In Times Trading Corporation v National Bank of Fujairah (Dubai Branch) [2020] EWHC 1078 (Comm) the English High Court (the “Court”) granted an anti-suit injunction, restraining National Bank of Fujairah (Dubai Branch) (“NBF”) from continuing its claims in the Singapore High Court in breach of an arbitration clause, despite the fact that the existence of the underlying contract containing the arbitration agreement was disputed.

Background

NBF was the holder of 27 bills of lading that were issued in respect of cargo to be shipped on a vessel (the “Vessel”) owned by Rosalind Maritime LLC (“Rosalind”). The bills contained a General Paramount Clause providing for a 12 month time bar for misdelivery claims, and incorporated an arbitration clause from a voyage charterparty between Trafigura Maritime Logistics Pte Ltd and Harmony Innovation Shipping Pte Ltd., referring any dispute under the bills of lading to ad hoc arbitration in London. The cargo was discharged between 10 and 20 June 2018 at an Indian port, without production of the bills of lading and against letters of indemnity. NBF asserted a claim for misdelivery against the registered owner of the Vessel. This was addressed to Rosalind “c/o Times Navigations Inc.” NBF argued that the reply from Rosalind’s solicitors that they “took no issue with the addressing of the claim”, implied that Rosalind was the carrier.

NBF issued an in rem writ of summons in the Singapore High Court on 2 January 2019, against the “Owners and/or Demise Charterers and/or other persons interested in …” the Vessel. In addition, on 4 June 2019, NBF commenced arbitration proceedings in London against Rosalind, as the carrier (the “London Arbitration”).

After the 12 month time limit had expired, solicitors for Times Trading Corporation (“Times”) sent a letter contending that the Notice of Arbitration was issued against the wrong party. They stated that at the time the bills of lading were issued, the Vessel was under bareboat charter to Times, not Rosalind. NBF took the view that the bareboat charter was a sham.

NBF then served the in rem writ of summons in the Singapore proceedings on the Vessel  (the “Singapore Proceedings”). On 20 March 2020, an application was made to the English courts by NBF under s12 of the Arbitration Act 1996, for an extension of time to commence arbitration against Times (“s12 Application”).

Times applied to the English High Court for an anti-suit injunction to stop NBF pursuing its claim in the Singapore Court.

The Court’s decision

The Court re-stated the well-known principles governing anti-suit relief, including, among others: that (i) in “contractual cases” there must, to a “high degree of probability”, be “an agreement to arbitrate which governs the dispute”, or in “non-contractual cases” the litigation must be “frivolous or vexatious”; (ii) that there must be no “strong reasons” to refuse the relief; and (iii) that no other factors must exist that point against granting an anti-suit injunction.

Was this a “contractual case” or a “frivolous or vexatious case?

Uncertainty as to whether there was a contract between NBF and Times led to considerable discussion as to whether this case was a “contractual case”, a “frivolous or vexatious” case, or a “quasi-contractual” case that should be treated in the same way as a “contractual case”.

Times argued that this was either a “contractual” case or a “quasi-contractual” case. A quasi-contractual anti-suit injunction is issued where the party injuncted is not a party to the contract but should perform as if it were a party to the contract, with both types of cases falling to be treated in the same way and satisfy the same test (namely, whether there is, to a high degree of probability, an agreement to arbitrate). The relevant question here was whether the dispute was covered by the arbitration clause. Times argued that the case could be considered a contractual or quasi-contractual case, as the claim in the Singapore Proceedings was contractual (being made under the contract for carriage), and the bills of lading contained an arbitration clause that governed the dispute.

The Court noted that Times had technically proceeded on the basis that this was either a contractual or quasi-contractual case, but that in the hearing had largely pursued the quasi-contractual argument. After reviewing the relevant authorities, the Court agreed with NBF that there were, in fact, two categories of quasi-contractual cases: (i) derived rights, and (ii) inconsistent claims. Derived rights claims are ones “where the existence of the contract is not in doubt, but the person who has brought proceedings which are sought to be enjoined is not a direct party to that contract.” The Court cited insurers as the clearest example of such cases, with their claims being made in subrogation. Inconsistent claims are “where “the injunction Claimant denies the very existence of the contract under which he is sued… but the injunction Defendant in effect seeks to make a claim under the contract, while not seeking to respect the forum clause which forms part of it.”

The Court also agreed with NBF that the facts of this case did not fall clearly into either of the two types of quasi contractual case. Unlike the inconsistent claims authorities, Times was asserting the existence of the contract in support of its application for an injunction, and unlike the derived rights claims, NBF was an original party to the contract.

Underpinning the two types of quasi-contractual case was a “common and consistent thread” that it would be unjust to allow a party to invoke a contract (to which it either agreed, or claims a right to enforce) as the basis for its claim, but in a manner inconsistent with the jurisdictional regime of the contract. The facts of this case were consistent with this principle: NBF was attempting to assert a right under the bills of lading, but was trying to do so in a manner inconsistent with the choice of forum in the bills of lading by commencing the Singapore Proceedings. The case was not a “frivolous or vexatious” case.

Was there a high degree of probability that there was a relevant arbitration clause?

The court found that despite there being “much to say” for NBF’s argument that there was no arbitration clause between NBF and Times, there was in fact a high probability that there was a relevant arbitration clause: the arbitration clause in the bills of lading. In any event, the Court was happy to find a relevant arbitration clause based on a contractual analysis.

Strong reasons – would NBF be unfairly prejudiced?

The Court considered further arguments in respect of NBF being time-barred from commencing arbitral proceedings against Times, but decided that these did not amount to “strong reasons” not to grant the injunction.

The Court held, after reviewing the authorities, that “a time bar being missed reasonably/not unreasonably” does not amount to strong reasons to refuse to grant an injunction. The Court also considered that, in any event, a time bar was not yet established, as NBF’s s12 Application was outstanding. If the application was granted, then NBF would not be out of time to commence arbitral proceedings against Times.

Other discretionary factors

The Court considered a number of discretionary factors and found that although they were insufficient for a finding that an injunction should not be granted, they “do militate against the grant of an injunction in the terms sought.” The injunction was therefore granted conditionally on Times’s undertaking not to argue in the London arbitration that NBFs claim was time barred. The Court considered this approach to be consistent with similar past cases.

Comment

This judgment provides useful guidance on the circumstances in which an anti-suit injunction will be granted where the contractual matrix is uncertain. Where parties wish to restrain foreign proceedings being pursued in breach of an arbitration clause, the fact that the existence of the relevant contract is disputed will not necessarily be a bar to obtaining an anti-suit application. The decision demonstrates that, in appropriate cases, the English courts will be prepared to grant an anti-suit injunction even where the situation does not fit exactly within the prior quasi-contractual categories.

The conditional nature of the injunction is a further reminder of the court’s discretion not only to decide whether to grant relief, but also to tailor the relief where the circumstances require it and to make the grant of an injunction subject to strict conditions.

For more information, please contact Nicholas Peacock, Partner, Rebecca Warder, Professional Support Lawyer, or your usual Herbert Smith Freehills contact.

Nicholas Peacock
Nicholas Peacock
Partner
+44 20 7466 2803

Rebecca Warder
Rebecca Warder
Professional Support Lawyer
+44 20 7466 3418