Claxton Engineering Services Ltd v TXM Olaj–és Gázkutató Kft [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Hamblen J |
| Judgment Date | 01 February 2011 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 01 February 2011 |
Queen's Bench Division (Commercial Court).
Hamblen J.
C Reffin (instructed by Birketts LLP) for the claimant.
S Shackleton (instructed by Mundays LLP) for the defendant.
The following cases were referred to in the judgment:
A v BUNK [2006] EWHC 2006 (Comm); [2007] 2 CLC 157.
Albon v Naza Motor Trading Sdn Bhd [2007] 2 CLC 782.
Cetelem SA v Roust Holdings Ltd [2005] 1 CLC 821.
Deutsche Bank AG v Sebastian Holdings Inc [2009] 2 CLC 949.
Donohue v Armco Inc [2002] CLC 440.
Elektrim SA v Vivendi Universal SA [2007] 1 CLC 227.
Huyton SA v Peter Cremer GmbH & Co [1999] CLC 230.
Intermet FZCO v Ansol LtdUNK [2007] EWHC 226 (Comm).
J Jarvis & Sons Ltd v Blue Circle Dartford Estates LtdUNK [2007] BLR 439.
Kazakhstan v Istil Group Inc [2007] 2 CLC 870.
National Navigation Co v Endesa Generacion SA (The Wadi Sudr) [2009] 2 CLC 1004.
Naviera Amazonica Peruana SA v Cia Internacional de Seguros del PeruUNK [1988] 1 Ll Rep 116.
Weissfisch v Julius [2006] 1 CLC 424.
West Tankers Inc v Allianz SpAECAS (Case C-185/07) [2009] ECR I-663; [2009] 1 CLC 96; [2009] 1 AC 1138.
Arbitration — Anti-arbitration injunction — Contract claim against Hungarian defendant — English court decided that parties' contract contained exclusive English jurisdiction clause — No agreement for arbitration — Following English judgment defendant began Hungarian arbitration — Arbitration in breach of claimant's legal rights — Arbitration oppressive and vexatious — Exceptional circumstances justifying grant of anti-arbitration injunction.
This was an application by the claimant for an injunction restraining the Hungarian defendant from pursuing an arbitration which it had commenced in Hungary under the rules of the Court of Arbitration of the Hungarian Chamber of Commerce (“HCCI”) in reliance upon an alleged arbitration agreement between the parties.
The claimant's claim was for allegedly unpaid debts approaching £2 million for the manufacture and delivery of oil well equipment. The English court rejected the defendant's challenge to the jurisdiction ([2010] EWHC 2567 (Comm)). The claimant contended that the contract was subject to an exclusive English jurisdiction clause, and the defendant contended that it was subject to a Hungarian arbitration agreement. The judge held that it was right to determine what were the terms of the contract between the parties relating to dispute resolution and proper law. The judge held that the parties had agreed an exclusive English jurisdiction clause. Alternatively, if that was wrong, the English court had jurisdiction under art. 5(1)(b) of Regulation 44/2001, because delivery under the contract was at the claimant's UK works.
After that decision, a request for arbitration was submitted to the HCCI Court of Arbitration seeking among other things an urgent interim award declaring that the parties were bound by the alleged arbitration agreement and restraining the claimant from pursuing the English action.
The defendant argued that the court has no jurisdiction to injunct arbitral proceedings taking place in another member state relying on West Tankers Inc v Allianz SpAECAS (Case C-185/07) [2009] ECR I-663; [2009] 1 CLC 96; [2009] 1 AC 1138.
Held , granting an anti-arbitration injunction:
1. The ECJ's West Tankers decision, and the Regulation upon which it was based, applied to court proceedings, not to arbitration proceedings. Arbitration did not fall within the scope of the Regulation, see art. 1(2)(d). Anti-suit injunctions were objectionable if they interfered with an EU court deciding on its own jurisdiction under the Regulation, but not if they did not. If there was no court action against which the injunction was directed, then the effectiveness of the Regulation could not be impaired by it.
2. Accordingly the court had jurisdiction to grant an injunction under s. 37 of the Senior Courts Act 1981. An anti-arbitration injunction would generally only be granted in exceptional circumstances. The need for caution in the grant of such injunctions was all the greater in relation to arbitrations outside the jurisdiction because such matters were generally best left to the relevant supervisory courts being the courts of the country of the seat of the arbitration. In order to establish exceptional circumstances, it would usually be necessary, as a minimum, to establish that the applicant's legal or equitable rights had been infringed or threatened by a continuation of the arbitration, or that its continuation would be vexatious, oppressive or unconscionable, those being the principles which governed the grant of injunctions to restrain proceedings in a foreign court. In the present case the claimant could establish that the continuation of the arbitration would be a breach of its legal rights, because the court had held that the contract was subject to an English exclusive jurisdiction clause. Furthermore, it would be vexatious and oppressive to allow the arbitration to continue since the court had already held that there was no arbitration agreement.
3. The circumstances were sufficiently exceptional to justify the grant of an injunction. Alternatively, if they were not properly to be characterised as exceptional circumstances, a broader approach was justified where the court had held the claim was subject to an English exclusive jurisdiction clause and/or that there was no arbitration agreement.
Hamblen J: Introduction
1. The claimant applies for an injunction restraining the defendant from pursuing an arbitration which it has commenced in Hungary under the rules of the Court of Arbitration of the Hungarian Chamber of Commerce (“HCCI”) in reliance upon an alleged arbitration agreement between the parties.
2. The grounds upon which the injunction is sought are that the arbitration proceedings are brought in breach of an English exclusive jurisdiction clause, and despite the fact that, as the English court has already determined, there is no arbitration agreement.
3. The evidence in support is the first witness statement of Mr Matthews, the claimant's solicitor, and the evidence in opposition is the first witness statement of Mr Kean, the defendant's solicitor
4. The claimant issued its claim form with brief particulars claim in the Norwich District Registry on 5 November 2009. The claim was for allegedly unpaid debts approaching £2 million for the manufacture and delivery of oil well equipment.
5. The defendant challenged the court's jurisdiction, as a result of which the action was transferred to the Commercial Court.
6. The jurisdictional challenge was heard before Gloster J on 4 August 2010. On 15 October 2010, Gloster J handed down her judgment in which she rejected the jurisdictional challenge ([2010] EWHC 2567 (Comm)).
7. The background to the dispute between the parties and the issues between them as to whether an English exclusive jurisdiction clause or an HCCI arbitration clause were agreed are fully set out in her judgment.
8. The first issue which Gloster J had to decide was who should decide the question of jurisdiction. In this connection, she held as follows (at para. 12 to 18 of her judgment):
“12. Mr Stewart Shackleton, solicitor advocate and partner in the firm of SR Shackletons LLP, formerly a partner in Eversheds LLP, the solicitors formerly acting for TXM, submitted that the correct approach was for this court to conduct only a prima facie review of the existence of an arbitration agreement and refer the merits of all objections raised as to the scope, existence and validity of an arbitration agreement to a future Hungarian arbitral tribunal, for it to decide. He submitted that this was consistent with: (i) the United Kingdom's obligations to enforce...
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