Midgulf International Ltd v Groupe Chimiche Tunisien [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Teare J. |
| Judgment Date | 11 May 2009 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 11 May 2009 |
[2009] EWHC 963 (Comm)
Queen's Bench Division (Commercial Court).
Teare J.
Sara Masters (instructed by Swinnerton Moore LLP) for the claimant.
Michael Nolan (instructed by Salans) for the defendant.
The following cases were referred to in the judgment:
Av B [2007] 2 CLC 157.
Aggeliki Charis Compania Maritima SA v Pagnan SpA (The Angelic Grace)UNK [1995] 1 Ll Rep 87.
Akai Pty Ltd v People's Insurance Co Ltd [1997] CLC 1508. Allianz SpA v West Tankers Inc (The Front Comor)ECAS (Case C-185/07) [2009] 1 CLC 96.
Al-Naimi (t/a Buildmaster Construction Services) v Islamic Press Agency Inc [2000] CLC 647.
American International Speciality Lines Insurance Co v Abbott LaboratoriesUNK [2003] 1 Ll Rep 267.
Bankers Trust Co v PT Jakarta International Hotels and DevelopmentUNK [1999] 1 Ll Rep 910.
C v D [2007] 1 CLC 1038.
Fiona Trust & Holding Corp v Privalov [2007] 2 CLC 553.
Pagnan SpA v Feed Products LtdUNK [1987] 2 Ll Rep 601.
Sheffield United Football Club Ltd v West Ham United Football Club plc [2008]2 CLC 741.
Verity Shipping SA v NV Norexa (The Skier Star) [2008] 1 CLC 45.
Weissfisch v Julius [2006] 1 CLC 424.
Contract — Sale of goods — Arbitration — Contracts for sale of sulphur — Whether later contract contained arbitration clause — Buyer bought Tunisian proceedings for declaration and damages — Seller applied to appoint arbitrator and to continue anti-suit injunction restraining Tunisian proceedings — Buyer challenged court's jurisdiction — Tunisian court did not decide whether contract contained arbitration clause — Seller had not established to high degree of probability that contract included London arbitration clause — Buyer had not established that seller submitted to Tunisian jurisdiction — Arguable that declaration action not breach of arbitration clause — Anti-suit injunction continued pending speedy determination of issue whether contract contained arbitration clause.
These were applications by sellers, Midgulf, to appoint an arbitrator pursuant to s. 18 of the Arbitration Act 1996 and to continue an anti-suit injunction restraining buyers, GCT, from taking proceedings in Tunisia, and applications by GCT for orders that the English court had no jurisdiction to grant the orders sought by Midgulf.
Midgulf was a trader in sulphur. GCT was a company owned by the state of Tunisia which had a substantial demand for sulphur. The parties entered into a contract in June 2008 for the sale and purchase of sulphur. That contract contained a London arbitration clause. A second contract was made in July. GCT complained about the quality of the sulphur supplied under the June contract and also complained about the quality of sulphur supplied under the first shipment pursuant to the July contract. As a result the July contract was terminated and substantial claims and counterclaims under both contracts had been made. It was agreed that the dispute under the June contract had to be resolved in London arbitration. Midgulf wished the dispute under the July contract also to be resolved in London arbitration. GCT wished it to be resolved in the courts of Tunisia where it had begun proceedings for a declaration that the July contract did not contain an arbitration agreement and proceedings claiming damages for breach of the two supply agreements.
Held, Ruling Accordingly:
1. This was a case where an anti-suit injunction was sought at the interlocutory stage of proceedings. However, if the injunction was granted its effect was likely to be final because it would end the Tunisian proceedings and enable the arbitration proceedings to be completed. In such circumstances the court required the applicant for an anti-suit injunction to establish “a high degree of probability” that its case against the respondent was right and that it was indeed entitled as of right to restrain the respondent from taking proceedings abroad. (Bankers Trust v Jakarta IntUNK[1999] 1 Ll Rep 910andAmerican International Speciality Lines Insurance v Abbott LaboratoriesUNK[2003] 1 Ll Rep 267applied.)
2. Midgulf's case that GCT had accepted all of the terms in Midgulf's offer, including the terms of the June contract with its London arbitration clause, was arguable. So too was GCT's case that it had made a counter-offer, accepted by Midgulf, leading to a contract containing only the main terms of the agreement, with the detailed terms, including law and jurisdiction, to be agreed later. The court was not therefore able to reach the conclusion that Midgulf had established a high degree of probability that its case against GCT, that the July contract included a London arbitration clause, was right and that it was therefore entitled as of right to restrain GCT from taking proceedings in Tunisia. That would suggest that the anti-suit injunction granted ex parte should not be continued.
3. However, the Tunisian court had not decided whether the parties had agreed a London arbitration clause in the July agreement and might not do so. There was therefore a risk of stalemate. In the circumstances the just and appropriate course was, on case management grounds, to order a speedy trial of the issue as to the terms on which the July contract was agreed and to continue the anti-suit injunction until such time as that issue was determined. Once that issue was decided the court could then decide whether or not to appoint an arbitrator and continue the anti-suit injunction indefinitely. (Al-Naimi v Islamic Press Agency[2000] CLC 647considered.)
4. Midgulf had not submitted to the jurisdiction of the Tunisian court and had acted sufficiently promptly in seeking an anti-suit injunction. It could be argued that there was no basis for an anti-suit injunction in respect of GCT's declaration action in Tunisia. However, the matter should be viewed broadly. The declaration action only had relevance in the context of the damages action. The damages action was plainly in breach of the London arbitration clause. The court should not divorce the declaration action from the damages action merely because GCT had commenced two actions rather than one action in Tunisia. The court should not consider itself powerless to act in respect of the declaration action when the jurisdiction question, which only had relevance in the context of the damages action, had been raised in a separate action.
Teare J:
1. The Claimant, Midgulf, is a trader in sulphur. The Defendant, GCT, is a company owned by the state of Tunisia which has a substantial demand for sulphur. It is now common ground that the parties entered into contracts in 2008 for the sale and purchase of sulphur. The first contract, which I shall call the June contract, was for the sale by Midgulf and purchase by GCT of about 23,000 mt of sulphur. The second contract, which I shall call the July contract, was for the sale and purchase of about 150,000 mt of sulphur. It is common ground that the June contract contained a London arbitration clause. There is a dispute between the parties as to whether the July contract did so.
2. GCT have complained about the quality of the sulphur supplied under the June contract and in consequence have also complained about the quality of sulphur supplied under the first shipment pursuant to the July contract. As a result the July contract was terminated and substantial claims and counterclaims under both contracts have been intimated. It is now agreed that the dispute under the June contract must be resolved in London arbitration. Midgulf wishes the dispute under the July contract also to be resolved in London arbitration. GCT wishes it to be resolved in the courts of Tunisia.
3. Midgulf has made an application to appoint an arbitrator pursuant to section 18 of the Arbitration Act 1996 and also applies for an order continuing an anti-suit injunction granted by Burton J. on 19 February 2009 restraining GCT from taking proceedings in Tunisia. Those applications are opposed by GCT which has issued its own applications seeking orders that the court has no jurisdiction to grant the orders sought.
4. On 13 October 2008 Midgulf issued an application before this court for the appointment of an arbitrator under the July contract. On 24 October GCT took two steps. First, it stated that it was willing to nominate an arbitrator so long as the tribunal rendered an award on the validity of the alleged arbitration agreement. Secondly, it issued proceedings in Tunisia seeking a declaration that there was no arbitration agreement between the parties (“the declaration action”). On the same day Midgulf sought clarification of what GCT was doing. On 28 October Midgulf replied that it was obliged to defend its point of view before the arbitral tribunal and at the same time was seeking an order from the Tunisian court as to the “validity” of the alleged arbitration agreement.
5. On 13 November GCT issued two sets of proceedings in Tunisia, the one claiming damages under the June contract, the other claiming damages under the July contract (“the damages actions”). On 29 November Midgulf served submissions in the declaration action. On 13 December GCT served further submissions in the declaration action. On 18 December GCT issued an application in this court challenging the jurisdiction of this court to appoint an arbitrator.
6. On 13 January 2009 Midgulf served submissions in the damages actions and on 17 January Midgulf served further submissions in the declaration action. On 2 February Midgulf gave notice to GCT that an application for an anti-suit injunction was to be made in this court. On 7 February there was an oral hearing of the declaration action and the judge indicated he would give judgment on 28 February. On 13 February Midgulf issued its application for an anti-suit injunction and on 19 February that injunction was granted by Burton J “ex parte on notice”. On 2 March GCT issued an...
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