A party to London arbitration proceedings recently sought to outflank the jurisdiction of the English court, the supervisory court of the arbitration, by pursuing court proceedings in Delhi. The English Commercial Court has however blocked this attempt in its decision in Shashoua & Others v Sharma,1 by granting an anti-suit injunction which prevents the party from pursuing the matter in India. In doing so the English court has confirmed that it still has the power to grant anti-suit injunctions in relation to proceedings outside the EU notwithstanding the recent decision of the European Court of Justice (ECJ) in West Tankers2.
Anti-Suit Injunction (ASI)
An ASI is a court order restraining a party from bringing or continuing foreign court proceedings in breach of an exclusive jurisdiction clause or arbitration agreement. ASIs are not issued against the foreign court in question, only against the parties bringing proceedings there. ASIs are largely a common law phenomenon and their availability is perceived as a reason for choosing arbitration in London rather than in competing civil law jurisdictions. ASIs can be highly effective where the offending party has assets within England that would be vulnerable to contempt proceedings.
Brief Summary of Facts
Mr Shashoua and Mr Sharma entered into a Shareholders' Agreement to set up a joint venture company in India. The Shareholders' Agreement was governed by the laws of India and contained an arbitration clause providing for arbitration in London in accordance with the rules of the International Chamber of Commerce (ICC). Following unsuccessful applications to the English High Court (being the court of the seat of the arbitration), Mr Sharma applied to the Delhi High Court (inter alia) to have an interim costs award made against him in the arbitration set aside.
The Claimants obtained an interim anti-suit injunction to restrain Mr Sharma from pursuing the proceedings in the Indian courts, on the basis that the supervisory court of the arbitration was the English court. Mr Sharma challenged the Claimants' application for continuance of the interim injunction, contending that further to the decision of the ECJ in the West Tankers case, it was not open to the English courts to grant anti-suit injunctions to prevent proceedings being brought in the courts of India.
Judgment
Mr Justice Cooke rejected the argument that the ECJ's decision in West Tankers had changed the landscape of anti-suit injunctions as between England and jurisdictions outside the EU, including India. The rules of jurisdiction contained in the Brussels Regulation3 (upon which the West Tankers decision was founded) only apply within the EU; the New York Convention, to which the UK and India are parties, contains no equivalent rules on jurisdiction.
The court held that the body of English law that establishes that an agreement to a seat of arbitration is akin to an exclusive jurisdiction clause remains good law and West Tankers has no bearing on the English court's well-established power to grant anti-suit injunctions in relation to proceedings outside the EU.
Conclusion
Thus, while the ECJ has fettered the English court's power to grant anti-suit injunctions restraining court proceedings brought in breach of an arbitration agreement within the EU, Shashoua & others v Sharma indicates that the English court will take a robust approach to granting anti-suit injunctions if such proceedings are brought outside the EU.
Footnotes
1 2009 EWHC 957 (Comm)
2 C-185/07 ECJ [2009] 1 AER 435
3 Council Regulation No. 44/2001
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
