Sabah Shipyard (Pakistan) Limited v The Islamic Republic of Pakistan & Anor

Permission to appeal should be granted where there is a real prospect that the first-instance court failed to determine whether a foreign injunction remained in force before granting an anti-suit injunction. Where such an injunction may exist, comity may require the English court to establish its existence and take it into account. Proceedings in another jurisdiction are not necessarily vexatious or oppressive where the parties have agreed a non-exclusive jurisdiction clause contemplating proceedings in more than one country. A stay of the English action is a separate question from the continuation or discharge of an anti-suit injunction. Pending a complex appeal, the court may stay the action where that causes no material prejudice and preserves the existing injunction.

Sabah sought judgment against the Islamic Republic of Pakistan under a guarantee securing payment obligations owed by Karachi Electric Supply Corporation under a power purchase agreement. After an arbitration award against Karachi Electric Supply Corporation remained unpaid, Pakistan commenced proceedings in Islamabad seeking declarations that the award was fraudulent and that the guarantee was invalid, together with an injunction restraining demands under the guarantee.

David Steel J granted Sabah an anti-suit injunction restraining Pakistan from pursuing the Islamabad proceedings and refused Pakistan’s applications challenging jurisdiction or seeking a stay. Permission to appeal was sought on the issues rejected below, including whether the Islamabad injunction remained in force, whether the Pakistani proceedings were vexatious and oppressive, and whether the English action should be stayed.

1. Permission and stay. Clarke LJ, delivering the leading judgment, held that Pakistan had a real prospect of showing that the judge should have decided whether the injunction granted in Islamabad on 31 October 2001 remained in force when the English anti-suit injunction was granted. Permission to appeal was therefore granted, and the English proceedings were stayed pending the appeal. Chadwick LJ and Pill LJ agreed.
2. Foreign injunction and comity. Where an anti-suit injunction is sought in England in circumstances said to involve breach of an injunction granted by a foreign court, the English court should, other things being equal, determine whether the foreign order was in force and take that fact into account when exercising its discretion. That approach gives proper weight to comity. The court considered that the Islamabad court’s later views might also be relevant.
3. Vexatious and oppressive proceedings. Pakistan had a real prospect of showing that the judge was wrong to characterise the Pakistani proceedings as oppressive and vexatious. The guarantee contained a non-exclusive jurisdiction clause, consent to the jurisdiction of the English courts and a waiver of objections based on forum non conveniens. One possible interpretation was that the contract contemplated proceedings in more than one jurisdiction. The issue required determination by the full appellate court, having regard to Turner v Grovit [2002] 1 WLR 107 at paragraph 24 and the circumstances relied upon by Sabah.
4. Stay distinct from injunction. Even if the Pakistani proceedings were held not to be oppressive or wrongful and the injunction were discharged, it would not follow that the English action should be stayed. The express jurisdiction and waiver provisions made a stay difficult to justify, although Pakistan was entitled to argue that commencing the English proceedings while the Islamabad injunction allegedly remained in force constituted an abuse of process. The approach was considered by reference to National Westminster Bank v Utrecht America Finance Company [2001] 3 All ER 733.
5. Costs were reserved to the full court, with a two-day time estimate. The date fixed for the Part 24 application was vacated.

• Court of Appeal (Civil Division): Permission to appeal granted; proceedings stayed pending the full appeal. Costs reserved.
• Queen’s Bench Division, Commercial Court: David Steel J continued the anti-suit injunction and refused Pakistan’s applications to set aside the proceedings for want of jurisdiction or to stay them. Permission to appeal was granted on the state immunity issue, which was not determined in this judgment.