Midgulf International Ltd v Groupe Chimiche Tunisien

At the interlocutory stage, an applicant for an anti-suit injunction must establish a high degree of probability that the foreign proceedings breach an arbitration agreement and that relief is justified as of right. Where the contractual terms depend on disputed oral evidence, that threshold may not be met even though the applicant has a strongly arguable case. The court may nevertheless continue interim protection for a limited period and order a speedy trial of the contractual issue, particularly where refusing protection risks a jurisdictional stalemate. A party’s participation in foreign proceedings does not amount to submission merely because it addresses the existence of an arbitration agreement. The question is whether, viewed broadly and in the foreign procedural context, the steps were necessary or useful only if the party accepted the foreign court’s jurisdiction.

Midgulf and GCT entered into contracts for the sale and purchase of sulphur. Their dispute concerned whether the July contract contained a London arbitration clause. GCT commenced proceedings in Tunisia, including a declaration action concerning the existence of the arbitration agreement and a damages action. Midgulf sought appointment of an arbitrator under section 18 of the Arbitration Act 1996 and continuation of an anti-suit injunction restraining the Tunisian proceedings.

The written exchanges supported both parties’ construction of the July contract, and the effect of a disputed telephone conversation could not be determined at the interlocutory hearing. The issues were whether the evidential threshold for an anti-suit injunction was met, whether Midgulf had submitted to the Tunisian jurisdiction, and whether the declaration action itself breached the arbitration agreement.

1. Interim threshold. The application was not finally determined on the contractual issue. Because an injunction granted at this stage would probably have final practical effect, Midgulf had to establish a high degree of probability that the July contract contained a London arbitration clause and that it was entitled as of right to restrain the Tunisian proceedings. Its case was strongly arguable, but the disputed 4 July conversation might materially affect construction of the written exchanges. The threshold was therefore not met.
2. Case-management solution. The injunction previously granted by Burton J was continued on a limited basis. A speedy trial was ordered on the terms of the July contract, including whether it contained a London arbitration clause. After that determination, the court could decide whether to appoint an arbitrator and continue the injunction indefinitely. This was the appropriate course to avoid a possible stalemate between the jurisdictions.
3. Submission to foreign jurisdiction. Applying the broad approach in Akai v People’s Insurance [1998] 1 Lloyd’s Rep. 90, Midgulf had not submitted to the Tunisian court. Its participation in the declaration action was relevant to the damages action and was not a step necessary or useful only if it accepted Tunisian jurisdiction. The declaration and damages actions should not be artificially separated.
4. Scope of the arbitration agreement. Section 30 of the Arbitration Act 1996 did not confer exclusive power on the arbitral tribunal to determine whether an arbitration agreement existed. A court asked under Article II of the New York Convention to refer a dispute to arbitration could determine that question. Fiona Trust v Privalov [2008] 1 Lloyd’s Rep. 254 did not produce a different result. Nor did the supervisory jurisdiction discussed in C v D [2007] 2 Lloyd’s Rep. 367 extend to determining whether court proceedings had been brought in breach of an arbitration agreement.
5. Declaration action. Although the declaration action might not, viewed in isolation, breach the arbitration clause, it had relevance only in the context of the damages action. The court therefore continued the injunction against it on the limited case-management basis ordered.