SABAH SHIPYARD (PAKISTAN) LTD. v. ISLAMIC REPUBLIC OF PAKISTAN AND ANOTHER [2002] EWCA Civ 1643

A commercial waiver of sovereign immunity may constitute the written consent required for interim injunctive relief against a foreign state. The waiver must be construed as a whole, according to ordinary contractual principles and commercial common sense.

A non-exclusive English jurisdiction clause does not invariably prohibit proceedings elsewhere. Its terms may nevertheless require that, once English proceedings are commenced, parallel foreign proceedings should not continue without exceptional justification. Proceedings begun as a pre-emptive attempt to frustrate the agreed English jurisdiction may therefore be restrained as vexatious and oppressive. The fact that the foreign proceedings were commenced first, or that a foreign injunction may already exist, is relevant but not decisive.

A Pakistani company obtained an arbitral award against a state-owned corporation and demanded payment under a guarantee given by the Government of Pakistan. The Government commenced proceedings in Islamabad for declarations denying liability and obtained an injunction intended to prevent the company from pursuing the guarantee in England.

David Steel J continued an English injunction restraining the Government from pursuing the Pakistani proceedings and refused to stay the English proceedings. The Government appealed. The principal questions were whether the guarantee contained the written consent necessary for injunctive relief against a state, how its English jurisdiction clause should be construed, and whether the foreign proceedings were sufficiently vexatious or oppressive to justify an anti-suit injunction.

1. Appeal dismissed unanimously. Waller LJ delivered the leading judgment. Sir Martin Nourse agreed, and Pill LJ gave concurring reasons. The injunction restraining the Government from continuing the Pakistani proceedings and the refusal to stay the English proceedings were upheld.

2. Clause 2.6 of the guarantee constituted the written consent required by section 13 of the State Immunity Act 1978 for interim injunctive relief. Per Waller LJ, the clause was a comprehensive commercial waiver, subject to its exception for protected assets. Clause 2.6(ii), which waived any immunity connected with proceedings, could not sensibly be confined so as to exclude interim relief. Clause 2.6(iii) clarified post-judgment remedies and did not restrict the wider waiver. Pill LJ agreed that, in its commercial context, the word “waives” was capable of conveying the necessary consent.

3. Clause 1.9 was not an exclusive jurisdiction clause in the strict sense. Commencing proceedings outside England was not, without more, a breach of contract. Nevertheless, the parties had submitted to English jurisdiction, established machinery for English service, and waived objections based on inconvenience. In that context, once proceedings were commenced in England, parallel foreign proceedings could not be pursued merely because the foreign forum was convenient. Exceptional reasons would be required.

4. The Government's attempt to prevent proceedings in England was a breach of the jurisdiction agreement. The Pakistani action was a pre-emptive attempt to frustrate the agreed jurisdiction and was vexatious and oppressive. Its having been commenced first did not alter that conclusion. The non-exclusive clause did not itself establish an entitlement to an injunction, but its detailed terms materially lightened the burden of proving oppression.

5. The possible existence of a Pakistani injunction was relevant to discretion but did not prevent the English court from protecting the contractual right to commence English proceedings. Nor did it preclude an anti-suit injunction where obtaining the foreign order was itself an abuse of that right. The order operated personally against the Government. It neither challenged the Pakistani court's jurisdiction nor criticised that court.

1. Court of Appeal (Civil Division): The Government's appeal was dismissed unanimously. The injunction restraining continuation of the Pakistani proceedings and the refusal to stay the English proceedings were upheld: [2002] EWCA Civ 1643.

2. Commercial Court: David Steel J continued an injunction initially granted without notice, held that sovereign immunity had been waived, restrained the Government from continuing the Islamabad proceedings, and refused a stay of the English proceedings. No citation is stated in the judgment.