Summary
A shipowner was entitled to an anti-suit injunction to restrain Chinese proceedings commenced in breach of the arbitration clause contained in a bill of lading, but the English court had no jurisdiction to grant an injunction in favour of the ship manager that was not party to the arbitration agreement. The court’s discretion to grant an injunction under the Supreme Court Act 1981 remains available in regard to arbitration but is to be exercised with regard to the matters which arise under s.44 of the Arbitration Act
DMC Category Rating: Confirmed
Facts
The applicant shipowner (Starlight) and manager (Overseas Marine) applied for an anti-suit injunction to restrain proceedings brought by the respondent insurer (Tai Ping) in China. Starlight had chartered its vessel, the "Alexandros T", to Transfield ER Cape Ltd for a voyage from Brazil to China with a cargo of iron ore. The terms of this charter, dated 24 March 2006, included an English law and arbitration clause. Transfield then sub-chartered the vessel to the second respondent cargo owner (International) on identical http://www.szdhsjt.com/ terms as to law and arbitration. The bill of lading, which was issued on 13 April 2006, incorporated the terms of the head charter. In due course, International became the holders of that bill. In the course of the voyage from Brazil the vessel and cargo were lost.
The Chinese insurers, Tai Ping, commenced proceedings against Starlight, Overseas and Transfield in the Wuhan Maritime Court in China. The insurers alleged that these three parties were jointly liable for loss of the cargo, in respect of which Tai Ping had indemnified International in the sum of US$5.25 million. Starlight and Overseas had challenged the jurisdiction of the Chinese court. Security had been obtained in the Chinese proceedings in the sum of over US$4 million in respect of frozen freight payments under the head charter and sub-charter. Tai Ping and International had also commenced arbitration proceedings in London against Starlight, under reserve as to jurisdiction.
Starlight and Overseas submitted that the Chinese proceedings had been commenced in breach of the arbitration clause contained in the bill of lading and that there was no good reason why an anti-suit injunction should not be granted. The respondents maintained that the arbitration clause in the bill was ineffective as a matter of Chinese law and that the Chinese court would not recognize any award of the arbitrators or any order of the English court.
Judgment
The Applicable Principles
The judge held, at para.12 that, "As a matter of English law which governs the Bill of Lading and charter party contracts, the Cargo Owners are clearly bound by the arbitration clause incorporated in the Bill of Lading issued by the Owners, to which the Cargo Owners became party. In accordance with principles laid down in a number of authorities, including The Angelic Grace [1995] 1 LLR 87, where contracting parties agree to refer disputes to arbitration and a claim falling within the scope of the arbitration agreement is made in proceedings elsewhere, the English court will ordinarily exercise its discretion to restrain the prosecution of those proceedings in the non-contractual forum, unless the party suing in that forum (the burden being on him) can show strong reasons for proceeding there. No strong reason is available to the Cargo Owners here to militate against the grant of such an injunction where, as a matter of English law, the arbitration clause plainly binds." |
