Court declines to make anti-suit injunction against group companies

Tom Dane

In Team Y & R Holdings Hong Kong Ltd and others v Ghossoub and Cavendish Square Holding BV and another v Ghossoub [2017] EWHC 2401 (Comm) the English Court heard an application for an anti-suit injunction that would have restrained the defendant from pursuing unfair prejudice proceedings in Hong Kong against (i) two companies that had signed contracts including exclusive jurisdiction clauses in favour of the English Court and (ii) related companies within the same group (that had not signed up to the contracts containing English exclusive jurisdiction clauses).

This is a case with a complex factual background but the salient points to note are as follows:

  • The Claimants were members of the WPP Group which had acquired a minority stake in a Middle East business controlled by the Defendant (D).
  • C1 was incorporated in Hong Kong for the purpose of holding the Middle East business.
  • D sold 47% of shares in C1 to C2 pursuant to an SPA that was subject to English law and the exclusive jurisdiction of the English Court.
  • D retained 20% of shares in C1 and had a Service Agreement with C1 that was also subject to English law and the exclusive jurisdiction of the English Courts.
  • A dispute arose between D and C1, C2 and two other companies in the WPP Group.
  • D presented an unfair prejudice petition to the Hong Kong Court against C1, C2 and the two other companies in the WPP Group.
  • The unfair prejudice petition relied heavily on alleged breaches of the SPA (with C2) and the Service Agreement (with C1) – both of which were subject to the exclusive jurisdictions of the English Court.
  • In response, 5 members of the WPP Group applied to the English Court for an anti-suit injunction seeking to restrain the Defendant from pursuing the Hong Kong proceedings until after the English Court had decided the English law issues arising under the SPA and Service Agreement.

The Court noted that an anti-suit injunction should be granted unless a contract breaker could show strong reasons why foreign proceedings should be allowed to continue.

In this case granting an anti-suit injunction would not be appropriate as:

  • It was impossible to disentangle all issues so that the whole matter could be decided in England.
  • Insofar as the Hong Kong unfair prejudice proceedings related to claims against companies that were not a party to the SPA or Service Agreement, these companies were not party to the exclusive jurisdiction clauses. Therefore, the Hong Kong proceedings could continue and there would be a risk of conflicting decisions.
  • Only the Hong Kong court could determine if there had been unfair prejudice so there had to be proceedings in Hong Kong in relation to this cause of action.
  • It would be preferable for the Hong Kong court to determine the unfair prejudice claim after having considered all issues in the round.

Comment

This is an example of the English Court not granting an anti-suit injunction where a group company (not subject to a contractual exclusive jurisdiction clause) is also a party to foreign proceedings. It comes shortly after the decision in Dell Emerging Markets (EMEA) Ltd v IB maroc.com [2017] where the High Court was prepared to grant an anti-suit injunction against a group company that was not itself subject to an exclusive jurisdiction clause. This decision shows that the court’s assessment will be highly fact specific. In the present case, a key factor was the fact the Defendant was pursuing an unfair prejudice action in Hong Kong which is a claim that can only be decided by the court of the relevant company’s incorporation and therefore, on balance, issues should be allowed to be determined in the round before the Hong Kong court regardless of contractual jurisdiction clauses.

Team Y & R Holdings Hong Kong Ltd and others v Ghossoub and Cavendish Square Holding BV and another v Ghossoub [2017] EWHC 2401 (Comm)

Post By Tom Dane (3 Posts)

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