Manta Penyez Shipping Inc & Anor v Zuhoor Alsaeed Foodstuff Company

The court may grant a final anti-suit injunction to enforce an exclusive arbitration agreement where the agreement and its application to the dispute are established with a high degree of probability, unless strong or exceptional circumstances justify withholding relief.

A contractual promise to withdraw proceedings may, on proper construction or by implication, include a promise not to commence fresh proceedings. A third party may enforce such a promise under section 1 of the Contracts (Rights of Third Parties Act) 1999 where the term purports to confer a benefit, the third party is identified, and the contract contains no contrary intention. A purely jurisdictional defence in foreign proceedings does not amount to voluntary submission to that jurisdiction.

The claimants, owners of two vessels, sought variation of an interim anti-suit injunction and final injunctive relief. The injunctions restrained the defendant from pursuing proceedings in Yemen concerning a voyage charterparty containing an LMAA arbitration clause.

The defendant had also pursued proceedings in Djibouti, including proceedings concerning the enforcement of a Yemeni injunction and an appeal relating to the arrest of one vessel. The defendant did not attend the hearing, although the court was satisfied that it had been served and had knowingly chosen not to participate.

The principal issues were whether the defendant had given an enforceable contractual covenant not to sue, whether the claimants could enforce that covenant as third parties, whether the foreign proceedings breached it, and whether the existing order should be varied to identify the Djibouti proceedings expressly.

1. The court proceeded in the defendant’s absence. It was satisfied that the defendant had been served, had sufficient notice, had advanced no reason for non-attendance, and had waived its right to appear. An adjournment would not improve matters and would cause greater prejudice to the claimants.

2. Under section 37 of the Senior Courts Act 1981, the court had jurisdiction to grant an anti-suit injunction in support of arbitration. Applying The Angelic Grace and The SVS Cochrane, the relevant standard was a high degree of probability that the arbitration agreement or contractual covenant existed and covered the dispute, subject to strong or exceptional reasons against relief. The same principles applied to interim and final relief, as stated in Tyson International Co Ltd v GIC Re, India, Corporate Member Limited.

3. Clause 1 of the bank guarantee contained a promise by the defendant to refrain from detaining vessels in the same or associated ownership or management and to withdraw proceedings in Yemen relating to the charterparty. Properly construed, or alternatively by implication for business efficacy and obviousness, the promise also prevented the defendant from immediately recommencing proceedings after withdrawing them.

4. The claimants could enforce the promise under section 1 of the Contracts (Rights of Third Parties Act) 1999. The clause purported to confer a benefit on them, they were expressly identified or fell within an identified class, the guarantee contained no contrary intention, and injunctions were available under section 1(5). The court followed the approach in Secretary of State for the Home Department v Public Commercial Services Union.

5. The Yemeni and Djibouti proceedings breached the covenant. The Djibouti exequatur proceedings sought to enforce a Yemeni judgment abroad, while the Djibouti Supreme Court proceedings were, at least in effect, an attempt to re-arrest the vessel. The Yemeni proceedings concerned detention of a vessel under common management or substantive claims relating to the charterparty.

6. No strong reason militated against relief. There had been no material delay, the possible unenforceability of an injunction abroad carried little weight, and the claimants had not voluntarily submitted to the foreign jurisdictions. A purely jurisdictional defence did not amount to voluntary submission, consistent with UAU v HVB.

7. The court also accepted an alternative basis under the charterparty arbitration clause. Proceedings brought against a non-party seeking relief under or in connection with the charterparty could be restrained where they were inequitable, oppressive or vexatious. The Djibouti and Yemeni proceedings involved such features, including the risk of double recovery.

8. The interim relief was made final. The order was varied under CPR r.3.1(7) to identify expressly the Djibouti proceedings. The variation was justified because material facts had been innocently misstated or omitted when the earlier orders were made, within the guidance in Tibbles v SIG Plc. Costs were summarily assessed on the indemnity basis at £55,000.