Qingdao Huiquan Shipping Company v Shanghai Dong He Xin Industry Group Co Ltd

An interim anti-suit injunction may restrain a non-party to an arbitration agreement where the foreign claim, in substance, asserts rights under the contract containing the forum clause. A claimant cannot rely on contractual benefits while rejecting the contract’s procedural burden. The foreign claim is characterised by its substance and the issues raised, rather than its formal label. Delay is assessed in context, including its effect on comity, foreign proceedings and wasted resources. Delay is not automatically fatal where the foreign court has not ruled on the relevant jurisdiction or merits. At the interim stage, the applicant must show a high degree of probability that the arbitration agreement applies and has been breached. Final relief should not ordinarily be granted where the respondent was notified only of an interim application.

The Owners sought an interim anti-suit injunction restraining SDHX from continuing proceedings in China seeking repayment of RMB 3,910,848 paid under a settlement agreement between the Owners and Emori. The agreement was governed by English law and contained a London arbitration clause. SDHX was described as Emori’s authorised agent, but alleged a separate oral agreement and denied being bound by the arbitration clause.

The Qingdao Shinan District Court transferred the matter to the Qingdao Maritime Court, and the Qingdao Intermediate People’s Court upheld that decision. Neither Chinese court decided whether SDHX was bound by the arbitration agreement. SDHX did not attend the inter partes hearing. The central issues were the effect of non-privity, the substance of the Chinese claim, delay and whether interim or final relief should be granted.

1. Interim relief granted. The court granted an interim anti-suit injunction restraining SDHX from continuing the Qingdao Proceedings. Final relief was not granted.
2. Because the hearing was on notice, the Owners owed no duty of full and frank disclosure applicable to a without-notice hearing. They nevertheless had to present the case fairly, identify points benefiting the absent respondent and address points which the respondent might have taken. The approach in Braspetro Oil Services Co & Anor v FPSO Construction Inc [2007] EWHC 1359 and CMOC Sales & Marketing Ltd v Person Unknown & Ors [2018] EWHC 2230 (Comm) was applied.
3. Under the The Angelic Grace [1995] 1 Lloyd's Rep. 87 principles, foreign proceedings brought in breach of a London arbitration agreement should ordinarily be restrained unless the resisting party establishes a good or strong reason. The interim applicant must show a high degree of probability that an exclusive jurisdiction clause exists and has been breached, as explained in Donahue v Armco [2002] 1 Lloyd's Rep 425 and Transfield Shipping v Chiping Xingfa [2009] EWHC 3629 (QB).
4. The same principles can apply against a person who was not a party to the contract. A person who advances a foreign claim founded on contractual rights cannot rely on the benefits of the contract while rejecting its forum clause. The court must examine the substance and content of the right asserted, and the issues raised, rather than the form of the claim. The approach in The Yusuf Cepnioglu [2016] 1 Lloyd's Rep 641 (CA), Dell v IB Maroc.com [2017] EWHC 2397 (Comm) and The Prestige [2015] 2 Lloyd's Rep 33 was applied.
5. SDHX’s statement of claim expressly relied on the Settlement Agreement, alleged breach of contract and asserted that the written agreement had been varied. Its claim therefore had a high-probability foundation in the Settlement Agreement and attracted the burden of clause 9. It was unnecessary to determine the alleged oral agreement at the interim stage. Where the foreign claim is contractual and inconsistent with the jurisdiction clause, it is unnecessary to establish that England is the natural forum.
6. Delay is assessed by reference to all the circumstances. There is no fixed period constituting excessive delay. Delay and comity are linked, particularly by the extent to which delay increases interference with the foreign court or wastes its resources. The timing at which the applicant’s legal rights become sufficiently clear is relevant. The guidance in The Kishore [2016] 1 Lloyd's Rep 427, Ecobank Transnational Incorporated v Tanoh [2015] EWCA Civ 1309, Sea Powerful II v Bank of China [2017] 1 HKC 153 and Sana Sabbagh v Khoury [2018] EWHC 1330 (Comm) was applied. The one-year delay did not bar relief because the Chinese courts had not ruled on whether the arbitration clause bound SDHX or on the merits, and the Owners acted promptly after the Chinese appellate judgment clarified the contractual basis of the claim.
7. Although an inter partes interim hearing may sometimes be treated as a trial of final relief, that course was inappropriate where the respondent had been notified only of interim relief and the claim also sought declarations. The distinction from Donahue v Armco [1999] 2 Lloyd's Rep. 649 (Comm) was material. Costs were to be addressed after finalising the interim order.

The judgment records that the Qingdao Shinan District Court transferred the Chinese proceedings to the Qingdao Maritime Court on 5 December 2017. The Qingdao Intermediate People’s Court upheld that decision and dismissed SDHX’s appeal on 15 June 2018. Neither Chinese court determined whether SDHX was bound by the London arbitration clause. The High Court then granted interim anti-suit relief.