Sqd v Qyp
| Jurisdiction | England & Wales |
| Judge | Mr Justice Bright |
| Judgment Date | 21 August 2023 |
| Neutral Citation | [2023] EWHC 2145 (Comm) |
| Court | King's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2023-000643 |
[2023] EWHC 2145 (Comm)
Mr Justice Bright
Case No: CL-2023-000643
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, WC4A 1NL
The Claimant appeared represented by leading counsel
The Defendant did not appear and was not represented
Hearing dates: 17, 18 August 2023
Approved Judgment
This judgment was handed down remotely at 10.30am on 21 August 2023 by circulation to the parties or their representatives by e-mail.
This judgment concerns the application of the Claimant (“SQD”) for an interim anti-suit injunction (“ASI”) and anti-enforcement injunction (“AEI”) against the Defendant (“QYP”).
SQD was represented by leading counsel. I am very grateful to him and to the team working with him for the care taken in relation to this application and the fairness with which the matter was explained to me. This was all the more important because the application was made without notice to QYP.
Background
The application arises out of an agreement provided by SQD to QYP (“the Agreement”) in relation to a project overseas. The Agreement had a choice of law that expressly provided that English law applied. It also had a clause expressly providing for ICC arbitration in Paris.
Work on the project was suspended. QYP purported to terminate the contract governing the project. It then called for payment under the Agreement. SQD replied stating that it was legally prohibited from making the payment.
QYP wrote stating that it disagreed with SQD's reply. Its message made a number of express references to the Agreement and its terms and stated that it was to be treated as triggering the dispute resolution clause of the arbitration clause in the Agreement.
QYP then commenced proceedings in court in its own country, seeking payment of the sum covered by the Agreement and also seeking an order for the seizure of shares owned by SQD in that country.
QYP's Statement of Claim in those court proceedings does not deny the arbitration clause in the Agreement or the existence of an agreement to arbitrate. On the contrary, it recites the terms of the arbitration clause, but says that the agreement to arbitrate is unenforceable because QYP will not have access to justice in the context of an ICC arbitration in Paris such as the Agreement provides for: QYP will not be able to appear or be represented and/or is doubtful whether any hearing in France will be fair or impartial and/or the only state in which QYP can effectively defend its rights is its own country.
A few days after it received QYP's Statement of Claim in the court proceedings, SQD issued a request for arbitration pursuant to the arbitration clause in the Agreement. The relief sought includes declaratory relief as to the validity and enforceability of the arbitration agreement and the jurisdiction of the tribunal, further declarations that the courts of QYP's own country do not have jurisdiction and orders that QYP must discontinue the proceedings in that country and must not enforce any decisions of those courts.
The current position in relation to those court proceedings and the ICC arbitration proceedings is as follows:
i) In those court proceedings, SQD has not yet been required to enter an appearance and has not done so. The first hearing will take place shortly.
ii) In the ICC arbitration, the only procedural step taken so far has been the lodging of SQD's request for arbitration. There has been no response from QYP and no arbitrators have yet been appointed.
SQD's arbitration claim and application
SQD issued an arbitration claim form promptly and issued the application notice that is before me. These documents stated that the arbitration claim and the application were brought under s. 44 of the Arbitration Act 1996, alternatively under s. 37(1) of the Senior Courts Act 1981.
The relief claimed by the arbitration claim form was as follows:
“An interim anti-suit injunction and anti-enforcement injunction against the Defendants, restraining them from commencing and / or pursuing [SQD's court proceedings in its own country] in breach of an agreement to arbitrate in Paris, and any other such proceedings in breach of that agreement.”
The intended meaning of the word “interim” was explained in paragraph 24 of the arbitration claim form, as follows:
“24. SQD seeks an interim ASI and an interim AEI from the Court under section 44 of the Arbitration Act, alternatively under section 37 of the Senior Courts Act 1981, to hold the ring until the Paris tribunal is established and in aid of the Paris arbitration.”
The application notice stated that the jurisdiction relied on for the granting of the ASI and AEI was s. 44(2) of the Arbitration Act 1996, alternatively s. 37 of the Senior Courts Act 1981. It further indicated that SQD sought a return date of 8 September 2023 for further directions and “to expedite the final determination of these claims” – but my understanding of this, which SQD's counsel kindly confirmed, is that this meant only the determination of SQD's entitlement to interim relief, pending the establishment of the arbitration tribunal.
The application was supported by a witness statement made by a partner within SQD's solicitors, who set out the general background and the procedural history, and a witness statement made by a foreign lawyer, who explained some aspects of the proceedings commenced by QYP.
In the course of the hearing, I noted that I did not have any evidence explaining why the application was being made to this court, rather than in France. I adjourned the hearing in order to enable SQD to obtain such evidence. I also indicated that it might be instructive to look at the reports of the Departmental Advisory Committee (“DAC”) which preceded the passage of the Arbitration Act 1996; and that there were some additional authorities on which I would be grateful for further assistance.
The result was that, when the hearing resumed on the following day, I received a further witness statement from SQD's solicitors, which related to the position in France, as well as the further assistance that I had requested on the DAC reports and on various additional authorities.
The critical point: the seat of the arbitration is not in the jurisdiction
In the usual way, SQD filed various documents with the court in advance of the hearing, including its counsel's extremely clear and helpful skeleton argument. This meant that, at the outset of the hearing, I was able to give the following indications:
i) I was satisfied to a high degree of probability that the Agreement exists and has terms the clauses mentioned above. It is generally subject to English law and is subject to ICC arbitration in Paris.
ii) I was satisfied that the arbitration agreement itself is subject to English law, so far as this court is concerned, in the light of Enka Insaat Ve Sanayi AS v. OOO Insurance Company Chubb [2020] UKSC 38, per Lord Hamblen and Lord Leggatt at [170]; and Kabab-Ji SAL v. Kout Food Group [2021] UKSC 48, per Lord Hamblen and Lord Leggatt at [35], [39]. This is so even though I was (very properly) told that a French court might take a different view about the law of the arbitration agreement. I should add that my provisional view about the law of the arbitration agreement might have been different if there had been evidence that there is a provision of French law such that choice of a French seat requires French law to govern the arbitration agreement – cf. Enka at [170 (vi)].
iii) I was satisfied to a high degree of probability that QYP's proceedings in the courts of its own country are a breach of the arbitration agreement and/or a breach of the Agreement.
iv) In principle, agreements should be honoured. If this court has jurisdiction, it will generally give its support to a party wishing to ensure that an agreement is honoured by its counterparty. This includes arbitration agreements.
v) I was satisfied that SQD had acted promptly, following its receipt of the Statement of Claim in QYP's court proceedings. Delay therefore is not a factor.
vi) I was not persuaded that QYP would not have access to justice in the context of the arbitration in Paris. If QYP wishes to instruct western lawyers to represent it in the arbitration, I would expect it to be possible for this to be arranged, with licences being obtained as required. It would also be possible for QYP to be represented by its own lawyers, acting remotely if necessary. Indeed, the reference as a whole could proceed remotely, with the electronic presentation of evidence and witnesses attending by videolink. I am aware of several cases where these solutions have been adopted in international arbitration proceedings. Furthermore, international arbitrators would be capable of conducting the proceedings impartially, and I am confident that the ICC would enforce and protect such impartiality.
vii) In principle, if this case involved an arbitration with its seat within the jurisdiction, I would be very likely to grant an ASI, and probably an AEI (albeit after some discussion of the terms).
viii) However, I was concerned about whether it was appropriate to grant an injunction in this case, the seat of the arbitration being in Paris.
The result was that most of the oral submissions on behalf of SQD were directed to how the court should deal with the fact that the seat of the arbitration is not within the jurisdiction, and whether/how this should affect the court's decision.
s. 44 Arbitration Act 1996, s. 37 Senior Courts Act 1981
The court's power to grant relief in support of an arbitration under s. 44 Arbitration Act 1996 is as follows:
1.1.1.1. “44 Court powers exercisable...
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