Euroil Ltd v Cameroon Offshore Petroleum Sarl

Under section 44(3) of the Arbitration Act 1996, the court’s urgent injunctive jurisdiction is limited to orders necessary to preserve evidence or assets. Contractual rights may constitute assets, but the jurisdiction does not extend to any interim injunction. The court must avoid usurping the arbitral tribunal’s function. An injunction may be granted where there is a serious issue to be tried, damages may be inadequate, and the balance of convenience favours temporary protection. The order must be clear and must preserve the respondent’s contractual rights pending arbitration.

Euroil Ltd and Cameroon Offshore Petroleum Sarl were parties to a joint operating agreement concerning an offshore Cameroon petroleum permit. The agreement provided for arbitration under the London Court of International Arbitration rules and made Euroil the operator.

After both parties approved the submission of a development application, Cameroon Offshore Petroleum sent correspondence to the Cameroon authorities expressing reservations about the application. Euroil alleged that this breached the agreement and applied urgently under section 44 of the Arbitration Act 1996 for an injunction restraining further communications and controlling participation in imminent meetings with the authorities.

1. The application was granted on an interim basis pending a return hearing. The court could act because the matter was urgent, no arbitral tribunal had yet been appointed, and the tribunal was unable for the time being to act effectively within section 44(5) of the Arbitration Act 1996.

2. Section 44(3) was a limiting provision. Following Cetelem SA v Roust Holdings Ltd [2005] E.W.C.A. Civ.618; [2005] 1 W.L.R.3555, contractual rights and choses in action could constitute assets. However, the provision did not authorise the court to grant every kind of interim injunction, and the court had to avoid usurping the arbitrators’ function. The same limiting approach was adopted in ZIM Integrated Shipping Services Ltd. v European Containers, 6 November 2013.

3. Euroil’s contractual right under clause 6.6.1 to represent the parties in dealings with the Government concerning joint operations was capable, provisionally, of being treated as an asset. Clause 6.6 had to be read as a whole. Euroil was entitled to lead discussions, but the court was not prepared to hold at the interim stage that Cameroon Offshore Petroleum was required to remain silent when entitled to attend under clause 6.6.2. Final construction was for the arbitrators.

4. There was a seriously arguable case that Cameroon Offshore Petroleum’s correspondence breached clause 6.6.1. Further communications might cause serious financial consequences which damages could not adequately compensate, particularly given the respondent’s apparent lack of assets beyond its interest in the permit. The balance of convenience favoured temporary relief.

5. The proposed order was reformulated so that the respondent could attend and participate in the meetings, but could not make communications contradicting or undermining the jointly approved application. The injunction was to remain in force only until the return date. Costs were reserved, and an undertaking was accepted from the parent company pending any later application for fortification.

First-instance application under section 44 of the Arbitration Act 1996. The judgment does not state any prior appellate history.