English Commercial Court Warns Against Delay in Seeking Anti-Suit Relief

Published: 17/5/2017

The English Court has reiterated its approach that even if a dispute falls squarely within the ambit of an arbitration agreement between the parties, the Court will not grant injunctive relief restraining foreign proceedings commenced in breach of that agreement where the party has delayed in seeking that relief. That remains the case even where the party has initiated a jurisdictional challenge in the foreign proceedings.

The decision of Philips J in ADM Asia-Pacific Trading PTE Ltd v PT Budi Semesta Satria [2016] EWHC 1427 concerned a delivery of soybeans by ADM Asia-Pacific Trading PTE Ltd (ADM), which PT Budi Semesa Satria (Budi Semesa) alleged were of poor quality. PT Budi Semsa Satria withheld part of the purchase price and in May 2013 acted on an earlier threat to commence proceedings before the Indonesian Courts, in breach of an agreement to refer disputes to arbitration.

The English Court has the power to grant injunctions restraining one or more parties from continuing foreign proceedings brought in breach of an arbitration agreement (s37 of the Senior Courts Act 1981). This power can be exercised where the proceedings in question are brought in a jurisdiction not covered by the Brussels Regulation and Lugano Convention. The justification for the grant of relief is that a party would otherwise be deprived of a contractual right in circumstances where damages would be an inadequate remedy. Such relief must however be sought “promptly” (Aggeliki Charis Compania Maritima SA v Pagnan SpA (The Angelic Grace) [1995] 1 Lloyd’s Rep 87).

In June 2013 ADM commenced arbitration proceedings, including a claim for damages for Budi Semesa’s breach of the substantive contract and the arbitration agreement. It also went on to challenge the jurisdiction of the Indonesian Courts in the course of the Indonesian proceedings. This challenge was successful at first instance.

However, ADM did not apply for anti-suit relief from the English Courts until September 2015, soon after it became aware that the Indonesian Court had granted Budi Semesa’s appeal to its successful jurisdictional challenge. Budi Semesa defended the application on grounds of delay.

The English Court found that ADM had not acted promptly upon becoming aware of the breach and was not persuaded by ADM’s argument that delay on its own was insufficiently compelling a ground to resist the award of anti-suit relief. It was not sufficient that ADM had challenged jurisdiction in Indonesia; indeed the fact that ADM had done so and allowed that challenge to play out without also applying promptly for anti-suit relief led the Court to conclude that applying principles of comity would have resulted in a similar outcome: the Indonesian proceedings had continued for too long for the English Courts to intervene. Indeed, the Court noted it was only when ADM became unsatisfied with the approach of the Indonesian Courts (ie when Budi Semesa’s appeal was granted) that it sought relief elsewhere. It is worth noting that ADM had claimed its costs in the Indonesian proceedings as damages in the arbitration, thereby exposing Budi Semesa to liability for its own costs as well as liability for ADM’s.

This case reiterates the clear message that anti-suit relief must be sought swiftly where foreign proceedings are started in breach of an arbitration agreement outside the Brussels and Lugano regime. Where relief is not sought promptly, there is a risk that both parties become exposed not only to exponential costs as the parties pursue their rights before different fora, but also difficulties on enforcement. In this case, it is open to the Indonesian Courts to now hear the substantive claim, risking a judgment inconsistent with the award rendered by the arbitral tribunal.

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