Rochester Resources Ltd & Ors v Lebedev & Anor

An anti-suit injunction restraining foreign proceedings requires a high degree of probability that the relevant parties are bound by an arbitration agreement. The court must distinguish the scope of an arbitration clause from the identity of those bound by it. Where the clause refers to disputes arising between defined parties, affiliates are not bound merely because the agreement refers elsewhere to affiliates. The court cannot improve a carefully drafted commercial agreement by adding persons whom the parties did not include. An injunction under Senior Courts Act 1981, section 37, is the appropriate source of power for restraining foreign proceedings in breach of an arbitration agreement. Section 44(2)(e) of the Arbitration Act 1996 does not provide an alternative source of that power.

The claimants sought to restrain proceedings commenced by the first defendant in the Supreme Court of New York. The New York claim concerned alleged rights arising from earlier arrangements relating to an oil business and the sale of interests connected with it.

The claimants relied on an English-law Acquisition Agreement between Rochester Resources Limited and Coral Petroleum Limited. That agreement contained a London arbitration clause. They argued that Coral acted as the first defendant’s agent, or that the first defendant was bound as an affiliate. They also relied on third-party rights and agency arguments concerning the other claimants. The central questions were whether the first defendant was bound by the arbitration clause and whether relief was available under section 37 of the Senior Courts Act 1981 or section 44 of the Arbitration Act 1996.

1. The applications for an anti-suit injunction under section 37 of the Senior Courts Act 1981 and section 44 of the Arbitration Act 1996 were refused.
2. On an interlocutory application for an anti-suit injunction, the applicant must establish to a high degree of probability that an agreement exists which binds the person sought to be restrained to arbitrate the relevant disputes. The court relied on Transfield Shipping Inc v Chiping Xinfa Huayu Alumina Co Ltd [2009] EWHC 3629 (QB) and Midgulf International Ltd v Groupe Chimiche Tunisien [2009] 2 Lloyd’s Rep 411.
3. The Acquisition Agreement was, on its face, between Coral and Rochester. The arbitration clause applied to disputes arising between “the Parties”. Although the agreement referred to affiliates in other provisions, it was not established to the required standard that the first defendant was a party or was otherwise bound by the arbitration clause. The fact that he was beneficially interested in the underlying rights and had been involved in negotiating the agreement did not alter that conclusion.
4. The broad construction principle for arbitration clauses stated in Fiona Trust v Privalov [2007] UKHL 40 concerned the disputes covered by a clause, not the identity of the persons bound by it. The court could not add persons to a carefully drafted agreement merely because a wider clause might have been commercially neater. Charter Reinsurance Co Ltd v Fagan [1997] AC 313 illustrated that limitation.
5. The same reasoning applied to the second and third claimants. Rochester was better regarded as contracting as principal, and the later personal guarantees were inconsistent with Rochester having contracted as their agents.
6. The alternative application under section 44 also failed because it depended on the first defendant being party to the arbitration agreement. In addition, AES Ust-Kamenogorsk Hydro Power Plant LLP v Ust-Kamenogorsk Power Plant JSC [2013] UKSC 35 established that the source of power to restrain foreign proceedings in breach of an arbitration agreement is section 37, rather than section 44.