London Maritime Arbitration

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Injunctions and arbitration

A. Introduction

8.1 An injunction is an order requiring a party to do something or (more usually) to refrain from doing something. It is a remedy with a very broad range of use. For example, freezing orders may be granted to stop a party dissipating its assets pending the determination of a dispute (see ). Injunctions may also be the appropriate remedy to prevent disclosure of confidential information (see ). Injunctions are a general remedy which arbitrators can award under section 48(5) of the 1996 Act (see ). 8.2 This chapter will primarily focus on the use of an injunction against a party who has breached an arbitration agreement by pursuing foreign proceedings which relate to disputes the parties agreed to resolve by arbitration, or where a party is pursuing an arbitration in an unlawful way (for example, where the matter has already been decided against that party). European case law1 now precludes an English court from granting such an injunction in relation to court proceedings in another EU state but such relief remains available to restrain court proceedings outside the EU. Law and practice is discussed in this chapter (and throughout this book) on the basis that the UK is a member of the EU. The position is likely to be affected by future changes implemented by reason of Brexit. However, the continuing application of the New York Convention and the exclusion of arbitration from the scope of the Brussels I Regulation mean that the changes may be less significant to arbitration than in other areas of jurisdictional dispute. 8.3 Where proceedings are brought in the English courts in breach of an arbitration clause the appropriate remedy is a stay of proceedings (see ). Stays and anti-suit injunctions

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are regarded in English law as opposite and complementary sides of a coin; operating as counterpart remedies that support the arbitration agreement.2 8.4 Beyond disputes concerning anti-suit injunctions, the most common court injunctions are those sought under section 44(2)(e) of the 1996 Act to support an existing or proposed arbitration. Section 44 is set out in and dealt with in more detail there and also in as regards freezing orders.

B. Types of injunction

8.5 English law recognises that an injunction may be granted either as an “interim” or as a “final” remedy. A final injunction is a permanent order restraining a party indefinitely from doing something (or requiring him to do something). An interim injunction is a temporary order of the same sort and is usually sought to preserve the status quo pending the final determination of the parties’ rights, for instance a freezing order will usually be subject to a time limit. Despite its temporary nature an interim injunction may be commercially determinative of the dispute between the parties. The basic rule governing the grant of an interim injunction is that the remedy is discretionary. The applicant must establish a serious issue to be tried on the merits (although if the injunction is likely to be determinative of the question of the forum for a dispute, an applicant will probably have to show a stronger case on the merits).3 An interim injunction will not be granted if damages would be an adequate remedy for the wrong alleged. The applicant must also establish that the balance of convenience lies in favour of the grant of an injunction. This will involve considering the risk of causing injustice if the injunction is granted or refused.4 One particular feature of an interim injunction is that the applicant must give an undertaking (often to be supported by security) to pay damages for any loss sustained by reason of the injunction if it is found that the applicant was not entitled to it. 8.6 Injunctions are also sometimes categorised on grounds of whether they prohibit an act (a negative injunction) or require a positive act (a mandatory injunction). The courts are generally much more reluctant to make mandatory injunctions unless it is clear exactly what the enjoined party is required to do. The court needs to have “a high degree of assurance” that the claimant has the right contended for,5 and may sometimes need to be satisfied that the applicant has “an unusually strong” case for the injunction.6 8.7 An injunction to restrain a party from pursuing foreign proceedings is generally called an anti-suit injunction and can be granted as a final or interim order. An injunction to restrain a party from pursuing arbitral proceedings is often called an anti-arbitration injunction (and can similarly be granted as final or interim relief). 8.8 An injunction granted to restrain an imminent or threatened wrongful act is sometimes called a quia timet 7 injunction.

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Shell International Petroleum Co Ltd v Coral Oil Co Ltd 8 provides an example of a quia timet anti-suit injunction. It involved an agreement for supply of oil providing for arbitration in London of any dispute arising “in connection with” the agreement. Shell gave notice to terminate the agreement and Coral threatened to bring proceedings in Lebanon claiming a right to compensation granted under Lebanese law rather than on the basis of breach of the agreement. Moore-Bick J granted an injunction to prevent Coral pursuing proceedings in Lebanon on grounds that the claim that Coral wished to make in Lebanon depended on the contract and was a claim within the scope of the arbitration clause.

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