Perkins Engines Company Ltdv Ghaddar & Anor (Rev 1)

An arbitration clause conditional on the absence of reciprocal enforcement procedures between the United Kingdom and another country ordinarily refers to a binding bilateral or multilateral treaty governing enforcement of judgments between those countries. It does not refer merely to substantially equivalent domestic enforcement laws. Where no such treaty exists, the contractual arbitration agreement is engaged. An English court may grant an interim anti-suit injunction under section 37 of the Senior Courts Act 1981 where there is a high degree of probability that the foreign proceedings breach the arbitration agreement.

Perkins Engines Company Limited applied for an interim negative anti-suit injunction restraining Mohammed Ghaddar and Ghaddar Machinery Co. S.A.L. from pursuing proceedings in Lebanon. The Lebanese proceedings concerned alleged unlawful termination of a distribution agreement and sought compensation under Lebanese law.

The parties disputed the construction of the agreement’s conditional arbitration clause. The central questions were whether “reciprocal enforcement procedures” required a treaty between the United Kingdom and Lebanon and whether such procedures existed.

1. Relief granted. The court granted the interim anti-suit injunction in the terms sought. The Lebanese proceedings fell within the arbitration agreement and had to be referred to arbitration in England.
2. Applicable principles. The court had jurisdiction to grant an interim anti-suit injunction restraining breach of an English arbitration agreement under section 37 of the Senior Courts Act 1981. The applicant had to establish, to a high degree of probability, that an arbitration agreement governed the dispute. The arbitration clause was to be construed under English contractual principles, including the approach in Arnold v Britton, [2015] AC 1619, Wood v Capita Insurance Services Ltd, [2017] AC 1173, and Fiona Trust, [2008] 1 Lloyd's Rep 254.
3. Construction. “Reciprocal enforcement procedures between the United Kingdom and” Lebanon meant procedures contained in a binding bilateral or multilateral treaty between the two countries governing enforcement of one country’s judgments in the other. The words “reciprocal” and “between”, together with the reference to the United Kingdom rather than England, supported that conclusion. The clause did not require an assessment of whether domestic enforcement laws were substantially or functionally equivalent.
4. Application. It was common ground that no such treaty existed between the United Kingdom and Lebanon. The condition was therefore satisfied, the arbitration agreement was engaged, and the Lebanese proceedings breached it. The court’s alternative views that the actual dispute would also lack reciprocal enforcement procedures, and that enforcement would be impeded by jurisdictional and public-policy differences, were expressed only as obiter.
5. The court did not determine the unpleaded alternative claim based on the jurisdiction clause, nor whether that clause was exclusive or non-exclusive.