Albon (t/a NA Carriage Co) v Naza Motor Trading SDN BHD

The court may restrain a foreign arbitration under section 37 of the Supreme Court Act 1981 where the respondent is subject to its jurisdiction and an injunction is just and convenient. The applicant must establish unconscionable conduct, including oppression, vexation or interference with the court’s process, and a legitimate interest requiring protection in English proceedings brought in the natural forum.

Arbitral autonomy calls for particular caution, but does not prevent relief where there is a good arguable case that the arbitration agreement was forged to defeat English proceedings and the English court is to determine its authenticity. An appellate court should give considerable weight to the first-instance judge’s assessment of unconscionability, particularly where that judge has closely managed the litigation.

Mr Albon brought English proceedings arising from a car-dealing relationship with Naza. Naza relied upon an arbitration clause in a purported Joint Venture Agreement. Mr Albon alleged that his signature on that agreement had been forged. Lightman J decided that the English court should determine the agreement’s authenticity and later restrained Naza from pursuing the arbitration pending that determination.

Rix LJ granted permission to appeal on whether the court had jurisdiction to grant the injunction, but refused permission concerning the judge’s exercise of discretion. Naza renewed that application and also sought permission to appeal the costs order. The central issue was whether an English court could restrain the interim continuation of an arbitration when the existence of the arbitration agreement was itself seriously disputed and due to be determined by that court.

1. Appeal dismissed. The court had jurisdiction under section 37 of the Supreme Court Act 1981 to restrain the arbitration. The requirements of unconscionability and protection of a legitimate interest in English proceedings concern the proper exercise of an existing jurisdiction rather than jurisdiction in its strict sense. The distinction was one of nomenclature and did not narrow the issues open for argument.

2. There was a good arguable case both for continuing the English proceedings and for alleging that the signature on the Joint Venture Agreement had been forged after those proceedings began to stop them. The English court was, for present purposes, to determine authenticity finally. Continuing a co-extensive arbitration meanwhile would be oppressive. It would impose needless expense, create a risk of proliferating pleadings and disclosure, and require a party of limited means to fight on two fronts before the threshold issue could be resolved.

3. The first-instance judge had applied the correct principle. An appellate court should give considerable weight to that judge’s factual assessment of unconscionability and interfere only in a clear case. This was especially appropriate because the judge’s continuing management of the litigation gave him a much fuller appreciation of the overall circumstances. The fact that forgery had been established only to the good-arguable-case standard did not prevent interim relief.

4. The principle of arbitral autonomy reflected in section 1(1) of the Arbitration Act 1996 required caution but did not preclude the injunction. This was not an ordinary case. The arbitration agreement was arguably a forgery created to defeat properly instituted English proceedings, and the arbitrators were already precluded from determining its authenticity. The judge was therefore managing the English application, rather than improperly managing the arbitration.

5. The renewed application concerning alleged non-disclosures was refused. The judge was entitled to state his conclusion briefly rather than address every peripheral point in disproportionate written submissions. Permission to appeal the costs order was also refused. Although costs are not usually awarded on an interim injunction application, that practice is not invariable, and the judge was entitled to award the successful claimant his costs in any event.

1. Court of Appeal (Civil Division): Dismissed Naza’s appeal from the interim anti-arbitration injunction and refused its renewed applications concerning non-disclosure and costs: [2007] EWCA Civ 1124.

2. High Court, Chancery Division: Lightman J’s fourth judgment restrained Naza from pursuing the arbitration pending determination of the purported Joint Venture Agreement’s authenticity. His third judgment had held that the English court should determine authenticity. His first judgment, reported at [2007] 1 WLR 2489, upheld the English proceedings and held that England was the most appropriate forum.