Starlight Shipping Co & Anor v Tai Ping Insurance Co Ltd (Hubei Branch) & Anor Rev 1

An English court will ordinarily restrain proceedings brought in a foreign court in breach of an arbitration agreement unless the party seeking to proceed abroad shows a strong reason. Subrogated insurers acquire rights subject to the underlying arbitration clause. The court may grant interim relief under section 37 of the Supreme Court Act 1981 and, where the statutory conditions are met, under section 44 of the Arbitration Act 1996. Section 44 relief requires urgency and that the tribunal lacks power or is temporarily unable to act effectively. A non-party to the arbitration agreement cannot invoke the relevant service-out or section 44 jurisdiction merely because the proposed order concerns an arbitration. Comity gives limited weight where the parties have contractually selected arbitration.

The owners and managers of a vessel sought an interim anti-suit injunction against the cargo interests and their insurers. The insurers had commenced proceedings in the Wuhan Maritime Court after the vessel and cargo were lost. The claimants argued that the bill of lading incorporated an English law and London arbitration clause.

The cargo interests and insurers disputed the clause’s effect and relied on the Chinese proceedings, security obtained there, and the pending arbitration. The managers were named as defendants in China but were not parties to the arbitration agreement. The court therefore considered the injunction against the cargo interests and insurers separately from the proposed relief concerning the managers.

1. The owners were entitled to an interim anti-suit injunction against the cargo interests and insurers. The bill of lading incorporated the charterparty arbitration clause, and the cargo interests became bound by it when they became holders of the bill. Applying The Angelic Grace [1995] 1 LLR 87, proceedings falling within the arbitration agreement should ordinarily be restrained unless a strong reason for allowing them is shown.

2. The insurers’ subrogated rights were likewise subject to the arbitration clause. The court applied The Jay Bola [1997] 2 LLR 279 (CA) and held that an insurer could not enforce the transferred claim inconsistently with the obligation to arbitrate. The insurers’ reliance on Chinese law did not affect the English court’s analysis of the arbitration agreement.

3. Section 37 of the Supreme Court Act 1981 remained available to grant the injunction, whether or not section 44 of the Arbitration Act 1996 also applied. Under section 44, the court could act because the case was urgent, the tribunal had no power to grant an interim injunction, and it was temporarily unable to act effectively before the anticipated decision of the Wuhan court. The injunction was necessary to preserve the contractual right to arbitrate.

4. The pending arbitration, the arbitrators’ refusal to consent to a non-urgent application, and the security obtained in China did not constitute strong reasons against relief. The injunction was continued on condition that the owners provide comparable security when the Chinese security was released.

5. No injunction could be granted in relation to the managers. They were not parties to the arbitration agreement and could not show an arguable contract with the cargo interests or insurers. CPR 6.20(5)(c) therefore did not apply, and CPR 62.5 could not support an application by a non-party to the arbitration agreement. The claim against the managers was hopeless as a matter of English law, but the court lacked jurisdiction to restrain the Chinese proceedings against them.

6. Comity was given appropriate respect, but it did not outweigh the parties’ contractual agreement to arbitrate. The defendants were restrained until further order or final determination by the arbitral tribunal, whichever was earlier. Costs followed the event, subject to a discount reflecting the defendants’ limited success concerning the managers.

First-instance decision on an application for an interim anti-suit injunction. The application succeeded against the cargo interests and insurers but failed against the managers.