REC Wafer Norway AS v Moser Baer Photo Voltaic Ltd

A final anti-suit injunction may restrain a party from continuing foreign proceedings where, although not necessarily brought in breach of an arbitration agreement, their continuation is vexatious or oppressive. The court must be satisfied that the conduct is unconscionable and that the injunction is necessary to protect a legitimate interest in English proceedings. Continuing foreign proceedings seeking substantially the same relief after that relief has been refused by the parties’ chosen English court may satisfy this test. The court must exercise its discretion cautiously, considering comity, delay and the stage reached in the foreign proceedings. Damages may be inadequate where the foreign proceedings deprive a party of an agreed entitlement to immediate payment under autonomous bank guarantees.

REC Wafer Norway AS supplied silicon wafers to Moser Baer Photo Voltaic Ltd under an agreement governed by English law and providing for ICC arbitration seated in London. Moser Baer disputed the quality of the wafers and commenced proceedings in India seeking to restrain calls on two on-demand bank guarantees. It later sought substantially the same relief in the English Commercial Court, but the injunction was discharged by Tomlinson J on 27 May 2010.

REC subsequently sought a final anti-suit injunction restraining continuation of the Indian proceedings. The principal questions were whether the Indian proceedings were in breach of the arbitration clause and, independently, whether their continuation was vexatious or oppressive, having regard to the English decision, delay and the progress of the Indian proceedings.

1. Jurisdiction and independent grounds. The court had jurisdiction to grant a final injunction under section 37(1) of the Senior Court Act 1980. The restrictions governing interim relief under section 44 of the Arbitration Act 1996 did not prevent the court determining the application. Relief based on breach of the arbitration agreement and relief based on abuse of process were independent grounds.
2. Applicable principles. Applying the approach in Glencore International AG v Exter Shipping Ltd [2002] 2 All ER (Comm) 1, the conduct had to be unconscionable, including conduct which was oppressive or vexatious, and the injunction had to be necessary to protect the applicant’s legitimate interest in existing English proceedings. The court was also required to exercise its discretion cautiously in view of comity.
3. Application. The Indian and English applications sought in substance the same relief: an injunction preventing calls on the bank guarantees. Moser Baer had applied to the parties’ chosen English court and had failed. There was no good reason to continue seeking the same relief in India, including on appeal. That continuation was vexatious and oppressive and an injunction was necessary to prevent the English decision from being undone.
4. Damages and delay. Damages were inadequate because the contractual bargain entitled REC to immediate payment under the guarantees while the underlying dispute was resolved in arbitration. Although an anti-suit injunction should ordinarily be sought promptly and before foreign proceedings are too advanced, the relevant period was the period after the English decision of 27 May 2010. The Indian appeal had been released to a new bench and required reargument, and REC commenced these proceedings on 4 August 2010. The delay was therefore reasonable.
5. The court held that the case for a final anti-suit injunction was made out. The order was directed against Moser Baer, not against the Indian court. The parties were to address the form of the order and consequential matters.