Anti-suit injunctions and foreign insolvency proceedings

Charlotte Bamford

In SwissMarine Corporation Ltd v OW Supply & Trading A/S (in bankruptcy) the Commercial Court has rejected an application for an anti-suit injunction and ruled that proceedings brought regarding the applicability of foreign (here Danish) insolvency regimes to a contractual relationship will not constitute proceedings brought in relation to the rights and obligations that the parties have under that contract and that they accordingly will not be caught within jurisdiction clauses which proffer jurisdiction over questions on the contract.

The facts

SwissMarine and OW Supply entered into a master agreement to govern derivatives contracts enacted between them. During the currency of this agreement, OW Supply filed for bankruptcy in Denmark. As monies were still owing to OW Supply by SwissMarine at this time, SwissMarine sought a declaration (in England) that – owing to the fact that OW Supply had filed for bankruptcy, and that this constituted an event of default under the master agreement – no monies were payable by SwissMarine to OW Supply. Recission of the contract was also sought, on the basis that OW Supply had made misrepresentations about its solvency.

OW Supply brought a further action in Denmark, seeking confirmation in relation to how Danish insolvency law would apply to the contract and to SwissMarine’s obligations to make payment thereunder. SwissMarine responded by seeking an anti-suit injunction.

So who had jurisdiction?

The master agreement provided for English law jurisdiction in respect of the agreement and any non-contractual obligations arising out of it. This jurisdiction would be exclusive in respect of countries bound by the Brussels Convention or the Lugano Convention, but would be non-exclusive in respect of the rest of the world.

OW Supply argued – successfully – that this jurisdiction clause related only to the parties’ rights and obligations under the contract and that the Danish proceedings did not consider such matters and thus were outside the contemplation of the clause. On OW Supply’s argument the Danish proceedings existed to consider the application of Danish insolvency law in the context of the contractual rights and obligations and not to consider the rights and obligations themselves. The court, it seems, was inclined to agree. Mr Justice Andrew Smith, in his judgment, stated that the question was “not about what rights and obligations the parties have under the contract…the real question is how the foreign regime operates on those rights and obligations”. He went on to say that he “cannot accept that the parties evinced an intention…that OW Supply (or SwissMarine) should abandon the protections of its national insolvency regime. Clearer wording would be required to evince this intention“. It was accordingly held that SwissMarine had failed to show that the jurisdiction clause applied to the Danish proceedings and that it followed that SwissMarine could now show that such clause had been breached.

The court further acknowledged that exclusive jurisdiction could not be deemed to apply in this case, as the jurisdiction clause had only proffered exclusive jurisdiction in relation to countries bound by the Brussels or Lugano Conventions (England and Denmark would not be bound to apply the Conventions to this case). Mr Justice Andrew Smith held “there is no room…to infer that proceedings brought elsewhere are in breach of OW Supply’s agreement to submit to the English courts… The express agreement that the jurisdiction was not exclusive means that the parties have the right to bring proceedings elsewhere and [other parts of the relevant clause mean that] that right is not lost to one party if the other brings proceedings in the chosen non-exclusive jurisdiction“.

He also rejected an argument that the court should be particularly cautious about granting an anti-suit injunction where the respondent was suing in his own court.

Points to note

It is worth noting that the court held that reference to the Brussels Convention could not be interpreted as including the 2001 Brussels Regulation or the Recast Brussels Regulation. Any intention to include those regulations should therefore be made expressly, rather than presumed implied in a reference to the Brussels Convention.

It may also be worth noting that the judge took as relevant (in particular in relation to accusations that the Danish action was vexatious or oppressive) the facts that:

  • OW Supply had expected SwissMarine to defend the Danish action on the basis that the plea of rescission was properly before the English court;
  • OW Supply recognised that the English proceedings would continue; and
  • the Danish action was brought as part in the context of 25 actions being brought to OW Supply’s counterparties since the insolvency and that it was thereby apparent that the claim was not brought simply in response to SwissMarine’s UK proceedings.

SwissMarine Corporation Ltd v OW Supply & Trading A/S (in bankruptcy) [2015] EWHC 1571 (Comm)

 

Post By Charlotte Bamford (4 Posts)

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