Morgan Stanley & Co International Plc v China Haisheng Juice Holdings Co Ltd

An exclusive jurisdiction clause must be construed in the context of the agreement as a whole. A clause requiring each contracting party to submit disputes arising out of the agreement to a specified court will ordinarily concern claims between those contracting parties. It will not extend to claims against non-parties unless the contractual language clearly produces that result.

Where a party has sued in the agreed forum, the possibility that related proceedings elsewhere may offer a more convenient or unified resolution will rarely constitute a strong reason for refusing an anti-suit injunction. Where complete procedural unity is impossible, the court should at least secure the agreed forum for claims and counterclaims concerning the contracting party, particularly where concurrent proceedings risk inconsistent decisions.

Morgan Stanley & Co International Plc (“MSIP”) sought a declaration and an anti-suit injunction against China Haisheng Juice Holdings Co Ltd (“CH”). The parties had entered into an ISDA Master Agreement containing an exclusive English jurisdiction clause.

CH had commenced proceedings in China against MSIP and Morgan Stanley Asia Limited (“MSAL”), an affiliate which was not a party to the Master Agreement. MSIP subsequently sued CH in England for sums said to be due under currency swap transactions. The issues were whether the jurisdiction clause extended to CH’s claims against MSAL and whether there was a strong reason not to restrain CH’s Chinese proceedings against MSIP.

1. Construction of the jurisdiction clause. The words of clause 13(b)(i) were capable of applying either only to disputes between the contracting parties or also to claims against a non-party. The clause had to be construed against the whole Master Agreement and the whole of clause 13.

2. The provisions concerning third-party rights, service of process and waivers of immunity supported the conclusion that the parties had addressed claims between themselves, rather than claims against affiliates or other non-parties. An affiliate wishing to enforce a right expressly granted under the agreement had to accept the jurisdiction clause, but that did not show that a party was bound to sue an affiliate in England. The imbalance arising because a non-party had not submitted to the English jurisdiction was also material.

3. The exclusive jurisdiction clause therefore applied only to claims between MSIP and CH arising out of or in connection with the Master Agreement. CH had not promised to bring its claims against MSAL in England. The conclusion was consistent with Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd, and did not conflict with the reasoning of Lord Scott in Donohue v Armco Inc, which had considered a materially different clause.

4. Anti-suit injunction. MSIP’s English claim could not be stayed on jurisdictional grounds. Although the Chinese proceedings against MSAL could continue, the claims and counterclaims concerning MSIP could be heard together in England. The possibility of a case-management stay was speculative and unlikely where English law governed both the claim and the proposed rescission defence or counterclaim.

5. The competing forum factors did not amount to a strong reason for refusing enforcement of the exclusive jurisdiction clause. The most important consideration was the risk that refusal would produce concurrent English and Chinese proceedings involving common issues and inconsistent decisions. An anti-suit injunction was therefore granted restraining CH from pursuing its claims against MSIP in China. No injunction was granted concerning MSAL.

First-instance decision. No appellate history is stated in the judgment.