Euroil Ltd v Cameroon Offshore Petroleum SARL

Under section 44(3) of the Arbitration Act 1996, the court should exercise particular caution where an interim injunction would substantially determine an issue reserved for the arbitral tribunal. The disputed nature and scope of the contractual right may be preserved, but that does not make injunctive relief appropriate in every case. The court must also formulate any injunction with sufficient clarity to enable the restrained party to know what conduct is prohibited, especially where breach may lead to contempt proceedings. Subsequent events, delay, the limited practical value of continuing relief, and the risk of imposing an unjustified one-sided restraint may justify discharge. Setting aside the injunction does not determine the parties’ contractual rights or prevent the tribunal granting final or provisional relief.

Euroil sought an urgent injunction under section 44(3) of the Arbitration Act 1996 restraining Cameroon Offshore Petroleum SARL from communicating with the Cameroonian authorities concerning joint operations under a Joint Operating Agreement. The injunction was granted without effective notice on 6 January 2014, subject to an exception permitting attendance at imminent meetings.

On the return date, further evidence showed that the order had affected the parties’ participation in those meetings and had generated a dispute about its scope and possible contempt. The central issues were whether the injunction should continue, whether it was sufficiently clear, and whether the court should intervene where the underlying contractual rights were themselves disputed and fell to be determined by arbitrators.

1. The injunction was set aside and would not continue. The misrepresentation to the Cameroonian authorities that the injunction conclusively established a breach of the Joint Operating Agreement was an abuse of the court’s process and independently justified discharge.

2. The application concerned Euroil’s asserted right under clause 6.6 of the Joint Operating Agreement to represent the parties in communications with the government. The construction and scope of that right were central issues for the arbitral tribunal. Following Cetelem [2005] EWCA Civ 618, the court accepted, for present purposes, that jurisdiction could exist to preserve a disputed contractual asset. However, the approach in ZIM Integrated Shipping Services Ltd v European Containers KS [2013] EWHC 3581 (Comm) was maintained: the court should be more cautious where relief approaches determination of an issue reserved for arbitrators.

3. The disputed nature and scope of the alleged rights made substantial caution necessary. If the injunction protected Euroil’s interpretation too far, it would prevent Cameroon Offshore Petroleum from exercising rights which it might possess.

4. An injunction must be formulated with sufficient clarity that the defendant can determine, without undue difficulty, what may and may not be said or done. The dispute about whether even communicating the existence of the order breached it, together with the resulting contempt concerns, showed that the order lacked the necessary clarity.

5. The long-standing nature of the parties’ concerns, the limited remaining utility of the injunction, and the unfairness of restraining only one party from communicating with the authorities required the order to be discharged. The court did not decide whether either party had breached the Joint Operating Agreement. Those issues, and any application for final or provisional relief, remained for the arbitral tribunal.