Case Nos: A3/2009/0344, A3/2009/ 0344(A),
A3/2009/0875, A3/2009/0875(A)
ON APPEAL FROM HIGH COURT OF JUSTICE, COMMERCIAL COURT
Tomlinson J & Burton J
2008 Folio 1156
Royal Courts of Justice
Strand, London, WC2A 2LL
Before:
LORD JUSTICE CARNWATH
LORD JUSTICE TOULSON
and
LORD JUSTICE GOLDRING
Between:
(1) HIGHLAND CRUSADER OFFSHORE PARTNERS L.P. (2) HIGHLAND CREDIT STRATEGIES MASTER FUND L.P. (3) HIGHLAND CREDIT OPPORTUNITIES CDO L.P. | Appellants |
- and - | |
(1) DEUTSCHE BANK AG (2) DEUTSCHE BANK SECURITIES INC | Respondents |
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Mr Timothy Saloman QC and Mr Charles Holroyd (instructed by Cooke Young & Keidan LLP) for the Appellants
Mr Richard Handyside QC (instructed by Allen & Overy LLP) for the Respondents
Hearing date: 9 June 2009
Judgment
Lord Justice Toulson :
Introduction
This is a dispute about jurisdiction. The main issue is whether Burton J was right to grant Deutsche Bank (DB) and Deutsche Bank Securities Inc (DBSI) an injunction to prevent the Highland companies (collectively “Highland”) from prosecuting an action in Texas concerning a dispute about which DB and DBSI have brought parallel proceedings in the Commercial Court in London.
The parties are sophisticated financial institutions. DB is a major German bank, whose principal place of business is in Frankfurt, but it has an office in London. DBSI is an associated company which is registered in Delaware and has its principal place of business in New York.
Highland is a major US hedge fund. The principal place of business of Highland Crusader is Bermuda. The principal place of business of the other Highland companies is Dallas. All the investment decisions relating to all three Highland parties are made in Dallas.
In September 2007 DB’s London branch decided to approach hedge funds with a proposal to sell them tranches of asset-backed securities owned by DB. The approaches were made through DB’s worldwide sales force. The US based sales staff included Mr Casey Newell (an employee of DBSI). He approached Highland, who expressed interest in the proposal.
As a result of negotiations between the parties, on 23 October 2007 DB and DBSI entered into agreements with the Highland companies on materially identical terms by which, broadly speaking, Highland agreed to buy from DB tranches of asset-backed collateralised loan obligations (CLOs) (the underlying assets being predominately US based real estate) with a face value of about US $600 million. The agreements took the form of Global Master Repurchase Agreements (GMRAs), a standard form of international finance agreement. As its name suggests, a GMRA is a master agreement which provides for individual transactions to be entered into under it.
The nature of the scheme was that Highland’s purchases of the securities were financed by DB through a number of revolving repurchase transactions. Under the transactions Highland as seller agreed to sell the securities to DB and simultaneously agreed to repurchase equivalent securities from DB one month later at a higher price, the difference in price representing Highland’s costs of funding. This structure enabled Highland to keep the risk and reward on the securities, but the securities provided collateral to DB in case of Highland’s default. The transactions were to revolve monthly over a period of one year, subject to an event of default occurring in the meantime.
Paragraph 17 of the GMRA is central to the argument about jurisdiction. It provided:
“Governing Law
This Agreement shall be governed by and construed in accordance with the laws of England. Buyer and Seller hereby irrevocably submit for all purposes of or in connection with this Agreement and each Transaction to the jurisdiction of the Courts of England.
Party A [DB] hereby appoints the person identified in Annex 1 hereto as its agent to receive on its behalf service of process in such courts. If such agent ceases to be its agent, Party A shall promptly appoint, and notify Party B [Highland] of the identity of, a new agent in England.
Party B hereby appoints the person identified in Annex 1 hereto as its agent to receive on its behalf service of process in such courts. If such agent ceases to be its agent, Party B shall promptly appoint, and notify Party A of the identity of, a new agent in England.
Each party shall deliver to the other, within 30 days of the date of this Agreement in the case of the appointment of a person identified in Annex 1 or of the date of appointment of the relevant agent in any other case, evidence of the acceptance by the agent appointed by it pursuant to this paragraph of such appointment.
Nothing in this paragraph shall limit the right of any party to take proceedings in the courts of any other country of competent jurisdiction.”
Clause 5 of Annex 1 to the GMRA provided:
“The following additional supplemental terms and conditions shall apply to Transactions with respect to which Party B has dealt with an officer of Deutsche Bank Securities Inc (“DBSI”), an affiliate of Party A (“Applicable Transactions”):
…
(b) DBSI is acting in connection with Applicable Transactions solely in its capacity as agent pursuant to instructions from Party A and Party B. DBSI shall have no responsibility or liability to Party A or Party B arising from a failure by Party A or Party B to pay or perform any obligation under the Agreement, and is not acting as guarantor of either Party A or Party B in connection with any obligation under the Agreement. Each of Party A and Party B agrees to proceed solely against the other to collect or recover any amounts owing to it or to enforce any of its rights in connection with or as a result of Applicable Transactions under the Agreement.”
On 15 August 2008 DB, DBSI and Highland entered into agreements to amend the GMRA. The details of the amendment agreements are immaterial. I refer to them only because paragraph 6 of the amendment agreements stated:
“Paragraph 17 of the GMRA shall apply to this Agreement as if that paragraph were expressly set out herein.”
Margin Calls
Paragraph 4(a) of the GMRAs provided that if at any time DB or Highland had a net exposure in respect of the other party, it might by notice require the other party to make a margin transfer to it of an amount equal to the net exposure. It is not necessary to set out the definition of net exposure under the agreement, but in broad terms Highland would have a net exposure to DB if the value of the securities fell.
During 2008 DB made margin calls on Highland from time to time, and Highland paid them, although occasionally after challenging DB’s market valuations. However, on 30 September 2008 DB made further margin calls on Highland which Highland did not pay.
In the event of a wrongful failure by Highland to meet a margin call, the GMRA contained provisions for DB to serve a default notice, to treat the repurchase date as having occurred and to serve a default valuation notice setting out the amount immediately payable to DB. DB invoked these provisions. It served default notices on 1 October 2008 and default valuation notices on 8 October 2008 claiming sums amounting to over US $70 million excluding interest.
DB received no response to its notices. Between 14 and 17 October 2008 DB tried to contact Highland to discuss the situation but without success.
Litigation in Texas and England
On 16 October 2008 Highland filed proceedings against DB and DBSI in the District Court of Dallas County, Texas. In summary Highland alleged that:
1. DB and DBSI, through Mr Newell, induced Highland to agree to buy a portfolio of securities by fraudulent or negligent misrepresentations
(i) that DB and DBSI did not intend to hold Highland to the terms of the GMRA but were willing to replace it with a mutually acceptable form of agreement soon thereafter, and
(ii) only limited due diligence was needed on the part of Highland because the securities were credit enhanced and backed by triple A rated names with well-known managers, so the transaction was very low risk;
2. DB and DBSI improperly manipulated the valuations of the underlying collateral so as to enable them to make a number of margin calls;
3. DB and DBSI, through Mr Newell, induced Highland to make a margin payment of US $18 million on or about 24 September 2008 by falsely pretending that they were willing to extend the financing for 1 year at terms and spread levels that were acceptable to Highland, but only a week later made another improper margin call.
The amended complaint alleged 10 causes of action. Under count 1 Highland claimed a declaration against DB and DBSI that Highland had no liability to them. Count 2 alleged that DB and DBSI fraudulently induced Highland to enter into the purchase agreement and included a claim for exemplary and punitive damages. Count 3 alleged that DB and DBSI fraudulently induced Highland to pay the US $18 million margin transfer in September 2008 and again claimed exemplary and punitive damages. Count 4 alleged negligent misrepresentation as an alternative to fraudulent misrepresentation, but also alleged that because the misrepresentations were so grossly negligent as to constitute reckless disregard for the truth there should be an award of exemplary damages. Count 5 alleged breach of contract. Count 6 alleged violations of the Texas Securities Act by making false and misleading misrepresentations and omissions of material facts concerning the securities, as a result of which Highland claimed a statutory entitlement to rescission of the repurchase agreement and recovery of the full consideration paid to DB and DBSI, plus interest, costs and attorneys’ fees, regardless of whether Highland relied on the misrepresentations and regardless of whether the representations were either fraudulent or negligent. Count 7 alleged violations of section 27.01(e) of the Texas Business and Commerce Code. Count 8 claimed rescission of the GMRA. Count 9 claimed recovery of the value of the consideration received by DB and DBSI from Highland under the doctrine of unjust enrichment. Count 10 (the only count which differentiated between DB and DBSI) alleged by way of an alternative to the preceding claims that DBSI conspired with DB to defraud Highland and claimed punitive damages. Count 11 claimed damages for promissory estoppel in that Highland relied on DB and DBSI’s promises of willingness to amend the repurchase agreement both at the time of the original agreement and at the time of payment of the US $18 million margin transfer.
On 7 November 2008 DB issued proceedings against Highland in the Commercial Court for the amounts stated in the default valuation notices with interest. The proceedings were served on the same day on Highland’s agent for service appointed under paragraph 17 of the GMRA.
On 17 November 2008 DBSI filed a motion in Texas to dismiss or stay the proceedings for forum non conveniens. DB did not join in the motion at that stage because it was contending that it had not been validly served with the Texas proceedings. It joined with DBSI in the application to dismiss or stay the Texas proceedings by an amended motion filed on 20 January 2009.
On 21 November 2008 Highland filed an acknowledgement of service in the English action indicating an intention to dispute jurisdiction. Under CPR Part 11 its deadline for challenging the jurisdiction of the English court was 19 December 2008. On 14 December 2008 Highland’s solicitors asked DB’s solicitors to agree to an extension of time to 30 January 2009. The request was rejected. No application challenging the jurisdiction of the English court was issued within the prescribed period, but on 16 December 2008 Highland issued an application for an extension of time in which to apply to challenge the jurisdiction of the English court.
Highland’s extension of time application came before Tomlinson J on 29 January 2009 and was refused. Tomlinson J noted that there was no question of Highland having operated under some mistake as to when the application had to be made or that there was any reason why they could not have issued and served their application and supporting material in time. Highland had been put on notice by DB that they were expected to make their application in time or take the consequences. The only reason suggested for an extension of time was that there was an outstanding application in the Texas court to stay those proceedings, but the judge did not regard that as a justification for delaying their application to challenge the jurisdiction of the English court. He also observed that, on the face of it, the jurisdiction of the English court was established by paragraph 17 of the GMRA.
Highland seek leave to appeal against Tomlinson J’s refusal of their application for a time extension. I can see no serious basis on which Tomlinson J’s judgment can be challenged.
On the same day that Tomlinson J heard and dismissed Highland’s extension of time application, Highland filed a second amended petition in the Texas action joining Mr Newell as a defendant. The factual allegations remained as before, but Mr Newell was joined in count 2 (fraud in the inducement of the GMRAs), count 3 (fraud in inducing the payment of US $18 million), count 4 (negligent misrepresentation), count 6 (violations of the Texas Securities Act), count 7 (violations of the Texas Business and Commerce Code) and count 10 (conspiracy to commit fraud).
DB and DBSI’s motion to dismiss or stay the Texas proceedings
DB and DBSI’s motion came before The Honorable Judge Molberg on 4 February 2009 and was dismissed. In accordance with the practice of that court, the judge did not state his reasons beyond saying at the end of the hearing:
“This is fascinating. I understand the competing interests, and I particularly am swayed in many personal respects by what Mr Hackney [counsel for DB and DBSI] has just said [about the Texas court not wishing to be known for allowing international forum shopping]. Given that, I’m denying the motions.”
The transcript of the argument runs to over 70 pages. It is tempting to infer from some of the judge’s interventions what he regarded as the critical factors, but there would be danger in doing so. Observations may be made by a judge in the course of argument for the purpose of testing the parties’ positions before he has reached a conclusion and it would be a mistake to read too much into such remarks. It is possible to be more confident about the ground on which the battle was fought, although that is also not entirely clear.
The parties filed detailed memoranda. They included arguments about the effect of a non-exclusive jurisdiction clause under English and Texas law, about which it is unnecessary to say more. On the issue of forum non conveniens, more generally, the DB parties’ motion to dismiss submitted that Texas courts apply the factors identified by the US Supreme Court in Gulf Oil Corp v Gilbert (1947) 330 US 501, 508-9 in determining whether to transfer or dismiss a case for forum non conveniens. DB and DBSI accepted that they had to show that the plaintiffs’ claims could be heard in an available and adequate alternative forum that had jurisdiction over the dispute and that the balance of certain public and private interests identified by the Supreme Court weighed in favour of dismissal. Their memorandum set out a number of such factors. They included the following:
1 England would be a more convenient forum for witnesses, because most of DB’s witnesses were in England and none of its witnesses were in Texas. In particular, the traders who priced, negotiated and effected the trades at issue were in London.
2. The actions by DB that formed the basis of the law suit were effected by London based DB personnel.
3. Numerous DB documents relevant to the action were located in England and none was in Texas.
4. The transaction was governed by English law.
5. Any judgment obtained by either party in England would be fully enforceable in Texas and Bermuda, but a Texas judgment against a Bermuda based Highland entity (Highland Crusader) could not be enforced in Bermuda by being registered in the same way as could a judgment of the English court.
Highland’s memorandum agreed that the Texas Supreme Court had adopted the forum non conveniens framework articulated in Gulf Oil, emphasising that the standard for a forum non conveniens dismissal is extremely high (“unless the balance is strongly in favor of the defendant, the plaintiff’s choice of forum should rarely be disturbed”). Highland also submitted that England was not an adequate, alternative forum because Texas is a “first-filed state”, which meant that under Texas law the only court that properly had jurisdiction over the action was Texas, since the Texas proceedings were commenced before the English proceedings.
Highland’s memorandum disputed DB’s assertion that a Texas judgment would not be enforceable in Bermuda. Highland also identified a number of factors supporting Texas as the more appropriate forum. These included the following:
1. Highland had 10 -12 witnesses with knowledge of the facts, all of whom were in Dallas.
2. DB’s personnel who negotiated the contracts lived in the USA.
3. During the period of negotiation of the GMRAs there was no communication between Highland and anyone employed by DB in England.
4. The bulk of the documentary evidence was in Dallas.
5. Two of the three Highland companies had their principal place of business in Dallas and all investment decisions of the Highland companies were made in Dallas.
6. The representations on which Highland relied were received in Dallas.
7. The repurchase agreements were executed in Dallas.
8. The effect of the DB parties’ alleged fraud was felt in Dallas.
9. The conduct of the DB entities violated Texas law and was not merely a breach of contract under English law.
The memorandum concluded by saying:
“…Defendants have failed to carry their burden with regard to the forum non conveniens analysis and all of the private and public interest factors set forth in Gulf Oil confirm that Dallas is a far more convenient forum for the parties. Defendants cannot demonstrate, and have presented minimal evidence, that the private or public interest factors weigh in favor of dismissing this case based on forum non conveniens. Plaintiffs have, on the other hand, demonstrated that the Gulf Oil factors weigh in favour of retaining the case in Texas. Moreover, Plaintiffs filed this law suit first, Texas law applies to the majority, if not all, of Plaintiffs’ claims, and the slight burden to Defendants in defending this lawsuit in Dallas is outweighed by the burden the Plaintiffs will suffer if their claims are dismissed and they are forced to prosecute their claims in an English court. As such, it is clear that Plaintiffs’ choice of forum, Dallas, should not be disturbed.”
On the present appeal Mr Handyside QC submitted that the Texas first-filed rule was critical to the outcome of the motion to dismiss or stay the Texas proceedings. The materials before the court do not make it clear what relevance, if any, the first-filed rule had to the outcome of the application or how such rule fits with the Gulf Oil principles to which both parties directed submissions. The conclusion to Highland’s memorandum suggests that Highland treated it as a factor, but by no means the only relevant factor, in resisting the application for dismissal or a stay on forum non conveniens grounds.
DB and DBSI’s motion made no reference to the first-filed rule. The case cited by Highland in its memorandum as authority for the first-filed rule was Perry v Del Rio 66 SW 3d 239, 252 (Tex 2001). The judgment in that case was included in the materials before Burton J. It was a decision of the Supreme Court of Texas in a case where constitutional challenges to Texas congressional districts had been filed in different Texas courts. Allocating their priority was therefore a problem internal to the Texas judicial system. Unsurprisingly there was no reference to Gulf Oil. It is not apparent from the judgment that the reasoning was intended to apply to a case where parallel proceedings are brought in different states; and the parties on the present appeal have not be able to give any clear explanation, how, if it does apply, the rule fits with Gulf Oil principles. It is, however, plain from the transcript that both parties advanced arguments on Gulf Oil factors at the hearing before Judge Molberg, and his brief statement when dismissing the motion that he understood “the competing interests” suggests at least that he saw the application as involving the weighing of competing interests, without specifying the factors which led him to his conclusion that the application should be refused.
Joinder of DBSI in the English action
On 27 February 2009 DB and DBSI issued an application for permission to join DBSI as a claimant in the English action and for an anti-suit injunction. The application for the joinder of DBSI was heard (together with the application for an anti-suit injunction) by Burton J on 2 April 2009 and he granted it. Highland seek to appeal against that decision.
The relief claimed by DBSI in the amended particulars of claim is a declaration that DBSI is under no liability to Highland under or in connection with or as a result of the GMRA and transactions under it. In short, it is intended to be a mirror of the claims made against DBSI by Highland in Texas.
Burton J considered that, if the English proceedings were to proceed, it would be convenient for DBSI to be a party to them. He also considered that it was at least strongly arguable that DBSI, as a party to the GMRA, was a party to the agreement contained in paragraph 17.
Highland made various criticisms of the judge’s decision in their grounds of appeal and skeleton argument, but Mr Saloman QC did not spend any time on them in his oral submissions, concentrating wisely on the anti-suit injunction.
The English court had jurisdiction to allow the joinder of DBSI as a co-claimant. Since it is Highland’s case that DBSI is jointly liable with DB for damages for breach of contract and various torts relating to the contract, the judge was obviously right to say that it was convenient for DBSI to be joined with DB in the English action.
I can see no realistic basis for arguing that Burton J was wrong to allow the application to join DBSI as a claimant in the English action.
Decision to grant an anti-suit injunction to halt the Texas action
On 3 April 2009 Burton J ordered Highland not to take any further steps in the Texas proceedings except that they were required to take steps as soon reasonably possible to stay those proceedings until the outcome of the proceedings in the Commercial Court.
The question whether this order was right raises serious issues.
I should state at the outset that at one stage Highland was threatening to seek an anti-suit injunction from the Texas court to prevent DB from prosecuting the English action and on the eve of Burton J’s order it applied to the Texas court for a Temporary Restraining Order. It stated in its application:
“Immediate relief is required because Plaintiffs’ counsel in London indicated this afternoon that the Court in London will rule tomorrow, April 3, 2009, before the courts open in Texas and has indicated that it will likely grant an anti-suit injunction against Plaintiffs.”
I read that application as intended to protect the Texas jurisdiction. On 2 April 2009 the Texas Court issued a temporary injunction enjoining DB from proceeding with its application to enjoin Highland’s action before the Texas Court. This attempt to forestall the grant of anti-suit injunction by Burton J proved to be ineffective.
The current position is that Mr Saloman informed the court, on instructions, that Highland has no present intention of trying to obtain an order from the Texas court to prevent the English action from proceeding. Since Highland have also submitted to the English jurisdiction, it may be taken as an accepted fact for the purposes of the present appeal that the English action will proceed.
Burton J’s reasoning for granting the injunction may be summarised as follows:
1. Because paragraph 17 was not an exclusive jurisdiction clause, there was no breach of contract if either contracting party took proceedings elsewhere.
2. However, the question then arose as to what should happen if that occurred and there were then parallel proceedings, one in the nominated jurisdiction and the other in a “non-contractual, but otherwise competent jurisdiction”. As to that, the policy of the law must be to favour the litigation of issues once only, in the most appropriate forum (applying words of Bingham LJ in Du Pont v Agnew [1987] 2 Lloyds Rep 585, 589).
3. Mr Handyside had submitted that in that situation, absent special circumstances, the party which had commenced proceedings in the “non-contractual jurisdiction” must desist, such implied term being imported by virtue of commercial good sense. However, it was unnecessary to decide whether there was such an implied term.
4. The approach in Texas to parallel proceedings appeared to give considerable, if not conclusive, significance to the “first filed rule”. This was not the approach of the English courts where there is a jurisdiction clause.
5. The approach of the English courts is that an anti-suit injunction can be granted if required by the “ends of justice” (Donohue v Armco Inc [2001] UKHL 64, [2002] 1 Lloyds Rep 425, 431). Generally speaking, such an injunction will only be granted if pursuit of proceedings in a foreign court would be vexatious or oppressive, but in applying that test the words of Bingham LJ in Du Pont v Agnew provide important guidance.
6. Where there is a contractual non-exclusive jurisdiction clause, a party will ordinarily act vexatiously and oppressively in pursuing proceedings in the non-contractual jurisdiction in parallel with proceedings in the contractual jurisdiction, unless there are exceptional reasons, not foreseeable at the time when the contractual jurisdiction was agreed. This test was derived from a line of authorities, particularly, British Aerospace plc v Dee Howard & Co [1993] I Lloyds Rep 368, Mercury Telecommunications Limited v Communication Telesystems International [1999] 2 All E R (Comm) 33, Sabah Shipyard (Pakistan) Limited v Islamic Republic of Pakistan [2003] 2 Lloyds Rep 571, BPplc vNational Union Fire Insurance Co [2004] EWHC 1132 (Comm), Antec International Limited v Biosafety USA Inc [2006] EWHC 47 (Comm) and HIT Entertainment Limited v Gaffney International Licensing Pty Limited [2007] EWHC 1282.
7. No unforeseeable change since the conclusion of the contract had been suggested in the present case.
8. The balance of convenience or availability of juridical advantages to Highland from suing in Texas were irrelevant considerations where there was an English jurisdiction clause and no unforeseeable change of circumstances.
9. There was no “derogation from comity” in the judge granting an anti-suit injunction against Highland, because Judge Molberg had applied Texas law and the judge had to apply English law which involved a different test.
10. There was no good reason why the injunction granted against DB should not apply equally to DBSI and include an injunction against pursuing the claims made against Mr Newell as a servant or agent.
Arguments on the appeal
Mr Saloman for Highland concentrated in his oral submissions on two fundamental points.
First, he submitted that the judge failed to give proper effect to the last part of paragraph 17. Since the parties agreed that nothing in paragraph 17 should limit the right of any party to take proceedings in the courts of any other country of competent jurisdiction, the judge was wrong to treat Highland as presumptively acting in a vexatious or oppressive manner in the Texas action. It was for DB and DBSI to establish that Highland’s conduct was vexatious or oppressive and this was not established by the mere fact that Highland intended to continue with proceedings properly commenced in Texas. That, he submitted, was an end of the matter.
Secondly, he submitted that the judge was in any event wrong in holding as a matter of general principle that where there is a contractual non-exclusive jurisdiction clause, a party will ordinarily act vexatiously and oppressively in pursuing proceedings in the “non-contractual jurisdiction” in parallel with proceedings in contractual jurisdiction, unless there are exceptional reasons, not foreseeable at the time when the contractual jurisdiction was agreed. He submitted that the appellate authorities established no such broad principle, when properly analysed, and that in so far as support for it can be found in first instance authorities they are wrong. As a result of adopting this approach, the judge wrongly shut out from his consideration factors which meant that it was by no means oppressive for Highland to commence proceedings in Texas and seek to pursue them. The same approach also led the judge into error when he considered the issue of comity.
Mr Handyside supported the reasoning of the judge. This was unsurprising since the judge had largely accepted Mr Handyside’s submissions. However, he also emphasised a number of points. He submitted that the only effect of the last subparagraph of paragraph 17 was to prevent the clause from being an exclusive jurisdiction clause in the fullest sense. It had no more effect than if the first subparagraph had simply referred to the “non-exclusive jurisdiction of the Courts of England”.
Mr Handyside submitted that it was just as vexatious and oppressive for Highland to continue with the Texas proceedings after the commencement of the English action as it would have been for Highland to commence proceedings in Texas after the commencement of the English action. An alternative approach would merely encourage a rush to issue proceedings first. The central point was that the parties cannot be taken to have contemplated that there might be parallel proceedings in England and elsewhere, and, since there was an express submission to English jurisdiction, it must be vexatious for either party to pursue parallel proceedings in another jurisdiction unless there was some special justification for doing so. In the present case the Texas action was clearly intended to pre-empt the claim by DB in England for the amount stated in the default valuation notices. The vexatious nature of those proceedings was further demonstrated by the fact that the allegations of fraud were manifestly unfounded and the joinder of Mr Newell as a Defendant was a mere tactical ploy. As to that issue, in my view it would be impossible to come to even a provisional conclusion without exploring the evidence in a way which the parties, rightly, did not attempt to do.
Mr Handyside further submitted that the making of claims against DBSI was additionally vexatious and oppressive because they were brought in breach of the no-action clause in paragraph 5 of Annex 1 to the GMRA. Mr Saloman put forward a number of answers to that point. The most telling was that Highland make allegations against DBSI of deliberate deception and conspiracy to defraud; and on ordinary principles of construction the relevant clause is unlikely to be interpreted as intended to preclude the investigation of such claims on their facts. Otherwise its effect would be to provide immunity against fraud, which cannot have been the parties’ intention.
I have noted that at first instance an argument was advanced that Highland’s prosecution of the Texas action involved breach of an implied contractual term, but the judge made no such finding. DB and DBSI served a respondent’s notice, but the notice does not assert that the judge ought to have held that by continuing with the Texas action after the commencement of the English action Highland was in breach of an implied contractual term. Mr Handyside submitted that the result should be the same whether or not there was a breach of an implied contractual term, but his preferred way of putting it was that Highland’s conduct was vexatious and oppressive. He suggested in oral argument that an implied term would be an alternative basis for reaching the same result, but he did not seek to develop a separate argument in support of an implied term. (As to the claim against DBSI and the no-action clause, the argument advanced by DB and DBSI was that this provides a further demonstration of vexatious or oppressive behaviour rather than affording a separate ground for an injunction based on a breach of contract. For reasons which I have briefly stated, I do not think that an injunction against DBSI based on an alleged breach of contract in that regard could be sustainable, since there is at least a good arguable case that the clause would not as a matter of English law preclude an action in fraud.)
The essential issues are therefore whether the judge was right to regard Highland’s conduct as vexatious and oppressive, having regard to paragraph 17 and the relevant authorities, and whether he was right in his approach to the question of comity.
Anti-suit injunctions and forum non conveniens – key principles
Although the ground has been well travelled on many occasions, I think that it is helpful to start by identifying key principles. After that I will look at the few cases where anti-suit injunctions have been sought on the basis of a non-exclusive jurisdiction clause and other authorities which influenced the judge before stating my conclusions.
Leaving aside the provisions of the Brussels 1 Regulation and previous conventions, which are not relevant in this case, I would summarise the relevant key principles as follows:
1. Under English law the court may restrain a defendant over whom it has personal jurisdiction from instituting or continuing proceedings in a foreign court when it is necessary in the interests of justice to do.
2. It is too narrow to say that such an injunction may be granted only on grounds of vexation or oppression, but, where a matter is justiciable in an English and a foreign court, the party seeking an anti-suit injunction must generally show that proceeding before the foreign court is or would be vexatious or oppressive.
3. The courts have refrained from attempting a comprehensive definition of vexation or oppression, but in order to establish that proceeding in a foreign court is or would be vexatious or oppressive on grounds of forum non conveniens, it is generally necessary to show that
(a) England is clearly the more appropriate forum (“the natural forum”), and
(b) justice requires that the claimant in the foreign court should be restrained from proceeding there.
4. If the English court considers England to be the natural forum and can see no legitimate personal or juridical advantage in the claimant in the foreign proceedings being allowed to pursue them, it does not automatically follow that an anti-suit injunction should be granted. For that would be to overlook the important restraining influence of considerations of comity.
5. An anti-suit injunction always requires caution because by definition it involves interference with the process or potential process of a foreign court. An injunction to enforce an exclusive jurisdiction clause governed by English law is not regarded as a breach of comity, because it merely requires a party to honour his contract. In other cases, the principle of comity requires the court to recognise that, in deciding questions of weight to be attached to different factors, different judges operating under different legal systems with different legal polices may legitimately arrive at different answers, without occasioning a breach of customary international law or manifest injustice, and that in such circumstances it is not for an English court to arrogate to itself the decision how a foreign court should determine the matter. The stronger the connection of the foreign court with the parties and the subject matter of the dispute, the stronger the argument against intervention.
6. The prosecution of parallel proceedings in different jurisdictions is undesirable but not necessarily vexatious or oppressive.
7. A non-exclusive jurisdiction agreement precludes either party from later arguing that the forum identified is not an appropriate forum on grounds foreseeable at the time of the agreement, for the parties must be taken to have been aware of such matters at the time of the agreement. For that reason an application to stay on forum non conveniens grounds an action brought in England pursuant to an English non-exclusive jurisdiction clause will ordinarily fail unless the factors relied upon were unforeseeable at the time of the agreement. It does not follow that an alternative forum is necessarily inappropriate or inferior. (I will come to the question whether there is a presumption that parallel proceedings in an alternative jurisdiction are vexatious or oppressive).
8. The decision whether or not to grant an anti-suit injunction involves an exercise of discretion and the principles governing it contain an element of flexibility.
To make good those propositions I should comment on them.
Propositions 1 to 3
These appear from a number of authorities including the speech of Lord Goff in the leading case of Societe Nationale Industrielle Aerospatiale v Lee Kui Jak 871, 892-896, in which he reviewed the more important earlier authorities.
Propositions 4 and 5
Authoritative exposition of these important principles can be found in a number of cases, particularly the speech of Lord Goff in Aerospatiale, the judgment of Hoffmann J in Re Maxwell Communications Corporation plc (No 2) [1992] BCC 757 (whose statement of the law was approved in the same case by the Court of Appeal), and the speech of Lord Goff in Airbus Industrie GIE v Patel [1999] 1 AC 119.
In Aerospatiale, at 895, Lord Goff said that where parties are in dispute whether an action should proceed in an English or foreign court, and the English court concludes that England is the natural forum, it would be wrong for the English court to restrain a party from proceeding in the foreign court “on that ground alone” (Lord Goff’s emphasis). For that would be to conclude that where there is simply a difference of view between the English court and the foreign court as to which is the natural forum, the English court can arrogate to itself, by the grant of an injunction, the power to resolve that dispute. Such a conclusion would be inconsistent with comity.
This is a convenient point for making a comment about the meaning of the phrase “the natural forum”. In Aerospatiale Lord Goff was using that phrase (as is apparent from the preceding paragraphs of the judgment at 893) in the sense in which he had used the term in Spiliada Maritime Corp v Cansulex Limited [1987] 1 AC 460, 478, i.e. as denoting a forum which is clearly more appropriate for the trial of the action than any alternative jurisdiction. Dicey, Morris and Collins (14th Ed) 206, Vol 1, para 12-005 similarly use the phrase “the natural forum” as shorthand for the court identified by reference to the criteria laid down in Spiliada, which is the sense in which it is generally used, and I will follow suit. (Spiliada decided that in cases where leave is required to serve proceedings out of the jurisdiction, as in cases where an application is made to stay English proceedings on forum non conveniens grounds, the English court has to consider whether one or other court is clearly the more appropriate for determining the dispute. The difference is that in an application to stay an English action, the applicant has to show that the foreign court is clearly the more appropriate forum; in an application for permission to serve out of the jurisdiction, the claimant has to show that England is clearly the more appropriate forum). The reason for making these remarks is that the cases sometimes refer to a country being “a natural forum”. That is different; it denotes a country which is not inappropriate, i.e. clearly less appropriate than another.
In Re Maxwell at 761-2 Hoffmann J observed that the theory that an anti-suit injunction is not an intended interference with the affairs of a foreign court, because it merely operates in personam upon a person subject to the jurisdiction of the English court, is a more realistic description in some cases than in others. It is a fair description where the injunction is intended to enforce a contractual submission to the exclusive jurisdiction of the English court. But where the court is not enforcing a contractual right under English law, the normal assumption is that an English court has no superiority over a foreign court in deciding what justice between the parties requires and, in particular, that both comity and common sense suggest that the foreign judge is usually the best person to decide whether in his own court he should accept or decline jurisdiction, stay proceedings or allow them to continue. In other words, there must be a good reason why the decision to stop the foreign proceedings should be made by an English judge rather than a foreign judge, and cases where justice requires the English court to intervene will be exceptional. Hoffmann J recognised that exceptional cases cannot be categorised, but he instanced cases where a foreign court has by its own jurisprudence a long arm jurisdiction so extensive that to English notions it appears contrary to accepted principles of international law, and where the English court may feel it necessary to intervene by injunction to protect a party from the injustice of having to litigate in a jurisdiction with which he or the subject matter had little connection. There may also be cases in which the judicial or legislative polices of England and the foreign court are so at variance that comity is overridden by a need to protect British interests or to prevent what the English court regards as a violation of the principles of customary international law.
In Airbus Lord Goff noted that since, as between common law jurisdictions, there was no international treaty governing jurisdiction issues, the basic principle was that each jurisdiction is independent and there is no embargo on concurrent proceedings in the same matter in more than one jurisdiction. The weapons for determining jurisdiction disputes are a stay (or dismissal) of proceedings and an anti-suit injunction, but each has its limitations. The former depends on its voluntary adoption by the state in question and the latter is inhibited by respect for comity.
Lord Goff then conducted a tour d’horizon in which he surveyed the extent to which common law jurisdictions had come to adopt similar forum non conveniens principles. He noted that there was a large measure of similarity between English law and the law of Canada, Australia and a number of states of the USA. He paid particular tribute to the judgment of Judge Wilkey in the District of Columbia Court of Appeals in Laker Airways Limited v Sabena, Belgian World Airlines (1984) 731 F. 2d 909, 926-7, where he observed that anti-suit injunctions are most often necessary to protect the jurisdiction of the enjoining court or to prevent the litigant’s evasion of important public policies of the forum.
Lord Goff also discussed in some detail the requirements of comity. He expressed the following general principle at 138:
“As a general rule, before an anti-suit injunction can properly be granted by an English court to restrain a person from pursing proceedings in a foreign jurisdiction in cases of the kind under consideration in the present case [an alternative forum case], comity requires that the English forum should have a sufficient interest in, or connection with, the matter in question to justify the indirect interference with the foreign court which an anti-suit injunction entails.
In an alternative forum case, this will involve consideration of the question whether the English court is the natural forum for the resolution of the dispute.”
As to the proper approach in such cases, Lord Goff cited the judgment of Sopinka J in Amchem Products Inc v British Columbia (Workers’ Compensation Board) [1993] 1 SCR 897, 932-932, including the following passage:
“If, applying the principles relating to forum non conveniens…, the foreign court could reasonably have concluded that there was no alternative forum that was clearly more appropriate, the domestic court should respect that decision and the application should be dismissed. Where there is a genuine disagreement between the courts of our country and another, the courts of this country should not arrogate to themselves the decision for both jurisdictions…In a case in which the domestic court concludes that the foreign court assumed jurisdiction on a basis that is inconsistent with principles relation to forum non conveniens and that the foreign court’s conclusion could not reasonably have been reached had it applied those principles, it must then go on to the second step of the [Aerospatiale] test [i.e. whether to grant an injunction on the ground that the ends of justice require it].”
Lord Goff described this exposition as being of considerable interest. He added that the general principle which he had outlined was consistent with the approach adopted by the Supreme Court of Canada in Amchem and that it was also close to the approach by the US Court of Appeals for the Second Circuit, the Sixth Circuit and the District of Columbia Circuit, derived from Judge Wilkey’s judgment in the Laker Airways case. This approach (as he had noted at 136) requires that a court should only grant an anti-suit injunction to protect its own jurisdiction or to prevent evasion of its public policies.
We were referred to Turner v Grovit [2001] UKHL 65, [2002] 1 WLR 107, where Lord Hobhouse said, at para 25, that an anti-suit injunction “is the obverse of an order for the stay of proceedings before the forum itself”, but I do not take him to have meant that a conclusion by the English court that England is the natural forum would of itself justify the grant of an anti-suit injunction, for that would be contrary to Aerospatiale and Airbus and there is no suggestion in Turner v Grovit that the House of Lords was intending to depart from the principles laid down in those cases. On the contrary, Lord Hobhouse said, at the end of para 27, that it is not sufficient for the applicant for an anti-suit injunction to say that there is another forum which is the appropriate forum; and in the next paragraph he went on to stress, by reference to Airbus, that English law attaches a high importance to international comity.
Proposition 6
This proposition is supported by Airbus at 132-133 (“parallel proceedings in different jurisdictions are not of themselves regarded as unacceptable”, per Lord Goff), Credit Suisse First Boston (Europe) Limited v MLC (Bermuda) Limited 767,781, and Royal Bank of Canada v Centrale Raiffeisen-Boerenleenbank [2004] 1 Lloyd’s Rep 471, 475. It also links with propositions 4 and 5. It is perfectly possible to envisage a scenario in which there are parallel proceedings and each court considers itself to be clearly the more appropriate forum, the difference of opinion arising from the courts taking different views of the weight of the relevant connecting factors. This scenario was envisaged by Hoffmann J in Re Maxwell. It is unfortunate if this should arise, but the possibility is inevitable. If in that situation the English court were to decide to impose its view on the foreign court by granting an anti-suit injunction, and the foreign court for the same reason decided to impose its view on the English court by an anti-suit injunction, the parties would then find themselves subject to mutual anti-suit injunctions. This would not solve the problem; it would add a further dimension, and it would run counter to the principle of comity. Hence the reason for an English court not ordinarily granting an anti-suit injunction in such circumstances, although there may be exceptions in circumstances such as those considered by Hoffmann J and by Sopinka J and Judge Wilkey in the judgments referred to by Lord Goff in Airbus.
Proposition 7
It stands to reason that by agreeing to submit to the non-exclusive jurisdiction of State X the parties implicitly agree that X is an appropriate jurisdiction, and therefore either party should have to show a strong reason for later arguing that it is not an appropriate jurisdiction. The cases support this approach: see Cannon Screen Entertainment Limited v Handmade Films (Distributors) Limited (July 11, 1989, Commercial Court, unreported), S & W Berisford PLC v New Hampshire Insurance Co [1990] 1 Lloyd’s Rep454, British Aerospace PLC v Dee Howard & Co [1993] 1 Lloyd’s Rep 368, 376 and Ace Insurance SA-NV v Zurich Insurance Co [2001] EWCA Civ 173, [2001] 1 Lloyd’s Rep 618, para 62. On the other hand, a non-exclusive jurisdiction clause self evidently leaves open the possibility that there may be another appropriate jurisdiction. The degree of appropriateness of an alternative jurisdiction must depend on all the circumstances of the case. In addition to the usual factors, the wording of the non-exclusive jurisdiction clause may be relevant, because of the light which it may throw on the parties’ intentions. Another possibly relevant factor (to which Waller J drew attention in Dee Howard)may be whether the choice of non-exclusive jurisdiction was specially negotiated or was contained in a standard form of contract.
Proposition 8
This proposition was stressed by Lord Goff in Airbus at p 140 and by Lord Bingham in Donohue v Armco Inc [2001] UKHL 64 [2002] 1 Lloyd’s Rep 425 at para 24.
Anti-suit injunctions and non-exclusive jurisdiction clauses
I turn to the recorded cases where applications have been made to an English court for an anti-suit injunction on the basis of a non-exclusive jurisdiction clause. Counsel have been able to find the transcript or reports of four such cases prior to the present: Cannon Screen, Credit Suisse, Sabah Shipyard (Pakistan) Limited v Islamic Republic of Pakistan [2002] EWCA Civ 1643, [2003] 2 Lloyd’s Rep 571 and RBC v Rabobank. Mance LJ in RBC v Rabobank at 480-1 referred to an additional unreported decision of Waller J in Amoco v TGTL (Comm Ct, July 11, 1989). Considering how common non-exclusive jurisdiction clauses are, this small number shows how unusual anti-suit injunctions are in such cases.
Cannon Screen
In Cannon Screen there were three plaintiffs, referred to as Cannon UK, Cannon Group and Mr Globus. There were two defendants, referred to jointly as Handmade. Cannon UK was incorporated in the UK, had its registered office in London and carried on business in London. Cannon Group was a Delaware company with its headquarters in Los Angeles. The president of Cannon Group and leading individual in the group was Mr Globus, who lived in California. Handmade were UK registered companies carrying on business in the UK and having their primary centre in London. The plaintiffs applied for an anti-suit injunction to prevent the defendants from carrying on proceedings against them in California.
The background to the dispute was that Cannon UK had entered into a string of contracts with Handmade relating to the exploitation of video rights in films to be made by Handmade. Payment was to be made by Cannon UK for distribution rights on dates defined by reference to when the various films were released in various parts of the world. The contracts comprised a principal agreement (the output agreement) and separate agreements in relation to each film (the conforming agreements). The output agreement and the conforming agreements all contained a clause designating English law as the governing law and stating that “the parties hereby consent and submit to the jurisdiction of the courts of England in connection with any dispute arising hereunder”.
Disputes arose and Cannon UK ceased to pay invoices. Handmade served a statutory demand, to which Cannon UK responded by issuing a summons in the Companies Court to stop the presentation of a winding up petition. On the hearing of that application Handmade conceded that Cannon UK had a bona fide defence and undertook not to present a winding up petition. Handmade’s solicitors asked Cannon UK’s solicitors if they would accept service of proceedings on behalf of Cannon UK, to which they agreed, but no such proceedings were started in the UK. Instead Handmade filed a complaint against the plaintiffs in the Superior Court of California. The plaintiffs responded by bringing proceedings in the Commercial Court claiming damages for breach of the output and conforming agreements and an injunction to restrain Handmade from pursuing the proceedings in California.
Cannon UK argued that the jurisdiction clause was an exclusive jurisdiction clause. Hobhouse J held that on its proper construction it was a non-exclusive clause (observing that “words are an accurate tool and relatively small differences in wording will produce different contractual effects”). But he considered that the clause was still of “primary importance” in evaluating the justice and propriety of granting an injunction to stay the Californian proceedings. He analysed in some detail the various claims in the Californian proceedings and identified what he regarded as a number of vexatious elements affecting all of them. He noted that the mere existence of concurrent proceedings in different jurisdictions did not make out a case for an injunction, and that in determining whether he should grant an injunction the relevant factors included what was the natural forum, the elements of vexation and oppression that were or might be involved and the principles of comity. The risk of injustice from concurrent proceedings in different jurisdictions in relation to the same subject matter was also a factor. Applying those principles to the facts of the case, he noted a number of features. The English proceedings were in accordance with the jurisdiction clauses and were going to go ahead in any event. He did not consider that, as between Cannon UK and Handmade, international comity would be transgressed by an anti-suit injunction. Handmade was domiciled and resident in the UK. The contractual rights that Handmade asserted were located in the UK and governed by English law. The party alleged to be liable (Cannon UK) was domiciled and resident in the UK and had its head office in London. The natural forum was England. The parties alleged to have suffered loss were English companies carrying on business in England and suffering the alleged loss in England. There were clear and cumulatively very strong elements of oppression and vexation in Handmade seeking to litigate its various claims against Cannon UK in California. He concluded that in all the circumstances “to sue in California is not merely to sue in an inconvenient forum but to engage in a crude form of oppression”.
On those grounds Hobhouse J granted an anti-suit injunction to Cannon UK. But he refused to grant similar injunctions to Cannon Group or Mr Globus. Handmade did not appear to be asserting English law rights against Cannon Group or Mr Globus, who were not parties to the output or conforming agreements, which contained the English non-exclusive jurisdiction clause. Hobhouse J considered it an important factor that Cannon Group and Mr Globus were both subject to the natural jurisdiction of the Californian courts but not that of the English court. He asked rhetorically:
“If they are being improperly or unjustly sued in California, why should they not look to their own courts to protect them rather than to the English courts? In English and private international law there can be no objection to the Californian court exercising both its procedural and it substantive jurisdiction over them.”
Amoco v TGTL
It appears from Mance LJ’s judgment in RBC v Rabobank that when English proceedings were well on their way to trial the English defendants commenced proceedings on the same subject in Texas for the purpose of obtaining discovery in Texas for use in the English action. Waller J granted an anti-suit injunction to prevent this. The passage of his judgment referred to by Mance LJ has similarities to his later judgment in Sabah.
Credit Suisse
Credit Suisse is of particular interest because it involved the same jurisdiction clause as in the present case, paragraph 17 of the GMRA. The contractual arrangements in Credit Suisse were complex. CS Europe, through its agent CS US, agreed to sell two series of bonds to MLC. MLC was a Bermudan company but it had offices in New York and the deals were made on the telephone in New York between representatives of MLC and CS US. The purchases were financed by repurchase transactions (repos). The framework for the repos was provided by a GMRA made between CS Europe and MLC. The specific purchase agreements were between the same parties and contained an English jurisdiction clause which was exclusive in relation to MLC (but non-exclusive in relation to CS Europe). The first series of bonds were issued by CS Switzerland. The second were issued by the Russian Federation with an underlying security expressed in Russian roubles, so that the purchase involved a currency risk, which was hedged by a contract between MLC and CS Switzerland. There was also a customer agreement between MLC and CS US, which contained a New York law clause but no jurisdiction clause.
MLC failed to meet a margin call. CS Europe thereupon began proceedings against MLC in the Commercial Court. Shortly after acknowledging service of those proceedings, MLC began proceedings in New York against CS Europe, CS US and CS Switzerland. CS Europe responded by making an application to join CS US and CS Switzerland as parties to the English action (which Rix J granted) and it also applied for an anti-suit injunction to restrain MLC from pursing its New York claims. MLC applied for a stay of the English action. Rix J held that in so far as there was a conflict of jurisdiction provisions on standard forms drafted by CS Europe, MLC should be entitled to exercise the broader rights under paragraph 17 of the GMRA rather than be restricted to the narrower jurisdiction provisions of the purchase agreements. He also dismissed MLC’s summons for a stay of the English action.
The CS parties argued in support of their application for an anti-suit injunction that paragraph 17 of the GMRA, although non-exclusive, meant that there could be no objection to the action proceeding in England, and that it was in the interests of justice to prevent parallel proceedings in New York. Rix J rejected the submission. His reasoning is at pages 780-782. He regarded it as an important fact that he could not ensure that all litigation between MLC and the Credit Suisse entities was carried forward in one jurisdiction unless he was prepared to extend an injunction to all the claims against all three CS entities in New York. He declined to injunct the claims against CS US and CS Switzerland because, however undesirable it is in principle to have parallel litigation in two jurisdictions, the duplication of litigation did not of itself make it in the interests of justice to injunct the New York proceedings in relation to CS US and CS Switzerland.
In so far as the claims against CS US were outside any contract between MLC and CS US, no jurisdiction clause applied and it could not be said that New York was an inappropriate forum. On the contrary, there was much to suggest that the centre of gravity of such claims was in New York. To the extent that the claims were under or affected by or in connection with the GMRA, paragraph 17 of the GMRA specifically provided that nothing in it should limit the right of any party to take proceedings in the courts of any other country of competent jurisdiction. Since he was considering a complaint before the New York court, comity suggested that the New York court should be the primary court to consider whether such claims should under principles applicable in New York be stayed in favour of English jurisdiction.
Rix J granted an injunction to CS UK in so far as MLC’s New York claims against it arose only under the purchase agreements, and were therefore covered by the exclusive English jurisdiction clause. He refused to grant an injunction in so far as the claims fell within paragraph 17 of the GMRA, because MLC’s right to sue CS Europe under the GMRA in any other country of competent jurisdiction was expressly reserved to MLC by the final sentence of paragraph 17.
Sabah
Sabah is the case on which DB places principal reliance. Mr Handyside submitted that it marked an important development in the law and that the decision in CS would now be different. Sabah was incorporated in Pakistan by its Malaysian parent for the sole purpose of entering into agreements with the Government of Pakistan (GOP) and a state owned corporation, KESC, relating to the design, construction and maintenance of an electric generation facility at Karachi. The agreements included an implementation agreement between Sabah and the GOP and a power purchase agreement between Sabah and KESC. The GOP also entered into a guarantee in favour of Sabah by which it guaranteed the obligations of KESC under the power purchase agreement.
Clause 1.9.1 of the guarantee provided that each party consented to the jurisdiction of the courts of England for any action filed by the other party under the agreement and provided for enforcement in England, subject to immaterial exceptions. Clause 1.9.2(c) provided that each party was to maintain in London a duly appointed agent for the receipt of service of process. Clause 1.9.3 provided that each party waived any objection which it might now or hereafter have to the venue of any action or proceeding brought as consented to under clause 1.9, and specifically waived any objection that any such action or proceeding was brought in an inconvenient forum and agreed not to plead or claim the same.
Disputes having arisen between the parties, an arbitration under the power purchase agreement took place in Singapore and resulted in an award in Sabah’s favour for US $6.84m. Sabah made a demand on the GOP under the guarantee. In response the GOP issued proceedings in Islamabad for declarations that the award had been obtained by fraud and was not binding on the GOP and that the guarantee was unenforceable for that and other reasons. The GOP also claimed an injunction restraining Sabah from making any demand on the guarantee and it obtained an ex parte injunction to that effect. It was common ground before the Court of Appeal that the order was intended to have the effect of preventing Sabah commencing proceedings in England despite clause 1.9.1. of the guarantee. Sabah issued proceedings against the GOP in the Commercial Court and sought an anti-suit injunction to restrain the GOP from proceeding against it in Pakistan. There was some uncertainty whether the interlocutory injunction issued by the Islamabad court was still in force at the time of the issue of the English proceedings, but the Court of Appeal was told that the Islamabad court had of its own motion ordered Sabah’s lawyers to show cause why they should not be committed for contempt. The Court of Appeal upheld the grant of an anti-suit injunction by David Steel J.
On any view the conduct of the GOP was vexatious and oppressive, and the approach of the foreign court (although the Court of Appeal was careful not to criticise it directly) was difficult to reconcile with generally accepted principles of international law. Sabah had obtained an award which it was seeking to enforce in accordance with the terms of an English contract under which the GOP had agreed that the English court should have jurisdiction. As Waller LJ observed in giving the leading judgment, England had been chosen as a neutral jurisdiction by a company with Malaysian shareholders and the State of Pakistan. But in disregard of the contractual provisions of the guarantee, the GOP sought to prevent Sabah from having recourse to the English jurisdiction. In such circumstances the interests of justice required the English court to grant an anti-suit injunction in order to protect the contractual rights of Sabah.
Mr Handyside submitted that the reasoning of the Court of Appeal was based on a broader principle. He relied in particular on the words of Waller LJ at para 36:
“In the instant case, on any view, the GOP agreed to submit to the jurisdiction of the English court. Furthermore, it appointed agents for the purpose of service in England, and it agreed to waive any objection that any action brought in England was being brought in an inconvenient forum. It seems to me that it cannot have been the intention of the parties that if proceedings were commenced in England, parallel proceedings could be pursued elsewhere unless there was some exceptional reason for doing so.”
Waller LJ went on to say that it could not have been contemplated that convenience could count as a reason for pursuing proceedings in a country other than England, particularly where England had been chosen as a neutral jurisdiction. It was therefore a breach of contract to seek to prevent Sabah commencing proceedings in the agreed jurisdiction. If proceedings in England had been commenced before the proceedings in Pakistan, it would in the context of this clause have been vexatious for the proceedings in Pakistan to have been commenced if the only basis for bringing them was on the ground of forum non conveniens. Similarly, if proceedings were commenced in Pakistan in an attempt to frustrate the jurisdiction clause, such conduct would be contrary to the spirit of the clause and vexatious.
Mr Handyside relied on this passage as authority for the proposition that where there is a non-exclusive jurisdiction clause, it cannot have been the parties’ intention to permit the prosecution of parallel proceedings and that it is oppressive and vexatious for a party to seek to pursue parallel proceedings in another country unless are exceptional reasons for doing so.
Thomas Raphaelin his book The Anti-Suit Injunction (OUP, 2008) para 9.10, comments on this reasoning:
“This may go too far. If this reasoning was adopted in relation to non-exclusive jurisdiction clauses in general, it would mean that non-exclusive clauses could be converted into something close to an exclusive jurisdiction clause by the simple expedient of commencing parallel proceedings in England soon after the commencement of the foreign proceedings. So it is submitted that this aspect of Sabah should be read as specific to the unusual facts of the case, where the foreign proceedings included a claim for an anti-suit injunction to restrain proceedings in the chosen forum.”
Cheshire North and Fawcetton Private International Law (14th Ed, 2008) adopt a similarly cautious approach to Sabah. They say at 474:
“Where the agreement provides for the non-exclusive jurisdiction of the English courts there is no breach of agreement in bringing proceedings abroad and therefore an injunction will not be granted on the basis of breach of an agreement. However, if one party (A) by way of a pre-emptive strike seeks an injunction abroad whereby the other party (B) will be permanently restrained from making any demand under a contract (containing a non-exclusive English jurisdiction clause) in the hope of preventing B from starting proceedings in England, this is a breach of contract and vexatious. An injunction restraining A from continuing the proceedings abroad will then be granted on the basis of vexation or oppression. Moreover, the nature of the jurisdiction clause may be such that, although not exclusive, it does not contemplate parallel proceedings and pursuing proceedings abroad would be vexatious and oppressive. Normally, though, a non-exclusive jurisdiction agreement will contemplate the possibility of simultaneous trials in England and abroad and, if trial is pursed abroad, there will not only be no breach of agreement but also no vexatious or oppressive conduct.”
Raphael’ssuggestion that the court’s reasoning in Sabah should be read as specific to the unusual facts, where the foreign proceedings included a claim for an anti-suit injunction to restrain proceedings in an agreed forum, is consistent with the statement by Waller LJ at para 44 that the injunction was being granted by the court to give effect to the bargain made by the parties and was therefore not an unfriendly interference with the jurisdiction of the foreign court.
In Evialis v SIAT [2003] EWHC 863 (Comm), [2003] 2 Lloyd’s Rep 377 Andrew Smith J adopted a similar approach to the interpretation of Sabah. The case concerned an insurance claim by Evialis for cargo damage. The insurers brought declaratory proceeding against Evialis in Genoa. Evialis subsequently brought proceedings against the insurers in England and sought an anti-suit injunction to restrain the insurers from prosecuting the Italian proceedings. The case is of limited present relevance because it was governed by the Brussels 1 Regulation, but Evialis relied on Sabah. At that stage English courts were following the reasoning of the Court of Appeal in Continental Bank NA v Aeakos Compania Naviera SA [1994] 1 WLR 588 in granting anti-suit injunctions in cases governed by the Regulation where there was an exclusive English jurisdiction clause (a practice which the European Court of Justice has since ruled to be impermissible). Andrew Smith J did not accept that the relevant clause was properly to be interpreted as conferring exclusive jurisdiction on the English court, but he accepted that Evialis had a good arguable case that the clause entitled it to sue the insurers in England (para 67). In those circumstances there was no breach of contract by the insurers issuing proceedings in Genoa and he observed that to grant an anti-suit injunction would be an extension of the decision in Continental Bank. He distinguished Sabah on the basis that although there was reference in that case to the proceedings in Pakistan being oppressive and vexatious, as he read the judgments, the basis of the Court of Appeal’s decision was that the government was in breach of the jurisdiction agreement (para 101). He refused to grant an anti-suit injunction for a number of reasons, one of which was that he considered there to be a real risk that the Italian courts would regard it as an affront for an English court to grant such an injunction (paras 52-58 and 139 (iv) ).
RBC v Rabobank
RBC v Rabobank concerned a swap agreement which was subject to an International Swap Dealers Association master agreement. The master agreement was governed by English law and contained a non-exclusive jurisdiction clause by which each party submitted to the jurisdiction of the English court and waived any objection which it might have at any time to proceedings being brought in England. The clause also provided that nothing in the agreement precluded either party from bringing proceedings in any other jurisdiction, nor would the bringing of proceedings in any one or more jurisdictions preclude the bringing of proceedings in any other jurisdiction.
Rabobankcommenced proceedings against RBC in New York claming rescission of the swap agreement or damages on the ground of fraudulent misrepresentation. On the next working day RBC commenced English proceedings for damages in respect of money payable under the agreement. The claims and cross claims in the New York and English proceedings mirrored each other.
RBCapplied to theEnglish court for an injunction to restrain Rabobank from pursuing the New York proceedings. The application was refused by Andrew Smith J, who found that Rabobank had a legitimate juridical advantage in pursuing proceedings in New York and that the English court was not a more natural or appropriate forum for the trial of the issues. His decision was upheld by the Court of Appeal.
RBC did not suggest that it was vexatious or oppressive for Rabobank to have brought the New York proceedings in the first place but, relying on Sabah, it submitted that the jurisdiction clause was to be treated as conferring “primacy” on the English court in any conflict arising from the existence of parallel proceedings; that it could not have been contemplated by the parties that parallel proceedings would continue in New York after proceedings had been commenced in the forum which they had agreed as convenient; and that in those circumstances it was in the interests of justice to restrain Rabobank from continuing with the New York proceedings.
The Court of Appeal distinguished Sabah both on the language of the relevant clause and on the facts. Mance LJ observed, at para 41, that the relevant clause expressly contemplated the commencement of foreign proceedings prior to any English proceedings and, as a result, the concurrence of parallel proceedings here and abroad. Whereas in Sabah it was clearly a breach of contract for the GOP to seek to prevent Sabah commencing proceedings in the agreed English jurisdiction, the issue of the New York suit by Rabobank was not oppressive. Mance LJ added, at para 50, that he would not “rule out the possibility” of an English court concluding that a foreign suit, properly commenced and pursued at the outset, had become oppressive during its course. But proceedings, once begun, were normally intended to be pursued to trial. Even on the assumption (which he was prepared to make for the purposes of the argument) that a non-exclusive jurisdiction clause might somewhat relax the inhibitions which the English court might otherwise feel in interfering with a foreign suit, and that the English forum might in that way be given a certain primacy, considerations of comity grew in importance the longer the foreign suit continued and the more the parties and the judge had engaged in its conduct and management.
Other authorities which influenced the judge
Apart from Sabah, the main authorities which influenced Burton J were Dee Howard, Du Pont v Agnew [1987] 2 Lloyd’s Rep 585, Donohue v Armco and what he described as a stream of persuasive first instance decisions which post-dated Sabah.
In Dee Howard proceedings were brought in England four months after the English defendants had commenced proceedings in Texas against the English plaintiffs. The English defendants applied to stay the English action on the ground of forum non conveniens. The contract giving rise to the dispute contained an English jurisdiction clause. Waller J construed the clause as exclusive, but held that, even if it was not an exclusive jurisdiction clause, it was a clause which the parties had freely negotiated, agreeing not to object to the English court’s jurisdiction, and that in those circumstances it would be wrong to stay the action. There was no discussion of an anti-suit injunction.
In Du Pont the English plaintiffs were insured against product liability claims under a number of policies, the leading policy being a Lloyd’s policy negotiated and issued in London. The plaintiffs issued a writ in England claiming indemnity under the policies in respect of a large personal injury award which had been made against them. One month later, all except one of the insurers brought proceedings against the plaintiffs in Illinois for negative declaratory relief and an injunction to restrain the English proceedings. The English defendants also applied to stay the English action on the ground of forum non conveniens. The application failed.
Bingham LJ, at p 589, referred to the general undesirability of concurrent proceedings between the same parties on the same issues in different jurisdictions; but he added that the general undesirability of such concurrent proceedings was only one consideration to be weighed as part of the overall assessment. It could not necessarily lead to a stay or setting aside of the English proceedings. It might, on the facts, be correct to restrain pursuit of the foreign proceedings (as in Aerospatiale) or to make no order.
He did not regard the dates on which the proceedings were begun as significant. As it happened, the English proceedings began first, but it might have been the other way round, and he did not consider that the outcome should be affected by what was little more than an accident of timing. After reviewing the relevant factors he concluded that England was a clearly more appropriate forum for the trial of the litigation than Illinois.
The next stage in the saga was Du Pont v Agnew (No 2) [1988] 2 Lloyd’s Rep 240, to which Burton J does not appear to have been referred. Having successfully resisted the insurers’ application for a stay of the English proceedings, Du Pont applied to the English court for an anti-suit injunction to restrain the insurers from proceeding with the Illinois action, but the application failed. By this stage the judge dealing with the matter in Illinois had dismissed a motion by the insurers to restrain Du Pont from proceeding with the English proceedings and a motion by Du Pont to stay the Illinois proceedings. The Court of Appeal did not consider that its own opinion that England was clearly the more appropriate forum, and the undesirability of parallel proceedings, were sufficient to make it right to grant an anti-suit injunction. Part of the indemnity claimed by Du Pont related to an award of punitive damages of $13 million which had been made against it by a jury in Illinois. Neill LJ observed at p 249 that it was clear that the court in Illinois considered that it was the more appropriate forum to resolve the issue as to Du Pont’s right to an indemnity in respect of punitive damages. There was therefore a difference of approach between the English court and the Illinois court as to which was the more appropriate forum. The court did not consider it right to arrogate to itself the power to resolve that difference of view by the grant of an injunction.
In Donohue v Armco the facts were complex. Armco was a US based conglomerate and was the ultimate owner of a group of three insurance companies known as British National Insurance Group. Armco agreed to sell the insurance group to two senior Armco executives, one of whom was Donohue. The purchase agreements for the insurance group contained exclusive English jurisdiction clauses. In due course Armco alleged that it was induced to enter into the agreements by fraud and it brought proceedings in New York against Donohue and a number of alleged fellow conspirators. Subsequently Donohue brought proceeding against Armco in the English court in reliance on the exclusive jurisdiction clause and applied for an anti-suit injunction to prevent Armco continuing with its action against him in New York. The application failed.
Lord Bingham stated that where there was an exclusive jurisdiction clause the English court would ordinarily exercise its discretion to secure compliance with the contractual bargain, whether by granting a stay of proceedings in England or by restraining the prosecution of proceedings in the non-contractual forum abroad. However, he considered that the ends of justice would be best served by a single composite trial in the only forum in which a single composite trial could be procured, which was New York. On that ground he found strong reasons for not giving effect to the exclusive jurisdiction clause in favour of Donohue.
The series of first instance decisions since Sabah to which Burton J referred are Breams Trustees Limited v Upstream Downstream Simulation Services Inc [2004] EWHC 211 (Ch), BP plc v National Union of Fire Insurance Co [2004] EWHC 1132 (Comm), Antec International Limited v Biosafety USA Inc [2006] EWHC 47 (Comm) and H I T Entertainment Limited v Gaffney International Licensing Pty Limited [2007] EWHC 1282 (Ch). All involved unsuccessful applications to stay English proceedings, or to set aside service of proceedings outside the UK, where there were parallel foreign proceedings and there was a non-exclusive English jurisdiction clause. Although none of them involved an application for an anti-suit injunction to prevent continuation of the foreign proceedings, it was their reasoning which Burton J described as providing persuasive authority in support of an anti-suit injunction in the present case. Because they are in similar vein, I will take as a single example BP plc v National Union of Fire Insurance Co, where Colman J said that the effect of the authorities was to establish the following principles:
“i) If a contract contains a non-exclusive jurisdiction clause the parties are taken mutually to have agreed that the country in which jurisdiction may be exercised pursuant to the clause is a convenient forum.
ii) Only in exceptional circumstances unforeseeable when the contract was made would it be open to one party to ignore such a jurisdiction clause and to start proceedings for negative relief elsewhere on the basis of a balance of convenience.
iii) The commencement in a forum other than that to which the jurisdiction clause refers of proceedings for negative or any relief before the commencement by the other party of proceedings in the agreed forum can normally contribute nothing to ascertaining such balance of convenience, which has to be tested on the assumption that neither party had yet started proceedings in any forum.
iv) In cases where it cannot be said that there are any exceptional circumstances unforeseeable at the time when the agreement was made which render an unagreed form materially more convenient than the agreed forum, subject to (v) below, it will be procedurally oppressive for one party to commence proceedings in an unagreed forum either before or after the other party has commenced proceedings in the agreed forum.
v) There may be exceptional cases where, in spite of there being no unforeseen circumstances giving rise to a balance of convenience in favour of some other forum, the justice of the case and the interests of all parties so strongly point to the desirability of a trial in an unagreed forum that they outweigh what would otherwise be the oppressive character of a party’s conduct in ignoring the agreed forum.”
Colman J based these principles largely on his interpretation of Sabah. He made no reference to RBC v Rabobank. It may be that the judgment of the Court of Appeal in the latter case had not yet been reported, and it is certainly hard to imagine that Colman J would not have referred to it if it had been cited. The issue before him was whether to set aside service of proceedings brought by an insured under an insurance contract containing a non-exclusive English jurisdiction clause. The insurers had previously issued negative declaratory proceedings against the insured in New York. The judge concluded his judgment dismissing the application to set aside service of the English proceedings with a message to the parties expressed in the form of a prediction that a time would come when “the perception of all parties concerned gave more weight to maximising the cost effectiveness of their route to dispute resolution than to maximising their payments of legal fees”.
His comment serves as a reminder that however undesirable it is that parallel proceedings may proceed and in theory result in conflicting judgments, whether and to what extent it happens in practice that the courts find themselves faced with the enforcement of conflicting judgments is another matter. Experience suggests that when parallel cases continue to be fully fought after the initial jurisdiction battles the courts will do their best to use their management powers to prevent tactical obstructionism and to achieve a just and orderly disposal of the litigation, taking into account the progress of the parallel proceedings as may be appropriate.
Conclusion
The starting point for considering the effect of a non-exclusive jurisdiction clause must be the wording of the clause. In terms of contract law, I cannot see how a party could ordinarily be said to be in breach of a contract containing a non-exclusive jurisdiction clause merely by pursuing proceedings in an alternative jurisdiction. It is conceivable that a jurisdiction clause which is not fully exclusive may nevertheless be drafted in such a way as to have the effect of barring parallel proceedings in certain circumstances, but that is a matter of individual contractual interpretation. Looking at the matter in general terms, I agree with Raphael’s suggestion in The Anti-Suit Injunction at para 9.12 that
“where a non-exclusive jurisdiction clause does not clearly indicate whether prior or subsequent parallel proceedings in a non-selected forum are permitted or prohibited, the best interpretation will usually be that, by contracting for non-exclusive jurisdiction, the parties have anticipated and accepted the possibility of some parallel proceedings, and as a result, only foreign proceedings which are vexatious and oppressive for some reason independent of the mere presence of the non-exclusive clause will be restrained by injunction.”
Consistently with that approach, when it comes to the question whether the interests of justice require that an anti-suit injunction should be granted, I do not consider that it would be right to start with a general presumption that parallel proceedings in a non-selected forum are to be regarded as vexatious or oppressive and that there is a burden on the party responsible for prosecuting them to make out a strong case to justify them on grounds of matters unforeseeable at the time of the contract or other exceptional circumstances. My reasons are based on principle, practice and authority.
In principle, there are a number of reasons why I do not think that it would be right to adopt such a presumption. First, it is equivalent or at least comes close to treating a non-exclusive clause as an exclusive jurisdiction clause once proceedings are commenced under it, whereas there is an important difference. An exclusive jurisdiction clause creates a contractual right not to be sued elsewhere, although the court has a discretion whether to enforce it (and may refuse as in Donohue v Armco). In the case of a non-exclusive clause, either party is prima facie entitled to bring proceedings in a court of competent jurisdiction. Duplication of litigation through parallel proceedings is undesirable, but it is an inherent risk where the parties use a non-exclusive jurisdiction clause.
Secondly, I see no cogent reason why it should automatically be assumed that nomination of a non-exclusive forum should give priority or dominance to that forum over any other. It ignores all variables. The non-exclusive jurisdiction clause may in one case represent the result of specific negotiations; in another it may result from the use of a standard form of contract. In one case there may be another forum which is obviously appropriate applying the normal factors; in another case there may not be.
Thirdly, there is the important factor of comity to consider. If the English court and the foreign court take different views about the weight to be attached to a non-exclusive jurisdiction clause, I do not see that as a sufficient reason for departing from the principle that each court should ordinarily be left to determine the suitability of the litigation before it and should be chary of attempting to interfere with the other court’s decision. (See Du Pont (No 2), Re Maxwell and Airbus)
The argument for saying that where proceedings are brought in England pursuant to a non-exclusive English jurisdiction clause it will be vexatious and oppressive for either party to pursue parallel proceedings in a foreign court, unless there is an exceptional reason for doing so, is premised on the reasoning that such parallel proceedings cannot have been within the parties’ contemplation, that the exposure to the costs and risks of inconsistent judgments resulting from parallel proceedings is oppressive, and that justice therefore requires that the foreign proceedings should be barred (since there can be no objection to the English proceedings in the light of the agreed submission to English jurisdiction). For reasons already set out, I am not persuaded by the premises which underlie the argument. As to the first, if on the proper interpretation of the clause its effect was to bar parallel proceedings, then the party suing in England would have a contractual right to enforce the bar, subject to the court’s residual discretion in matters of procedure. But if that is not the effect of the clause, then the clause does leave open the foreseeable possibility of parallel proceedings. As to the second, it does not follow that because parallel proceedings are undesirable they are necessarily oppressive. If they are improperly brought they are oppressive, but here the argument becomes circular.
As a matter of practice non-exclusive jurisdiction clauses are commonplace but, as noted, there appear to have been only three known previous cases where the English court has granted an anti-suit injunction to restrain the foreign proceedings. They are Cannon Screen, Amoco v TGTL and Sabah. Those cases were in different ways exceptional. The anti-suit injunction in Cannon Screen was not based on any broad proposition that the Californian proceedings were presumptively vexatious and oppressive in the light of the English non-exclusive jurisdiction clause. It was based on a combination of factors which lead the judge to describe the action brought against Cannon UK in California as a crude form of oppression. Amoco v TGTL concerned the institution of what seem to have been effectively ancillary proceedings in a foreign court for the purpose of obtaining documents for use in an English action.
Sabah has given rise to a good deal of debate as to its interpretation. I agree with Andrew Smith J in Evialis and Raphael that the decision is best understood to have been based on the finding that the GOP acted in breach of its contract with Sabah by bringing proceedings in Islamabad in which it claimed an injunction to prevent Sabah from enforcing its rights against the GOP in England pursuant to the English non-exclusive jurisdiction clause. (This view is supported by Waller LJ’s statement in para 44 that the injunction “is being granted by the Court to which both parties have agreed to give effect to the bargain they made”.) If I am wrong, and the injunction was granted not in support of a legal right but under the court’s power to protect Sabah from vexatious and oppressive litigation, for reasons already discussed the conduct of the GOP was certainly vexatious and oppressive on the particular facts of the case. On either approach, the case needs to be seen in the context of its own particular facts. It would be wrong in my view to extrapolate from it a rule of law that the prosecution of foreign litigation in parallel with litigation in England pursuant to a non-exclusive jurisdiction clause is per se vexatious and oppressive unless exceptional circumstances can be shown to justify it. Such a rule would be inconsistent with the weight of other appellate authorities from Du Pont (No 2) to RBC v Rabobank. It follows that in so far as later first instance judgments have treated Sabah as establishing such a rule, they are in my view wrong (although I am not suggesting that the decisions made in those cases, concerning applications to stay English proceedings or to set aside service of English proceedings out of the jurisdiction, were wrong).
I would therefore hold that Burton J misdirected himself in principle when he said that
“…absent some unforeseeable change since the contract, none of which is suggested here, in my judgment, when it comes to deciding whether it is vexatious or oppressive to continue two sets of proceedings in parallel, it is vexatious and oppressive, in the absence of any such exceptional unforeseeable circumstances, for a party to pursue proceedings in non-contractual forum.”
Accordingly it is necessary for this court to make its own decision whether an anti-suit injunction ought to have been granted. There are a number of relevant factors.
The starting point is the wording of the contract. The GMRA used by the parties was a standard form of international finance agreement. The last sentence of paragraph 17 (“Nothing in this paragraph shall limit the right of any party to take proceedings in the courts of any other country of competent jurisdiction”) is inconsistent with reliance on that clause of itself to suggest that the prosecution of parallel proceedings in another jurisdiction would be oppressive or vexatious. The clause does not prevent DB from relying on other factors to show that the parallel proceeding were vexatious or oppressive, but, to the extent that a party might otherwise pursue parallel litigation without it being vexatious or oppressive, its right to do so is not limited by the paragraph, because the paragraph itself says so in plain terms.
Looking at the usual list of factors, some would favour England as the forum and some would favour Texas as the forum.
I have referred to the main ones advanced by the parties on the application to dismiss or stay the Texas action for forum non conveniens, and they were fully argued before Judge Molberg.
I would attach little significance to the fact that the Texas action was begun before the English action, both for the reason given by Bingham LJ in Du Pont when considering an application to stay an English action in favour of an Illinois action commenced a month later (where he expressed the view that the outcome should not be affected by what was little more than an accident of timing), and also because the natural consequence of treating it as an important factor would be to encourage parties to rush to fire the first shot.
Far more important is what has happened in the foreign proceedings. Whatever decision this court might have made about the rival merits of London and Texas as a forum for determining the dispute, there can be no foundation for any suggestion that Judge Molberg’s decision to accept the suit of the Highland companies (who had strong connections with Dallas and whose complaints related to financial agreements negotiated and executed by them in Dallas) violated the principles of customary international law. In my judgment his decision whether to accept jurisdiction should be respected. Although the cases such as Re Maxwell and Airbus recognise that there may be exceptional circumstances where the interests of justice, as perceived by the English court, require the grant of an injunction to restrain foreign proceedings which the foreign court considers it proper to entertain, this is not such an exceptional case.
When all is said and done, this is a dispute between international financial institutions under a standard form contract governed by English law and with an English non-exclusive jurisdiction clause, but where there is relatively little else to connect the dispute with England. The English Commercial Court has an important role as a tribunal often chosen by foreign parties for the resolution of their disputes; but if such parties do not choose to make its jurisdiction exclusive, the court should not attempt to block any alternative jurisdiction which properly regards itself as an appropriate forum, save possibly in exceptional circumstances which do not presently exist.
Disposal
I would (a) refuse Highland’s application for permission to appeal against Tomlinson J’s refusal to extend time for challenging the English court’s jurisdiction; (b) refuse Highland’s application for permission to appeal against Burton J’s order allowing DBSI to be joined as a claimant in the proceedings; and (c) grant Highland’s application for permission to appeal against the anti-suit injunction granted by Burton J, allow the appeal and set aside the injunction.
Lord Justice Goldring:
I agree with both judgments.
Lord Justice Carnwath:
I agree fully with Toulson LJ’s judgment, to which I pay admiring tribute, and with his proposed disposal of the appeals.
I take the opportunity to renew a plea on behalf of the text-book writers. In CEL Group Ltd. v Nedlloyd Lines UK Ltd. & Anor [2003] EWCA Civ 1716 I said (with the agreement of Waller LJ):
“One of the curses of the common law method in the 21st century is unlimited accessibility to authorities, reported and unreported, and apparently unlimited resources for copying them. (See the Practice Direction on Citation of Authorities [2001] 1 WLR 2001) On the other hand, one of the blessings is the availability of up to date and authoritative textbooks on almost every relevant subject, in which the material cases have been sorted out and digested. For my part, at least where I am concerned with common law rather than statute, I find it most helpful to start by looking for a succinct statement of the relevant principle: either in a recent binding decision of the higher courts, if there is one; or, if not, in a leading textbook (or, where available, a Law Commission report). Of course, that is only the starting point. Authorities may be needed to qualify, expand, or merely illustrate the basic principle. However, it is important to be clear for which of those purposes any case is being advanced. Furthermore, where the purpose is to qualify or expand, it is not enough simply to cite an authority, without being able to articulate with reasonable precision the proposition which it is said to support.
Occasionally, and exceptionally, the uncertainty of the law in a particular area may require a detailed examination of cases going back over a long period. In such cases, for my part, I welcome all the help I can get. In most disputed areas of the law, it is possible to identify a recent, informed academic treatment of the subject by a recognised authority, with a full discussion of the relevant cases. Proliferation of academic articles is no more welcome than proliferation of authorities. However, an objective academic review can often provide the best framework for the discussion in court, and a useful corrective to the necessarily partisan viewpoint of counsel.”
That observation was directed to the arguments in the case which had involved a detailed examination of authorities going back over 100 years. The issues in this case are rather different in kind, and the authorities more recent; but the complexity of the facts in some is an obstacle to the confident extraction of principle. In my view, the same approach can be relevant to presentation of cases in many specialist areas of the law, where abundance or complexity of authority can be an impediment to ready understanding by the uninitiated. Advocates preparing arguments for this court in such a case would do well to bear in mind that not all members of the constitution are likely to be equally familiar with the legal subject-matter of the appeal.
I mean no disrespect to the impressively full “skeletons” in the present case, nor to the expert oral presentations on both sides. However, in some ways I found the simplest and clearest exposition of the problem with which we are faced in Thomas Raphael’s book “The Anti-suit Injunction” paras 9-07 to 11 (quoted by Toulson LJ at para 83). As the author makes clear, the uncertainty arises principally from the apparent tension between some of the statements in Sabah case and the arguably more conventional view reaffirmed in Rabobank. Although that discussion merited a footnote in the skeletons, it might usefully have been given more prominence. It has not of course dispensed with the need for a journey through the authorities reviewed by Toulson LJ, but it has provided signposts to the general direction of travel and independent guidance along the way.