HONG KONG COURT GRANTS ANTI-ARBITRATION INJUNCTION TO PROTECT ENFORCEMENT OF PRIOR AWARD

The Hong Kong Court of First Instance (“CFI“) has taken the rare step of granting an anti-arbitration injunction to restrain claims which sought to undermine the enforcement in Hong Kong of a prior arbitral award (廈門新景地集團有限公司 formerly known as 廈門市鑫新景地房地產有限公司 v. Eton Properties Ltd and Another [2023] HKCFI 1327).

The decision is the latest in the long-running proceedings between Xiamen Xinjingdi Group Co Ltd (“XJ“) and Eton Properties Limited and others (together “EP“), which have been addressed in three of our previous blog posts (see here, here and here).

In the most recent proceedings, XJ (the award creditor) applied for an anti-arbitration injunction to restrain a new Mainland PRC-seated CIETAC arbitration commenced by EP (the award debtor).

The CFI refused to grant a blanket injunction restraining the arbitration in its entirety, even though there were good grounds to find that the arbitration was vexatious, oppressive and abusive. This was because certain claims being advanced for the first time in the new arbitration (which had not been determined or foreclosed by the findings of previous tribunals or courts) fell within the scope of the arbitration agreement.

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MALAYSIA: HIGH COURT ISSUES ANTI-ARBITRATION INJUNCTION AGAINST LONDON ARBITRATION AND REJECTS PARALLEL APPLICATION TO STAY COURT PROCEEDINGS

In MISC Berhad v Cockett Marine Oil (Asia) Pte Ltd (Admiralty in Personam No. WA-27NCC-46-05/2020), the Malaysian High Court issued an anti-arbitration injunction to halt a London-seated arbitration on the grounds that the arbitration proceedings were in breach of an exclusive jurisdiction clause in favour of the Malaysian courts. The decision confirms the power of Malaysian courts to restrain a foreign-seated arbitration where the court takes the view that it has jurisdiction over the dispute, and provides guidance on the circumstances in which a Malaysian court will exercise this power.

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COMMERCIAL COURT OVERTURNS INJUNCTION TO PRESERVE ASSETS GRANTED UNDER SECTION 44(3) OF THE ENGLISH ARBITRATION ACT 1996

In the recent decision of Daelim Corporation v Bonita Company Ltd and Others [2020] EWHC 697, the Commercial Court overturned an injunction previously granted under s44(3) of the English Arbitration Act 1996 (the Act). The injunction had amounted to an anti-arbitration injunction which, the Court held, was not necessary for the statutory purpose of preserving assets.

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THE COURT OF APPEAL CONFIRMS THE JURISDICTION OF ENGLISH COURTS TO RESTRAIN A FOREIGN ARBITRATION IN AN ‘EXCEPTIONAL’ CASE

In Sabbagh v Khoury and others, [2019] EWCA Civ 1219 (available here), the English Court of Appeal partly upheld the injunction granted by the Commercial Court restraining the pursuit of arbitration proceedings seated in Lebanon.  In doing so, the Court of Appeal confirmed the power of English courts to restrain a foreign arbitration on grounds that the foreign arbitration is oppressive and vexatious and provided helpful guidance on the exceptional circumstances in which English courts may exercise this power.

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Malaysia’s Federal Court grants third party anti-arbitration injunction

It is an oft-repeated rule that only signatories to an arbitration agreement can be made party to arbitration proceedings. To this end, various jurisdictions have considered situations where an arbitration clause can be ‘extended’ to a third party, and arbitral institutions have also introduced rules to ‘join’ third parties to arbitration proceedings, subject to the consent of the parties. What steps can a third party take to safeguard its rights where parties to an arbitration do not consent to a joinder?

In Jaya Sudhir a/l Jayaram v Nautical Supreme Sdn Bhd & Ors (Federal Court Civil Appeal No. 02(i)-83-09/2018(W)), although the applicant, Jaya, was not a signatory to the shareholders’ agreement containing the arbitration clause, he nevertheless sought to enforce both contractual and beneficial rights under it. Malaysia’s Federal Court granted an anti-arbitration injunction restraining Malaysian arbitration proceedings in favour of litigation in Malaysian courts, to prevent a non-party from being left without meaningful remedy. In doing so, the Federal Court set out limited circumstances where it would allow a third party to restrain arbitration proceedings.

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English Commercial Court orders stay of Lebanon-seated arbitration in ‘exceptional’ case

In the most recent decision in the Sabbagh family feud, Sabbagh v Khoury & Ors [2018] EWHC 1330 (Comm), the English Commercial Court ordered the stay of parallel Lebanon-seated arbitration proceedings. This was despite the tribunal in that case having found that it had jurisdiction to hear it. In granting the interim injunction to restrain the pursuit of the arbitration proceedings, Mr Justice Knowles was quick to acknowledge the significance of a court that is not the supervisory court granting an injunction to prevent parties prosecuting a foreign arbitration.

 

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Recent Developments in India-related international arbitration

Herbert Smith Freehills has issued the latest edition of its Indian international arbitration e-bulletin.  

In this issue, we review a number of recent arbitration-related decisions of the Indian courts, in particular a Supreme Court ruling on applicability of BALCO to an agreement varied after 6 September 2012 and a decision by the Delhi High Court issuing anti-arbitration injuction against London arbitration. We also provide an update on prospective changes to India’s investment arbitration and domestic dispute resolution landscapes.

For further information, please contact Nicholas Peacock, Head of India Arbitration Practice, Alastair Henderson, Managing Partner-SE Asia, Donny Surtani, Senior Associate, or your usual Herbert Smith Freehills contact.

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