Crescendo Maritime Co & Anor v Bank of Communications Company Ltd & Ors

Where foreign proceedings breach an agreement to arbitrate in London, an anti-suit injunction will ordinarily be granted unless there are strong reasons not to enforce the agreement. The convenience of a foreign forum carries little weight where the parties deliberately selected a neutral arbitral venue. Multiple parties and a risk of inconsistent findings may constitute a strong reason, but not where that risk results from the applicant’s own decision to pursue substantially the same fraud allegations both in arbitration and abroad, particularly after losing in the arbitration. Proceedings against a non-party may also be restrained where they amount to a collateral attack on an arbitration award, although the question is fact-sensitive. A declaration of non-liability may properly be granted where it resolves a substantive dispute and has practical utility.

The claimant Buyer had agreed with a Chinese shipbuilder and the Bank that disputes concerning the shipbuilding transaction and refund guarantees would be resolved by London arbitration. After the shipbuilding contract was terminated, arbitration proceeded and the tribunal rejected the Bank’s allegations that the guarantees had been procured by fraud. The Bank then commenced proceedings in China against the Buyer, Alpha Bank and others, seeking findings of fraud and release from liability under the guarantees.

The Buyer sought a final anti-suit injunction. Alpha sought declarations that it was not an assignee or party to the arbitration agreements and had no liability in fraud. The central issues were whether there were strong reasons not to enforce the arbitration clauses, whether proceedings against Alpha constituted a collateral attack on the award, and whether Alpha had concealed the true date of the shipbuilding contract.

1. Anti-suit injunction against proceedings concerning the Buyer. The arbitration clauses covered the Bank’s allegations that the refund guarantees were procured by misrepresentation or non-disclosure, including a tort claim for fraud. The ordinary rule was that an injunction should issue unless strong reasons justified refusal, protecting the contractual right to arbitrate in London.
2. The alleged differences between the Chinese proceedings and the arbitration were differences of detail rather than substance. Both proceedings concerned the same alleged deception and sought to avoid liability under the refund guarantees. The fact that China was the natural forum for the alleged fraud was insufficient. The parties had chosen London as a neutral forum, and convenience factors therefore carried little weight.
3. Claims involving additional parties and the risk of inconsistent findings could in principle constitute a strong reason. In this case, however, the Bank had raised substantially the same fraud allegations in the arbitration, declined to participate further, lost before the tribunal, and then sought to obtain an inconsistent decision in China. That conduct was vexatious and oppressive. The risk of inconsistency was self-created and did not justify refusing relief.
4. Proceedings against Alpha. Proceedings seeking release from the refund guarantees were a collateral attack on the arbitration award. Following Noble Assurance v Gerling-Konzern General Insurance [2007] EWHC 253 (Comm), the court had jurisdiction, in an appropriate case, to restrain proceedings against a non-party to the arbitration agreement. Whether proceedings against a non-party were such a collateral attack depended on the circumstances. The damages claim against Alpha was not a collateral attack because it would arise only if the Bank remained liable under the guarantees. The injunction was therefore confined to proceedings against the Buyer.
5. Declarations. The deed of assignment was by way of security. Notice of an intention to enforce was required before the assignment became absolute, and no such notice had been given. Alpha was therefore entitled to the declaration that it was not an assignee or party to the refund guarantees or arbitration agreements.
6. The evidence established that the Bank knew, or was likely to have known, that the shipbuilding contract had been backdated. Alpha had therefore made no concealment and had not deceived the Bank. Since deception was required for fraud under either English or the relevant Chinese law, Alpha had no liability in fraud. Declarations of non-liability had sufficient utility.
7. The Buyer received a final anti-suit injunction restraining proceedings against it in China, and Alpha received declaratory relief. The claims for an injunction restraining proceedings against Alpha, including in Alpha’s separate action, were dismissed.