Ecom Agroindustrial Corporation Ltd v Mosharaf Composite Textile Mill Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Hamblen |
| Judgment Date | 20 May 2013 |
| Neutral Citation | [2013] EWHC 1276 (Comm) |
| Docket Number | Case No: 2013 FOLIO 97 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 20 May 2013 |
[2013] EWHC 1276 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building,Fetter Lane, London, EC4A 1NL
Mr Justice Hamblen
Case No: 2013 FOLIO 97
Mr Luke Pearce (instructed by Davies Battersby) for the Claimant
Defendant not represented
Hearing Dates: Friday 10 May 2013
Introduction
By an arbitration claim issued by the Claimant on 22 January 2013 the Claimant claims injunctive and declaratory relief relating to proceedings which have been commenced by the Defendant in Bangladesh, on the ground that those proceedings were commenced in breach of an arbitration agreement.
The Defendant has not acknowledged service of the claim form, or taken any other part in these proceedings, and did not appear at the hearing.
Background
The background to the claim is set out in the first witness statement of Patrick Battersby.
The claim arises out of a contract for the sale of Brazilian Raw Cotton dated 31 January 2011, under which the Claimant was the Seller and the Defendant was the Buyer (the "Contract").
The Contract contained the following material terms:
GENERAL CONDITIONS UNLESS OTHERWISE MENTIONED OVERLEAF
…
12. GENERAL:
This contract … is subject to the Rules of the Cotton Association mentioned therein — any dispute shall be settled according to these Rules."
| "Quantity | About 1,500 metric tons |
| Quality | Brazilian Raw Cotton 2011 Crop |
| … | |
| Shipment | July, August, September 2011 Equally … |
| Price | 189.50 US cents / lb. |
| Reimbursement | By irrevocable and confirmed Letter of Credit (L/C) available by sight payment, opened by an A-1 bank approved by sellers before opening, in favour of a negotiating bank nominated by sellers. … |
| Rules | This contract incorporates the Rules and By-laws of the International Cotton Association in force at the time this contract was entered into. All disputes will be settled amicably or will be referred to arbitration in accordance with the Rules and by-laws of the International Cotton Association and shall be resolved by the application of English law. |
| Arbitration | ICA arbitration for any technical and quality disputes … LC Opening: July LC by 20 th June, August LC by 21 st July 11, September LC by 21 August 2011 otherwise CC's to apply. |
Pursuant to the contract the Defendant was meant to open a letter of credit for the first shipment by 20 June 2011. The Defendant failed to open a letter of credit by that date or at all. The reason given by the Defendant was that the price of cotton had fallen since the conclusion of the Contract, and it was therefore unable to fulfil its commitments.
On 22 November 2011, following an unsuccessful attempt to reach an amicable solution to the dispute, the Claimant wrote to the Defendant declaring that it was holding the Defendant in breach of the Contract, and intended to commence arbitration forthwith.
Accordingly, on 28 November 2011, the Claimant commenced arbitration against the Defendant pursuant to the rules of the International Cotton Association ("ICA") claiming damages against the Defendant for breach of contract. The quantum of the claim is stated to be US$3,475,948.72.
The Defendant did not take part in the arbitration. Instead, on 19 January 2012, and without warning to the Claimant, the Defendant issued proceedings against the Claimant (and certain others) before the First Court of Joint District Judge, Dhaka (the "Bangladeshi proceedings"). In the Bangladeshi proceedings, the Defendant seeks a declaration that the Contract is illegal and void, and has no binding effect on the Defendant, and/or that the Contract has been frustrated by virtue of the fact that it was impossible to set up a letter of credit, together with a permanent injunction restraining the Claimant from pursuing any claim or proceedings in respect of the Contract before the ICA or elsewhere.
Also on 19 January 2012, at the same time as issuing the Bangladeshi proceedings, the Defendant applied for and obtained an interim anti-suit injunction from the Bangladeshi court to restrain the Claimant from pursuing any claim in relation to the Contract.
The Defendant's case in the Bangladeshi proceedings is founded upon certain provisions of Bangladeshi law which are said to restrict the import of cotton into Bangladesh for a price which is higher than the then prevailing market price. In particular, it is said that Bangladeshi law precluded the Defendant's bank from opening up a letter of credit in the Defendant's favour, and that performance of the Contract was therefore impossible. In addition, the Defendant contends that the payment of US$3,475,948.72 which is claimed by the Claimant would be payment without any consideration and is against the public policy of Bangladesh by virtue of s.23 of the Contract Act; and that such payment would result in its liquidation, causing injustice and is (apparently for that reason) illegal.
The Defendant also contends in the Bangladeshi proceedings that the dispute between the parties does not fall within the arbitration clause in the Contract, on the ground that it is not a "technical or quality dispute". The Defendant goes on to say that the Bangladeshi court has jurisdiction, on the basis that the cause of action arose at the offices of the Defendant in Bangladesh.
On 18 June 2012 the Clamant filed an appeal in the Bangladeshi court against the interim injunction. The principal ground of appeal is that the Bangladeshi court should not have granted the order because of the existence of the arbitration agreement. Despite various attempts on behalf of the Claimant to have the appeal listed, the appeal has not yet been heard and no date has been fixed for it to be heard in the near future. Indeed the evidence of Mr Battersby at paragraphs 28–9 of his first witness statement is that it may take several years before the Bangladeshi proceedings can be fully disposed of via the procedural routes available in Bangladesh. In April 2012 the Claimant filed a Written Statement setting out its objections to the jurisdiction of the Bangladeshi court as well as its defence to the claims made.
In the meantime, in light of the interim injunction granted by the Bangladeshi court, the Claimant has taken no further steps in the ICA arbitration, which is effectively on hold pending the disposal of those proceedings.
Against the above background, on 22 January 2013, the Claimant issued the present Commercial Court proceedings. In summary, the Claimant claims:
(1) An injunction to (a) prohibit the Defendant from taking any further steps in the Bangladeshi proceedings (save to discontinue them), or from commencing any further proceedings in relation to the Contract; and (b) order the Defendant to take immediate steps to discontinue the Bangladeshi proceedings; and
(2) Declarations that:
(a) The Defendant is obliged to arbitrate all disputes relating to the Contract;
(b) The Defendant is obliged to bring any challenge to the substantive jurisdiction of the Tribunal or to the validity of the arbitration agreement contained in the Contract (if and to the extent that this is still permissible) before the Tribunal or before this Court in the exercise of its supervisory jurisdiction;
(c) The Bangladeshi Proceedings against the Claimant constitute a breach of the Contract.
At the time the claim was initiated the Claimant anticipated that it would apply for an interim injunction to 'hold the ring' pending the final determination of the arbitration. However, in the event, given that the Defendant has chosen not to appear it has been possible to have the claim listed for final determination at an early stage, as directed by order of Cooke J dated 25 March 2013, pursuant to which the claim has been listed for a hearing in the absence of the Defendant.
The claim for an anti-suit injunction
(i) The law
The basic principles governing the grant of an anti-suit injunction in this context are well settled.
The jurisdiction to grant a final injunction to prevent the breach of an arbitration clause is provided by section 37(1) of the Senior Courts Act 1981, which confers upon the Court a general power to grant injunctions "in all cases in which it appears to the court to be just and convenient to do so" — see The Epsilon Rosa [2003] 2 Lloyd's Rep 509 (CA), para 40; see also AES Ust-Kamenogorsk Hydropower Plant v Ust-Kamenogorsk Hydropower Plant JSC [2012] 1 WLR 920 (CA), paras 61–63.
Where foreign proceedings are brought in breach of an arbitration clause, the court will "ordinarily" grant an anti-suit injunction to restrain those proceedings unless there are "strong reasons" not to do so. The burden of proof is on the party in breach of the arbitration clause to show that there are strong reasons why an injunction should not be granted. The Court is not obliged to exercise any particular caution before granting the injunction — see The Angelic Grace [1995] 1 Lloyd's Rep 87, 96; Donohue v Armco [2002] 1 Lloyd's Rep 425 (HL) para 24 (Lord Bingham), 53 (Lord Scott); Raphael, The Anti-Suit Injunction (2008) para 7.09.
Although anti-suit injunctions are usually in prohibitive form, in appropriate cases the court will also grant a mandatory anti-suit injunction requiring the injunction defendant to discontinue foreign proceeding — see Raphael, The Anti-Suit Injunction, para 3.18 and the cases at footnote 55. An example of such a case is the...
To continue reading
Request your trial
-
Renaissance Securities (Cyprus) Ltd v Chlodwig Enterprises Ltd
...that the respondent take positive steps to discontinue them: Ecom Agroindustrial Corp Ltd v Mosharaf Composite Textile Mill Ltd, [2013] EWHC 1276 (Comm); [2013] 2 All ER (Comm) 983 at 53 I have summarised above the evidence of Mr Simonov as to the likelihood of the Russian courts themselv......
-
Daiichi Chuo Kisen Kaisha v Chubb Seguros Brasil S.A. (formerly ACE Seguradora S.A.)
...the injunction defendant to discontinue the foreign proceedings may be granted in an appropriate case: see e.g. Ecom v Mosharaf [2013] 2 All ER (Comm) 983at §§ 37–38; Evergreen v Fast Shipping [2014] EWHC 4893 (QB) § 19. More recently the court has recognised that there is no rigid dividi......
-
Specialised Vessel Services Ltd v MOP Marine Nigeria Ltd
...be restrained by injunction on the basis that it is a breach of contract. As Hamblen J (as he then was) stated in Ecom v Mosharaf [2013] EWHC 1276 (Comm) at [21]: “Where, as in the present case, the foreign defendant is itself seeking (or has obtained) an anti-suit injunction, and thus the......
-
WWRT Ltd v Serhiy Tyshchenko
...for any delay, and the prejudice to the other side caused by that delay: Ecom Agroindustrial v Mosharaf Composite Textile Mill [2013] EWHC 1276 (Comm), 36 One situation where an injunction might well be denied on the grounds of delay is where there has been detrimental reliance on the fore......