High Court confirms courts’ power to grant anti-enforcement injunctions

Guy Stuckey-Clarke

In Ecobank Transnational Inc v Tanoh, the Commercial Court confirmed the court’s power to grant anti-enforcement injunctions as a means to prevent a defendant from enforcing a foreign judgment or award in England.  However, it declined to grant an injunction in this case due to the applicant’s unnecessary delay in seeking to restrain the enforcement of two foreign judgments.

Practical implications

This case serves as a cautionary tale to those who regard anti-enforcement injunctions as a “after the event” alternative to anti-suit injunctions.  It shows that it will be harder for an applicant to obtain an anti-enforcement injunction where he did not apply for an anti-suit injunction in relation to the substantive proceedings – unless he can show good reason for that delay.  Parties must be aware of the inherent risk in choosing to contest the enforcement of foreign proceedings rather than seeking anti-suit relief at the earliest possible stage.

Background

Anti-enforcement injunctions are rarely ordered by English courts. Where they are granted, it is typically in cases where a foreign judgment is handed down in breach of an exclusive jurisdiction or arbitration agreement (in relation to judgments of non-EU countries at least).

The court has inherent jurisdiction under section 37(1) of the Senior Courts Act 1981 to grant an injunction preventing a person from starting or continuing foreign proceedings (known as an anti-suit injunction).  Ellerman Lines Limited v Read [1928] 2 KB 144 established the court’s power to grant an anti-enforcement injunction by analogy with its power to grant an anti-suit injunction.  There, Atkin LJ stated:

If the English court finds that a person subject to its jurisdiction has committed a breach of covenant, or has acted in breach of some fiduciary duty or has in any way violated the principle of equity and conscience, and that it would be inequitable on his part to seek to enforce a judgment obtained in breach of such obligations, it will restrain him, not by issuing an edict to the foreign court, but by saying that he is in conscience bound not to enforce that judgment“.

This seeks to reconcile the court’s power to grant an anti-enforcement injunction with the doctrine of comity (the mutual recognition and enforcement of judgments by courts in different jurisdictions).  Anti-enforcement injunctions do not represent an incursion by the English courts into the jurisdiction of a foreign court.  They are directed to the party who has obtained the foreign judgment and not to the foreign court or tribunal that gave the judgment.  Nevertheless, the English courts have acknowledged that granting an anti-enforcement injunction is “a very serious matter”, indicating that the applicant will likely have to meet a high threshold before a court will exercise its discretion to grant an injunction.

Facts

Mr Tanoh (“T”) is a national of Cote d’Ivoire.  He was employed by Ecobank under a contract described as an Executive Employment Agreement (the “EEA”).  The EEA provided for “any and all disputes, controversies or claims arising under or in connection with [the EEA]” to be referred to arbitration in London under the UNCITRAL rules.

Ecobank terminated T’s employment in March 2014, following which T commenced proceedings before the Labour Tribunal of Lome in the Togolese Republic for unlawful dismissal in April 2014 and before the Abidjan Commercial Court in Cote d’Ivoire for defamation in May 2014.  In the latter, T contended that a letter written by an Ecobank director, on behalf of the company, contained defamatory allegations about T’s work whilst employed by Ecobank.

Ecobank unsuccessfully contested jurisdiction in both sets of proceedings.  T was successful in his claims and was awarded approximately US$ 11 million by the labour tribunal and approximately US$ 12.8 million by the Ivorian court.

At no stage did Ecobank seek an anti-suit injunction from the English courts restraining the proceedings on the basis that they were in breach of the arbitration agreement in the EEA.  However, in December 2014, Ecobank commenced arbitration proceedings against T under the EEA, and applied for a worldwide anti-enforcement injunction restraining enforcement of both judgments.  The court granted an interim injunction pending a full hearing of the application.  The matter then came back before the court

Decision

Mr Justice Knowles refused Ecobank’s application and refused to continue the interim injunction.

The court’s power to grant an anti-enforcement injunction

Knowles J confirmed that the court had the power to grant an anti-suit injunction, as demonstrated in cases such as AES Ust-Kamenogorsk Hydropower Plant LLPP v Ust-Kamenogorsk Hydropower Plant JSC [2013] UKSC 35 and Bank St Petersburg OJSC and another v Arkhangelsky and another [2014] EWCA Civ 593 (reported on this blog here). He dismissed the fact that there are few reported examples of anti-enforcement injunctions, stating that the power may be exercised where this is “necessary to hold a party to its contract”.

Delay

It was clear that an applicant had to apply for an anti-enforcement injunction “promptly and before the foreign proceedings are too far advanced”.  The court was likely to scrutinise any delay in making the application, in particular where the applicant had not previously sought an anti-suit injunction to restrain the foreign proceedings.  Knowles J acknowledged that there might be cases where a judgment was “obtained too quickly or too secretly to allow an anti-suit injunction to be sought”.  However, considerations of comity were of “real importance” and the position was likely to become more complex the more time the foreign court had spent on the dispute and the more it had decided.  In particular, the grant of injunctive relief was a very serious matter once the foreign court had given judgment.

Knowles J rejected Ecobank’s argument that the requirement to apply for an injunction “promptly and before the foreign proceedings are too far advanced” did not include any period during which the applicant sought to challenge the jurisdiction of a foreign court and the period pending the foreign court’s decision on that challenge.  Instead he approved Leggatt LJ’s statement in The Angelic Grace [1995] 1 Lloyd’s Rep 87 that it would be the “reverse of comity” were the English court to:

adopt the attitude that if [a foreign court] declines jurisdiction, that would meet with the approval of the English court, whereas if [the foreign court] assumed jurisdiction, the English court would then consider whether at that stage to intervene by injunction”.

This means time will run from the date the foreign proceedings are started.  In this case, Ecobank had waited eight months before commencing arbitration and even longer before approaching the English court for injunctive relief.  This was a strong reason against continuing the interim injunction.

The judge also made it clear that delay alone could be sufficient to deny an applicant an anti-enforcement injunction, without evidence of the respondent relying on that delay to his detriment.  Although the respondent’s detrimental reliance on the applicant’s delay might be a factor in deciding the application, it would “unnecessarily restrict” the approach of the courts to make it an essential pre-condition for refusing to grant the injunction.

The arbitration agreement

Another ground which pointed “even more strongly” against the continuation of the injunction was that Ecobank had not referred T’s defamation claim to arbitration, and indeed that it was probable that the dispute did not even fall within the scope of the arbitration agreement.  Despite the presumption that parties are likely to have intended for all disputes arising out of their relationship to be determined in a single forum (Fiona Trust [2007] UKHL 40), Knowles J did not “consider it…realistic to treat the claim for defamation in the Ivorian proceedings as a claim ’arising under or in connection with’ the EEA”.

Ecobank Transnational Inc v Tanoh [2015] EWHC 1874 (Comm)

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