AQUAVITA INTERNATIONAL SA v INDAGRO SA

An anti-suit injunction may restrain foreign proceedings brought in breach of an arbitration agreement even where no arbitration is yet under way. The applicant must establish a high probability of success on breach. The respondent must then show a strong reason why relief should be refused, and relief must be just and convenient.

Foreign proceedings seeking interim relief may be permissible where they merely preserve the position in aid of substantive proceedings in the agreed forum. The court must examine their substance rather than their procedural form. Proceedings which effectively grant final contractual performance, are not genuinely in aid of arbitration, and seek to outflank the arbitration agreement constitute a breach.

Aquavita International SA, the owner of the vessel AQUAVITA ETERNITY, applied on the return date of an anti-suit injunction granted by Mr Justice Fraser. The injunction restrained Indagro SA from commencing or pursuing Brazilian proceedings concerning discharge of cargo carried under a charterparty containing an English-law London arbitration clause.

Indagro had obtained urgent relief from the 2nd Civil Court of Sao Francisco do Sul requiring discharge of cargo, backed by substantial daily fines and possible criminal sanctions. The court had to determine whether those proceedings, and any similar proceedings concerning the remaining cargo, were interim proceedings outside the scope of the arbitration agreement or instead breached it. A separate application for mandatory security under letters of indemnity was accepted to be premature.

1. Applicable principles. The court had power under Senior Courts Act 1981, s.37 to restrain proceedings brought in breach of an arbitration agreement, even though no arbitral proceedings were yet on foot. The Owner had to show a high probability of success on breach. If that threshold was met, Indagro had to show a strong reason against relief, and the injunction had to be just and convenient.
2. Interim proceedings. Proceedings in a non-contractual forum may be permissible where they obtain security or holding relief in aid of substantive proceedings in the agreed forum. Relevant features include that the foreign court makes only an arguability assessment, the relief does not grant the substantive contractual remedy even temporarily, and the relief has limited value unless the agreed proceedings are pursued.
3. Substance over form. The court assumed, in Indagro’s favour, that interim performance relief was not automatically impermissible. Nevertheless, the Brazilian order was final in practical effect because it determined that the Owner had to discharge the cargo. It was not meaningfully in support of an arbitration, since Indagro had no substantive relief to seek there and the only possible arbitration claim would be an objection by the party restrained by the Brazilian order.
4. The proceedings therefore attempted to outflank the arbitration agreement and obtain final contractual performance from the Brazilian court. The Owner had established a high probability of success that the Brazilian proceedings breached clause 33.
5. No strong reason. There was no strong reason to refuse relief. Indagro could seek appropriate interim relief from the arbitral tribunal or the English supervisory court under Arbitration Act 1996, s.44. The policy of minimal curial intervention supported holding the parties to their arbitration agreement and restraining foreign proceedings which trespassed on the tribunal’s jurisdiction.
6. The anti-suit injunction granted by Mr Justice Fraser was continued. The application for mandatory security was premature because no threat of arrest or quantified security claim had yet been formulated.

This was a first-instance return hearing. Mr Justice Fraser had granted interim anti-suit relief on 4 April 2022. Mr Justice Foxton continued that order in relation to the balance of the cargo.