with comity which are inherent in the indirect interference with the foreign court which the anti-suit injunction involves.
• For this reason, applications for anti-suit injunctions must be made promptly. Whilst anti-suit injunctions are justified on the ground that the injunction defendant promised not to put the other party to the expense and trouble of being involved in the foreign proceedings, it is seen to cause far less offence if an injunction is granted before the foreign proceedings are too far advanced.
• The fact that at some stage the foreign court has ruled in favour of its own jurisdiction is not per se a bar to an anti-suit injunction. But, as each stage is reached, more will have been wasted by the abandonment of proceedings which compliance with an anti-suit injunction would bring about. That being so, the longer an action continues without any attempt to restrain it the less likely a court is to grant an injunction and considerations of comity have greater force.
• In addition, if the impact of the delay on the injunction defendant is significant (e.g. because it has been put to greater expense in progressing the foreign proceedings), this is likely to militate against the granting of an anti-suit injunction. The need to avoid delay arises from a variety of reasons including, in addition to prejudice to the injunction defendant, waste of judicial resources, the need for finality, and comity towards the foreign court. Finally, and perhaps most importantly, the courts will take into account the extent to which the delay was justifiable or excusable in the circumstances, and will weigh delay against the importance of enforcing the forum clause.

The Daiichi case: the facts

Daiichi involved a complex chronology of events and web of parties. However, the issue essentially lay in the conflict between arbitration proceedings in England and proceedings in the Brazilian courts.

The dispute

The dispute arose from the collision of a vessel causing damage to its cargo. Chubb Seguros Brasil SA (‘Chubb‘) was a Brazilian insurance company that insured the cargo. The shipowner was Fair Wind Navigation SA (‘Fair Wind‘) which had chartered the vessel to Daiichi Chuo Kisen Kaisha (‘Daiichi‘). Daiichi had in turn chartered the vessel to Noble Chartering Ltd (related to Noble Resources). The managers of the vessel were Mizuho.

The English arbitration and the Brazilian proceedings

Chubb commenced London arbitration proceedings against Fair Wind under the bills of lading following the arbitration clause incorporated in the bills. However, rather than pursuing those arbitration proceedings, some six months later, Chubb commenced a claim in the Brazilian courts against Mizuho, Daiichi and Noble Resources in respect of losses arising out of the cargo damage.

The first anti-suit injunction

Fair Wind and Mizuho applied to the English courts for an anti-suit injunction restraining Chubb from pursuing the Brazilian proceedings. Chubb argued that the Brazilian proceedings were for tortious claims, not contractual ones. However, an anti-suit injunction was granted preventing Chubb from pursuing the currently formulated claim in the Brazilian proceedings and requiring it not to pursue any contractual claim other than by way of arbitration in London. Chubb then provided an undertaking in similar terms to Daiichi as well.

The undertaking and the anti-suit injunction granted by the English court left it open to Chubb to pursue a non-contractual claim in Brazil. Chubb proceeded to apply to amend its claim in the Brazilian proceedings to advance non-contractual claims. Following objections filed by Mizuho and Daiichi to the application, the Brazilian Superior Court of Justice rejected the amendment application. As a result, there was no scope for amending the Brazilian claim and any claim by Chubb in Brazil could proceed only as originally formulated.

The settlement discussions and steps taken in the Brazilian proceedings

Settlement discussions took place and so the Brazilian proceedings were not progressed for several months until Daiichi, Mizuho and Noble Resources then applied to challenge the Brazilian court’s jurisdiction. In addition to the jurisdiction challenge, Noble Resources field a substantive defence. They claimed that these steps were taken to avoid default judgment.

The second application for an anti-suit injunction 

Chubb then resumed active pursuit of the proceedings in Brazil against Daiichi and Noble Resources. Fairwind, Mizuho and Daiichi applied to the English court for a further anti-suit injunction on the basis that if the Brazilian proceedings were not discontinued, the Brazilian court would proceed to issuing judgment.

The Daiichi case: the ruling

Chubb argued that no injunction should be granted because Daiichi had delayed and it had taken steps in the Brazilian courts to challenge jurisdiction, thereby indicating that it was content to abide by the Brazilian court’s decision. Chubb also argued that if the English court were to grant an anti-suit injunction at this late stage, the practical effect would be to write off all of the judicial time and resources that had been spent by several courts dealing with various applications and appeals in Brazil as well as the legal costs incurred by Chubb.

However, the judge ruled that:

• The filing of a jurisdiction challenge and substantive defence in the Brazilian proceedings were to be seen as protective measures and not a submission to the Brazilian jurisdiction.
• Chubb had provided an express undertaking not to pursue its claims in Brazil. This was provided in lieu of an anti-suit injunction so that Daiichi could not now be criticised for delaying its application.
• Daiichi and Noble Resources were not, in any substantive sense, actively engaging in the proceedings in Brazil but rather, with Chubb’s express and active support, seeking to defer them. Such positive steps as were taken were taken only out of necessity or on a precautionary basis.
• Any relevant legal expenditure by Chubb in Brazil must have been limited.
• In these circumstances, it was inapt to characterise the present claim, as Chubb now did, as a ‘last minute bid’ to halt the Brazilian proceedings, or as being unduly late. Nor was the present case comparable to the situation of a party who simply allowed foreign proceedings to take their course, subject to making a jurisdiction challenge, when faced with a claim brought in breach of a jurisdiction or arbitration agreement. Here, Chubb had specifically agreed, by the undertaking, not actively to pursue the Brazilian proceedings.
• It was also necessary to consider carefully whether considerations of comity towards the Brazilian court weighed against the grant of an anti-suit. Chubb argued that the proceedings were at an advanced stage, with a risk of imminent judgment on the merits, so to grant an anti-suit injunction would in effect be to ‘snatch the pen’ from the Brazilian judge’s hand. The judge ruled, however, that the only step taken in relation to the substantive merits had been the precautionary filing of a defence in the Brazilian court. The Brazilian court had not yet assumed jurisdiction over any of the defendants. Such time and resources as the Brazilian courts had expended on the case will have related to the parties’ joint applications for a stay and/or procedural deferral, as opposed to the substantive merits of the claims.

On this basis, the English court granted a mandatory anti-suit injunction requiring Chubb to discontinue the Brazilian proceedings given the real risk that the Brazilian court would otherwise proceed to judgment on the merits.

Comment

The most important reminder that the case provides is that it is essential to act quickly if foreign proceedings are commenced in breach of an arbitration agreement. If a party does act without delay, the likelihood of it succeeding before the English courts is high because the interest in upholding parties’ contractual bargain in favour of arbitration will more likely outweigh the adverse comity considerations involved in making orders that affect foreign proceedings. In addition, parties will need to consider the level of protection offered via undertakings by opposing parties not to pursue foreign proceedings and when the more significant step of obtaining an injunction may be necessary.