High Court refuses anti-suit injunction based on arbitration clause due to delay

Lucy Hayes

In Asia-Pacific Trading Pte Ltd (formerly known as Toepfer International Asia Pte Ltd) v PT Budi Semesta Satria, the High Court held that delay on the part of the applicant could be adequate cause for refusing an anti-suit injunction, even where the respondent acknowledged there was an arguable case that it had breached an arbitration clause by bringing proceedings overseas.

The dispute concerned payment for a shipment of soybeans, which the buyer (the respondent) alleged were not of the required quality. The seller (the applicant) disagreed and argued that the respondent was still bound to pay.  The stock financing agreement between the parties stated that the governing law and jurisdiction was that of Indonesia.  However, the contract of sale contained an arbitration clause providing for disputes to be referred to the Federation of Oils, Seeds and Fats Association (FOSFA) in London.

The respondent commenced proceedings in Indonesia in May 2013. The applicant became aware of these proceedings in June 2013, by which point it had separately commenced a FOSFA arbitration in London.  Service of the proceedings (which was the responsibility of the court) was not effected until May 2014.  The applicant engaged with the Indonesian proceedings from June 2014, disputing jurisdiction but also making submissions on the merits.  However, in July 2015 the Indonesian High Court found that the Indonesian courts had jurisdiction against the applicant and remitted the case to the District Court of Jakarta for consideration.  The applicant then applied to the English High Court for an anti-suit injunction.

An anti-suit injunction will ordinarily be granted where a party has breached an arbitration clause. It restrains proceedings in foreign courts unless the respondent can establish that there are strong reasons for suing elsewhere (Donohue v Armco Inc [2001] UKHL 64).

The High Court acknowledged that normally the first issue would be whether the respondent was in breach of the arbitration clause by pursuing proceedings in Indonesia rather than in London. The respondent accepted that there was an arguable case that it was in breach.  Nevertheless, the court declined to determine this issue, holding that it was irrelevant if the anti-suit injunction could be declined on grounds of delay.

The applicant argued that delay could only prevent an anti-suit injunction if it was culpable delay that had prejudiced the respondent. The applicant maintained that it should not be penalised for waiting to see whether the Indonesian court would grant jurisdiction, and argued that there was no evidence that the respondent would have stopped the proceedings anyway.  Furthermore, the applicant argued that delay in itself was not a sufficient reason for denying the effect of an anti-suit injunction.

The court was unsympathetic to these arguments. It reaffirmed the principle in The Angelic Grace [1995] 1 Lloyd’s Rep 87 that an anti-suit injunction needs to be “sought promptly and before foreign proceedings are too far advanced“.  Moreover, Mr Justice Phillips stated that the principle that an anti-suit injunction should be allowed unless the respondent had “strong reasons” for suing in another jurisdiction did not “subsume or exclude issues relating to delay“.  A prompt application should have been made in May 2014, after the service of the Indonesian proceedings.  The applicant had no good reason for failing to make an anti-suit injunction application at that time and had clearly made a conscious choice to engage with the Indonesian proceedings.  Mr Justice Phillips criticised the fact that the applicant only resorted to the English High Court after it had received an unfavourable ruling in Indonesia; the applicant was “attempting to have the best of all worlds“.  The court held that it was inappropriate for it to interfere with the jurisdiction of the Indonesian courts and so rejected the application.

Asia-Pacific Trading Pte Ltd (formerly known as Toepfer International Asia Pte Ltd) v PT Budi Semesta Satria [2016] EWHC 1427 (Comm)

Lucy Hayes and Lucy Charatan (Work Placement Scheme intern)

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