News

     

The Angelic Grace of judicial pragmatism – Tom Snelling and Johnny Shearman

By Tom Snelling & Johnny Shearman

Partner, Tom Snelling, and Professional Support Lawyer, Johnny Shearman, examine in Litigation Futures The Angelic Grace principle and anti-suit injunctions in light of two recent ‘lockdown’ judgments from courts in London, which are important in understanding the application of this equitable jurisdiction.

Tom and Johnny’s article was published in Litigation Futures, 15 June 2020, here.

Update, 15 June 2020: The importance of ENKA v Chubb is reinforced by the fact that Chubb has now been granted permission to appeal the Court of Appeal’s judgment and the UK Supreme Court has also ordered a stay of the anti-suit injunction secured by ENKA.  The appeal is listed for 27/28 July 2020. 

The Angelic Grace principle is as well-established in the context of anti-suit injunctions as is angelic grace in the poetry of Petrach and the music of Liszt.  However, despite being engrained in English law, two recent judgments from the courts of England and Wales demonstrate continued judicial pragmatism when applying this equitable remedy.

For 25 years, since Angeliki Charis Compania Maritima SA v Pagnan Spa (The Angelic Grace) [1995] 1 Lloyd’s Rep 87, it has been clear that anti-suit injunctions should be granted to restrain foreign proceedings brought in breach of an English law arbitration agreement, unless there is strong reason not to.

In 2013, the Supreme Court held that the power to grant such injunctions arises not from legislative jurisdiction under section 44 of the 1996 Arbitration Act, but as part of the courts’ power to grant injunctive relief under section 37 of the Senior Courts Act 1981 (AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC [2013] 1 WLR 1889).

Recent application

In April, the Court of Appeal handed down its decision in Enka Insaat ve Sanayi AS v OOO Insurance Co Chubb [2020] EWCA Civ 574. The appeal was against a first instance decision not to grant an anti-suit injunction against a party alleged to be in breach of a London arbitration clause by bringing proceedings in Russia. The judge’s decision was based, at his own initiative, on grounds that the English court was not the appropriate forum to determine the underlying dispute.

In the lead judgment for the Court of Appeal, Popplewell LJ did not shy away from making clear that the first instance decision was wrong in principle.  In finding that English law governed the arbitration agreement on the facts, the Court of Appeal confirmed that the court of the seat of the arbitration is necessarily an appropriate court to grant an anti-suit injunction.

In short, the choice of a London seat arbitration is an agreement by the parties to submit to the jurisdiction of the courts of England and Wales and their powers to restrain a breach or threatened breach of the arbitration agreement.  It follows that those are appropriate courts to grant anti-suit injunctions.

Having reiterated the seminal nature of The Angelic Grace, Popplewell LJ applied it to assess the first instance judge’s conclusion that there was a strong reason to refuse the discretionary relief by reason of the Applicant’s delay, participation in the foreign proceedings, and failure to commence arbitration. Again, the Court of Appeal rejected the approach taken at first instance. Enka was deemed to be a classic case in which to restrain the further conduct of proceedings brought in breach of an English law arbitration agreement.

More recently, in the Commercial Court, Cockerill J applied The Angelic Grace to grant an anti-suit injunction (albeit not in the terms sought) subject to a (highly material) condition: Times Trading Corporation v National Bank of Fujairah (Dubai Branch) [2020] EWHC 1078 (Comm).

The Applicant sought an interim anti-suit injunction restraining the Defendant’s proceedings in Singapore, alleging that such proceedings were in breach of the Defendant’s contractual obligation to arbitrate in London.

The Defendant argued that the commencement of Singapore proceedings was necessary to protect limitation and the identity of the parties bound by the London seat arbitration clause was far from certain. On the facts, this line of reasoning came close to being sufficiently strong for the injunction not to be granted.

The judge’s pragmatism in this case is evident from the outcome reached. When faced with what she described as the “two distinct factual paradigms within the quasi-contractual injunction authorities”, the judge discerned “a common and consistent thread”, namely, applying The Angelic Grace at least by analogy. Against this backdrop, the grant of an injunction would only be just and convenient if the Claimant gave an undertaking not to rely on any time bar argument in the London arbitration.

Brexit

Both cases highlight a continued and pragmatic application of The Angelic Grace; however, there is also a future Brexit angle to consider.

Since the Court of Justice of the European Union’s decision in West Tankers Inc v Allianz SpA2 [2009] EUECJ C-185/07, national courts in the EU have seen themselves as constrained from granting injunctions restraining proceedings in another EU Member State. Consequently, the power to grant an anti-suit injunction has turned on where the foreign proceedings have been started.

Such restraint is expected to be lifted after the UK’s transition period with the EU.  Therefore, the decision to choose a London seat is, arguably, reinforced as anti-suit injunctions become available to the courts of England and Wales to protect arbitration agreements even where the foreign proceedings are commenced in one of the EU27.

Latest news

All news