Essar Shipping Ltd v Bank of China Ltd

An anti-suit injunction enforcing an English arbitration agreement is discretionary. The court will ordinarily uphold the contractual forum, but the applicant must act promptly. Delay may itself justify refusal, even without detrimental reliance or other specific prejudice. A prior challenge to the foreign court’s jurisdiction does not suspend the requirement of promptness. The court must assess promptness in context, including any relevant contractual or statutory time bar and the likely duration and prospects of the foreign challenge. Specific prejudice is also relevant, but a respondent relying on failure to commence protective arbitration proceedings must show that its omission was not unreasonable.

Essar Shipping Ltd sought a declaration that a London arbitration agreement had been incorporated into a bill of lading contract, an anti-suit injunction restraining Bank of China Ltd from pursuing proceedings in the Qingdao Maritime Court, and damages for breach of the arbitration agreement.

The bank’s Chinese proceedings claimed losses said to arise from delivery of cargo without production of the original bill of lading. Essar challenged the Qingdao court’s jurisdiction and later commenced the present English proceedings. The central issue was whether delay in seeking the injunction meant that granting it would no longer be just or convenient.

Application refused in part. The court granted the declaration sought but refused the anti-suit injunction. The claim for damages was left open.

1. Section 37 of the Senior Courts Act 1981 confers a broad but discretionary power to grant an injunction where it is just and convenient. Where parties have agreed an exclusive forum or arbitration, effect will ordinarily be given to that agreement unless strong reasons justify departure.
2. The requirements that an anti-suit injunction be sought promptly and that the foreign proceedings not be too far advanced are cumulative. Lack of promptness alone can justify refusal. Detrimental reliance is relevant but is not essential.
3. Promptness is fact sensitive. A foreign jurisdiction challenge does not, without more, justify deferring an English injunction application.
4. Given the potential one-year time bar, Essar should ordinarily have issued and served its English claim form by the end of November 2014. Its decision to await the Qingdao jurisdiction challenge was not objectively justified by any expectation of a speedy decision or sufficient prospect of success.
5. The bank had suffered prejudice through the expiry of time for protective arbitration proceedings, but it failed to show that its omission to commence arbitration was not unreasonable. The delay independently required refusal of the injunction.

First-instance arbitration claim in the High Court (Commercial Court). Essar had appealed the Qingdao Maritime Court’s dismissal of its jurisdiction challenge, but no decision on that appeal had been issued.