Unenforceability in a particular country may be a “strong reason” not to grant an anti-suit injunction

Matt Perry

In Impala Warehousing and Logistics (Shanghai) Co Ltd v Wanxiang Resources (Singapore) Pte Ltd, the High Court held that the fact that a judgment would not be enforceable in a particular foreign country could sometimes constitute a strong reason not to grant an anti-suit injunction.

The case concerned an alleged major fraud whereby goods stored with the claimant, a Chinese warehousing company, were shipped to Korea instead of being delivered to the defendant, who had agreed to buy the goods. The warehouse certificates, which had been issued in favour of and endorsed by the defendant’s bank, expressly incorporated a term that all contracts between the parties should be governed by English law and disputes dealt with exclusively in the English courts.

The defendant commenced proceedings in Shanghai seeking either delivery up of the goods or damages of almost $9 million. The Shanghai court rejected the assertions by the claimant that the English courts had exclusive jurisdiction. Therefore, the claimant applied for anti-suit injunctions in the English court, specifically (1) a final mandatory injunction requiring the defendant to discontinue the Shanghai proceedings; and (2) a final prohibitory injunction restraining the defendant from commencing or continuing proceedings other than in the English courts in connection with the warehouse certificates.

The defendant argued that the claim made in China was non-contractual and therefore not governed by the jurisdiction clause, however this argument was not accepted by the High Court. The defendant sought to argue that its claim was in tort/delict and that there was no contractual nexus between the two parties to the case given the interposition of the bank. However, the court held there was clearly a relationship of bailment on terms, stating: “in a commercial transaction like this, no warehouse would accept goods except on terms”. Furthermore, the Chinese court had itself determined the claim was contractual. On the facts, the court held the terms were governed by the warehouse certificates rather than a separate collateral management agreement which had been entered into. The jurisdiction clause had been sufficiently incorporated by the warehouse certificates, in that sufficient attention had been drawn to the claimant’s terms and conditions (which appeared on their website).

Following Donohue v Armco Inc [2002] 1 Lloyd’s Rep. 425, the court took the approach that unless there were strong reasons not to restrain the proceedings in the non-contractual forum, the anti-suit injunctions should be granted. It held that the fact an English judgment would not be enforceable in another country could be a strong reason not to award an anti-suit injunction. although it accepted the circumstances in which this could happen might be rare, because parties would have the issue of non-enforceability in mind when agreeing an exclusive jurisdiction clause. One example where this point could be of interest is a claim involving property, where the claim is brought in the country where the property is situated and an English judgment would not be enforceable in that country. However, in this case, the goods were understood to be no longer in China and as such there was no strong reason to refuse the anti-suit injunction.

The court considered it was commercially reasonable to hold the parties to their choice of exclusive jurisdiction as they were both part of major international commercial groups and therefore aware of the importance of dispute resolution clauses. However, as the defendant had indicated that it was willing to arbitrate, the judge invited the parties to argue before him whether the injunctions should be conditional on the claimant agreeing to arbitrate the underlying dispute in Hong Kong, given that such an arbitral award would be enforceable in China.

Impala Warehousing and Logistics (Shanghai) Co Ltd v Wanxiang Resources (Singapore) Pte Ltd [2015] EWHC 811 (Comm)

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