Anti-Suit Injunctions

Anti-Suit Injunctions - The Principles

Four principles govern the grant of an anti-suit injunction:

1. The jurisdiction is to be exercised when the ends of justice require it (i.e., that justice does not require that the action should nevertheless be allowed to proceed in the foreign court¹).
2. The order is directed not against the foreign court but against the party bringing (or intending to bring) the overseas claim.
3. An injunction will only be issued against a party:
   1. who is amenable to the jurisdiction of the court making the injunction, and
   2. against whom an injunction will be an effective remedy (i.e., the court in which the anti-suit injunction is sought is the natural forum for the trial of the action. The factors applicable for a stay on the grounds of forum non-conveniens can be applied²).
4. Since such an order indirectly affects the foreign court, the jurisdiction is one which must be exercised with caution. The stronger the connection between the foreign court and the parties or the subject matter of the dispute, the stronger the argument will be not to grant an anti-suit injunction and accordingly, the less the anti-suit injunction will interfere with the foreign proceedings the more likely it is that the court would grant it.³

Recent Jersey Case Law

The most recent relevant case law in Jersey is Investin Quay House Limited (in liquidation) v BUJ Architects LLP [2021] JCA 299, in which the Court of Appeal of Jersey refused a Jersey company leave to appeal a refusal to grant an anti-suit injunction restraining proceedings commenced in England, by its creditors, to wind it up.

The facts

Although the Plaintiff was a Jersey company, its Centre of Main Interest (COMI – usually the place where the company conducts most of its business as opposed to where it is incorporated) was England & Wales. The Respondent – a creditor of the Plaintiff – applied to the English High Court for the Plaintiff to be wound up.

The Plaintiff was granted leave in England to challenge the High Court’s jurisdiction to wind it up there and contending that the matter should proceed in Jersey. The Respondent opposed the initiation of a Jersey insolvency process.

Nevertheless, the company resolved to place itself into voluntary liquidation in Jersey and sought an anti-suit injunction from the Royal Court “to restrain pursuit of the Petition [before the English High Court]”.

The Royal Court’s decision

In Investin Quay House Limited (In Liquidation) v BUJ Architects LLP [2021] JRC 233 (Investin Quay v BUJ Architects), the Royal Court, referring to Singularis Holdings v Price Waterhouse Coopers [2014] UKPC 36 accepted that the general principle was that creditors should not be permitted to pursue competitor proceedings in other jurisdictions and that the principle of universalism (i.e., when a company is wound up in the jurisdiction of its place of incorporation, the courts of that jurisdiction ought to view their own proceedings as paramount), which underpins the insolvency regimes in other jurisdictions throughout the world, should be upheld.

The Royal Court also considered that one set of insolvency proceedings would be desirable and that, in most circumstances, those proceedings would be in the jurisdiction of incorporation. However, having regard to the circumstances before it, the Royal Court indicated that it was appropriate to decline the application and thus permit the English insolvency proceedings to continue.

Finally, the Royal Court found that it should not defeat legitimate third-party claims by enabling the Respondent to rely on certain features of Jersey insolvency legislation. MacRae, Deputy Bailiff, added that prohibition of pursuit of the proceedings in England would give rise to potentialinjustice to the Respondent which outweighed any inconvenience to the company and its sole shareholder.

Interestingly, the Royal Court also observed that its decision might well have been different had the voluntary winding up in Jersey begun at an earlier date – a date early enough to show that the decision to wind up the company had not been triggered by the threat of insolvency proceedings in England.

The Court of Appeal’s decision

In dismissing the company’s appeal, the Court of Appeal held that universalism being a principle, it follows that the Royal Court was correct to consider the individual facts and circumstances by reference to which the principle fell to be applied. Notwithstanding the broader considerations within universalism, the potential injustice to the Respondent and other creditors in being prevented from pursuing proceedings before the High Court was the overriding consideration. This is because insolvency proceedings in England would allow the possibility, in the present circumstances, of challenge on the basis of inappropriate preference whereas similar proceedings in Jersey would not.

Not long before the decision in Investin Quay v BUJ Architects, Cristiana Crociani sought an anti-suit injunction from the Royal Court in JCA 299, Crociani C and Ors v Crociani E [2021] JRC 279, without knowing that her sister, Princess Camilla, had simultaneously sought the same relief against her from a French court.

The facts

Cristiana applied to the Royal Court for an anti-suit injunction against Princess Camilla requiring her to withdraw proceedings that she had commenced before the Courts in Paris.

Simultaneously, Princess Camilla filed an anti-suit injunction against Cristiana in Paris. Princess Camilla’s application was heard a day before the Jersey hearing was meant to take place. She was successful in her application and the Parisian court issued an order that Cristiana be required to withdraw the summons that was before the Jersey court – which she did, for fear of being in contempt of the Parisian court.

The Royal Court’s decision

Cristiana was awarded her costs for making the Jersey application on a full indemnity basis. The Bailiff determined that Princess Camilla had been disrespectful and manipulative cynical in terms of the timing of her various applications.

The Bailiff accepted that there was nothing legally wrong in Princess Camilla’s actions, whilst describing Cristiana’s case as entirely arguable. That case would however “no longer be argued because of the respect that Cristiana has for the Parisian Courts and because of this Court’s respect for comity and the decision of the foreign courts”.

One can infer from the Bailiff’s decision that the Royal Court would not be shy in granting an anti-suit injunction when it is right do so.

In Al Tamimi-v-Al Chamaa [2017] JRC 176 the Royal Court gave its reasons for granting an interim anti-suit injunction, i.e., an anti-suit injunction with an expiry date.

The facts

The Plaintiff and the Defendant were resident in Dubai and divorced. The Plaintiff brought proceedings against the Defendant in Jersey claiming beneficial ownership of Jersey incorporated companies which owned real property in England.

The shares in the Jersey companies were in the legal ownership of the Defendant and had been funded by the Plaintiff. The Plaintiff’s case was that the Defendant held these shares as nominee for him, and that he had loaned the funds directly to the Jersey companies.

Unbeknownst to the Jersey court, the Plaintiff issued proceedings and obtained a default judgment in Dubai against the Jersey companies.

Notwithstanding the setting aside of the default judgment obtained in Dubai by the Jersey companies, the Plaintiff maintaining those proceedings.

Faced with proceedings in Dubai over an issue the Jersey companies said was determined in the Jersey proceedings, the Jersey companies applied for an anti-suit injunction before the Jersey courts.

The Plaintiff submitted that anti-suit injunctions were granted in two categories of case:

1. Where it is vexatious or oppressive or interferes with the due processes of the court for a party to bring or continue a claim in a foreign jurisdiction; and
2. Where the Applicant has a legal or equitable right, normally a contractual jurisdiction clause, which may be exclusive or non-exclusive, to be sued in a particular jurisdiction.

The Royal Court’s decision

To the extent that the application was properly ancillary to the proceedings commenced by the Plaintiff, the court found it difficult to see how the Plaintiff could challenge the jurisdiction he himself invoked.

Because the Plaintiff changed counsel days before the Defendant’s application was heard the court considered it just that the Plaintiff ought to be given some time to address the court on the merits.

However, the prima facie case presented by the parties was deemed sufficiently strong, both on jurisdiction and on the merits, and the conduct of the Plaintiff was of sufficient concern to justify the grant of an interim anti-suit injunction, so that no further steps could be taken by the Plaintiff in Dubai pending full argument before the Jersey courts.

Recent Case Law in Other Offshore Jurisdictions

An anti-suit injunction is by nature a multi-jurisdictional tool. As such it would not be unexpected for the Jersey courts to be influenced by decisions on the subject by other offshore jurisdictions, which tend to narrow the scope of the grant of an anti-suit injunction.

The Court of Appeal of the Eastern Caribbean Supreme Court in the Court of Appeal refused to grant an anti-suit injunction in Emmerson International Corporation et al v Viktor Vekselberg et al BVIHCMAP2020/0011. The judgment provided useful clarification as to the strict approach taken in the BVI towards this type of relief. Whilst it confirmed that BVI courts can consider the merits of foreign proceedings in the exercise of their discretion to grant an anti-suit injunction, this is not a requirement. Further, this factor can only be decisive if the foreign claim is hopeless, bogus, or entirely without merit. For the BVI Supreme Court, the overarching considerations are whether the foreign proceedings are vexatious or oppressive⁴, interfere with the court’s process⁵ or are otherwise unconscionable. The Court held that the foreign court – in this instance the Cyprus court – was best placed to consider the merits of that claim. Furthermore, it was noted that the issues in the Cyprus proceedings were different to those in the BVI proceedings and the BVI was therefore not the appropriate forum in which to trial those issues.

Summary

Anti-suit injunctions can be useful in some cases, but the courts (whether it be in Jersey or elsewhere) will not grant this relief lightly as it interferes with litigants’ access to the jurisdiction of foreign courts. Ultimately, the decision to grant anti-suit injunctions is a matter of discretion for the trial judge on whether it is in the interests of justice in the specific circumstances of the case.

By Arthur Preget, Paralegal and William Redgrave, Partner of Baker & Partners.

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¹ Société Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] AC 871.

² Highland Crusader Offshore Partners LP v Deutsche Bank AG [2009] EWCA Civ 725, [2010] 1 WLR 1023.

³ IPCOM GmBH v Lenovo Technology [2019] EWHC 3030.

⁴ Minib Masri v Consolidated Contractors International Company (UK) Ltd and others (No 3) [2009] QB 503.

⁵ Kenneth Krys and Joanna Lau v Stichting Shell Pensioenfonds BVIHCVAP 2011/036.