TOEPFER INTERNATIONAL G.m.b.H. v. SOCIÉTÉ CARGILL FRANCE

An arbitration clause requiring an award before court proceedings does not prevent the English court from granting an injunction to enforce the clause itself. Questions about the clause’s scope or validity are not necessarily for the arbitrators, and an arbitrator cannot grant an anti-suit injunction.

Where a contract contains both an arbitration clause and an exclusive-jurisdiction clause, the clauses may create alternative jurisdictional regimes. If the arbitration clause governs the dispute, the alternative grant of exclusive English court jurisdiction does not take effect. An anti-suit injunction rests on enforcement of contractual rights, rather than unconscionability. Unresolved questions about the Brussels Convention 1968 may be referred for a preliminary ruling.

Three contracts for soybean meal pellets contained GAFTA arbitration provisions and clauses on domicile and exclusive jurisdiction. After a cargo dispute, the buyer commenced proceedings in the French Court, while the seller sought declarations and anti-suit injunctions in England.

Colman J in the Commercial Court granted the relief on 20 December 1996. The buyer appealed. The Court of Appeal considered whether the contractual provisions barred the English claim, whether the English court had power and discretion to restrain the French proceedings, and whether the Brussels Convention 1968 required a stay. The central unresolved questions were whether Article 1(4) excluded the English proceedings and whether they involved the same cause of action as the French jurisdiction challenge for Article 21.

English law issues

1. Scott v Avery clause. Clause 32(b) concerned substantive disputes and did not preclude proceedings brought to enforce the arbitration clause itself. A dispute about whether the substantive dispute fell within the arbitrators’ jurisdiction was unsuitable for determination by the arbitrators, and an injunction was relief they could not grant. The Court of Appeal reached this conclusion on narrower grounds than Colman J.
2. Clause 31. Clause 31 provided alternative jurisdictional regimes applicable to substantive disputes. Where Clause 32 required arbitration, the alternative provision for exclusive jurisdiction of the English court did not take effect. The present proceedings therefore were not subject to an agreed exclusive English jurisdiction, contrary to Colman J’s conclusion.
3. Anti-suit injunction. The power exercised was the discretionary power to restrain breach of contract. The objection to the French proceedings was contractual, not based on unconscionability. Referring to Schiffahrtsgesellschaft Detlief von Appen GmbH v Wiener Allianz Versicherungs AG [1997] CCL 993, the court held that Cargill’s conduct was not intrinsically unconscionable. In light of The Angelic Grace [1995] 1 Lloyds Rep 87, the court held that Colman J had not erred in granting the injunction, although it did not independently endorse the wider observations in that case.
4. Convention issues. Since Clause 31 did not confer exclusive English jurisdiction, Article 17 afforded Toepfer no benefit. The court stated that, if necessary, it would have been bound by Continental Bank v Aeakos [1994] 1 WLR 588 to hold that Article 17 overrides Articles 21 and 22. The difficult questions whether Article 1(4) applied to the English proceedings and whether those proceedings involved the same cause of action as the French jurisdiction challenge under Article 21 were referred under Schedule 2 to the Civil Jurisdiction and Judgments Act 1982.

Order. Appeal referred to the European Court of Justice.

• Commercial Court, Queen’s Bench Division. Colman J granted the declarations and injunctions on 20 December 1996.
• Court of Appeal (Civil Division). Cargill appealed. The Court of Appeal resolved the English-law issues but referred questions concerning the Brussels Convention 1968 to the European Court of Justice under Schedule 2 to the Civil Jurisdiction and Judgments Act 1982.