Anti-Suit Injunctions – How they work in Arbitration

What is an anti-suit injunction?

An anti-suit injunction (“ASI”) is an injunction against a natural or legal person, personally prohibiting him from starting or continuing with proceedings in a court or tribunal outside of the jurisdiction.

Typically, in the context of an arbitration, a party may seek an ASI from the tribunal, once constituted, or from the court in the seat of the arbitration in order to stop foreign proceedings which breach the arbitration agreement. An application may also be made in the court in which the foreign proceedings are taking place or in a third jurisdiction.

The ASI has a long pedigree in the common law, but its foundations interestingly had nothing to do with foreign proceedings. According to Gee on Commercial Injunctions (7th edition) the first ASI was recorded in around 1615, when a court issued an injunction restraining a claimant from enforcing a judgment after he took his opponent’s main witness to a pub when he was supposed to give evidence, told the trial judge that the witness was “deathly ill”, and accordingly obtained a favourable judgment.

Why would a party to an arbitration need an anti-suit injunction?

In general, a party may seek an ASI because he is suing or being sued in one forum and a party, usually but not always the respondent or defendant in the original proceedings, or a related party, commences an action in a ‘foreign’ place elsewhere which has a detrimental impact on the original proceedings, for instance because it is in breach of the arbitration agreement or because there is a danger parallel proceedings may render incompatible judgments on the same issues.

• The classic basis of the ASI in English law was explained by the UK House of Lords as including cases based on a right not to be sued in a foreign court (British Airways Board v Laker Airways Ltd [1985] AC 58 at 81). That right may be based on a prior contractual agreement to subject the matters in dispute in the foreign proceedings to litigation or arbitration elsewhere.
  
  However, there is no exhaustive list of reasons for granting an ASI. In Societe National Industrielle Aerospatiale v Lee Kui Jak [1987] AC 871, an ASI was granted to eliminate the risk of injustice to the defendant from not being able to claim an indemnity from a third party in the same set of proceedings. Continuing the foreign proceedings would have exposed the defendant to the risk of inconsistent conclusions in different jurisdictions on the question of the defendant’s liability.
• In BNP Paribas SA v JSC Russian Machines and another [2011] EWHC 308 (Comm), and upheld by the Court of Appeal ([2012] EWCA Civ 644), the English Court found that the foreign proceedings, the target of the injunction, had been commenced by a third party who had colluded with the defendant to impede the arbitration. It was equitable to injunct the third party because the foreign proceedings were vexatious and oppressive. 

ASIs may therefore be based on a cause of action, such as a promise not to sue; or a right, such as a contractual right not to be sued; or wherever justice and/or convenience requires restraining a party from beginning or continuing foreign proceedings.

Why is an anti-suit injunction a controversial tool in arbitration?

An ASI forbids a person from carrying on a dispute in a foreign forum, either by compelling the respondent to withdraw (or terminate) the dispute or stay it until the primary dispute is resolved.

A court in granting an ASI restrains the respondent irrespective of the substantive and procedural rules of the foreign court or tribunal, including the applicable foreign conflict of laws and rules on jurisdiction which may entitle the respondent to litigate or arbitrate in the foreign forum. As a consequence, an ASI inherently meddles in the operation of a foreign court or tribunal process.

This raises concerns about tensions between national courts, and concerns about the extra-territorial effect of ASIs which are necessarily aimed at the jurisdiction of other courts or tribunals. As a result, an ASI is aimed at the party prosecuting the foreign claim and is not binding on the foreign court or tribunal (although the ASI order is usually sent to the foreign court or tribunal so it is aware of the existence of the order).

How can I obtain an anti-suit injunction?

A tribunal may have the power to issue an ASI. Its power to do so usually lies in the rules of the arbitration and in the arbitration law of the seat. For instance, Article 25 of the LCIA Rules 2020, Article 28(1) of the ICC Arbitration Rules 2021 and Section 38 of the English Arbitration Act 1996 empower tribunals to order interim remedies which implicitly include ASIs.  Where no tribunal has yet been formed but an ASI is urgently needed, a party may seek the appointment of an emergency arbitrator if the applicable rules and law allow such an appointment.

Some courts, such as England and Wales, commonly issue ASIs in order to restrain foreign court or arbitration proceedings. Others are more reluctant to do so. Generally, the forum court will only issue an ASI as an exercise of its discretion, without limiting the factors it may consider when contemplating that exercise.

The factors the tribunal or court will take into account when considering its discretion vary according to the jurisdiction and the applicable law, but the applicant may need to show one or more of the following: a binding right to arbitration or other cause of action that covers the matter in dispute in the foreign proceedings, or otherwise that it would be unjust for the foreign proceedings to be allowed to continue.

It is key to scrutinise the wording of the arbitration agreement. Wide arbitration agreements cover “all disputes arising out of or relating to” a substantive contract, including both contractual and non-contractual claims. Often, the courts will presume that the parties to the arbitration agreement intended all disputes arising from their contract to be determined in one place, i.e. arbitration. 

An application for an ASI should be made promptly, usually as soon as the prospect or existence of foreign proceedings is identified by the applicant. A failure to act promptly without justification may reduce the possibility of a court issuing the ASI given the progress of the foreign proceedings that may have been made in the interim.

Should a party apply to the arbitral tribunal or a court?

There are crucial differences between the powers of an arbitral tribunal and a court.

It takes time for a tribunal to be formed, even if an arbitrator is being appointed in an emergency. Court access is practically instantaneous. The jurisdiction of the tribunal is purely contractual and so its jurisdiction is limited to the parties to the arbitration agreement. A court has an inherent jurisdiction over defendants personally, which includes third parties to the arbitration agreement. Courts also usually have far greater powers than tribunals to sanction respondents and others who breach the terms of an ASI. The tools available to the former often include imprisonment and substantial fines, whereas the tribunal can only issue an award (whose enforcement will depend in part on the approach of the enforcing courts to ASIs); draw negative inferences from the breach and deploy them in the arbitration; and punish those in contempt with awards of costs and interest at a higher rate.

However, an ASI from a tribunal may ensure confidentiality over the process, and potentially be cheaper and quicker than instructing foreign counsel to act. The tribunal may be more familiar with the parties and issues in the dispute, and render an ASI expeditiously. Where the arbitration which is sought to be restrained has a foreign seat, a court may be especially cautious about intervening and do so only exceptionally.

A further option is to seek an ASI from the tribunal and in parallel file an objection in the foreign proceedings, but please note that voluntary participation in foreign proceedings may undermine the prospects of obtaining or maintaining an ASI from elsewhere.

If the ‘foreign’ proceedings are in the courts of the seat of the arbitration, the applicable arbitration law is highly likely to oblige those courts to stay the proceedings if they are covered by a valid arbitration agreement. This obligation is found in numerous arbitration laws including Section 9 of the English Act, and implements an obligation at Article II(3) of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.  

Conversely, a court or tribunal may injunct another arbitral tribunal in exceptional cases, if the foreign arbitration is conducted outside the scope of an arbitration agreement and it is just and convenient to make the injunction, for instance because the foreign arbitration is oppressive and vexatious (see Sabbagh v Khoury and others [2019] EWCA Civ 1219).

What if my opponent seeks or has obtained an anti-suit injunction against me?

There are a number of steps a respondent to an ASI can take. Check that the scope of the ASI covers the existing or planned foreign proceedings. The foreign proceedings may be outside the scope of the arbitration agreement, or otherwise be un-arbitrable (such as criminal or regulatory proceedings). Consider applying to the court or tribunal that granted the ASI to vary it or set it aside (in the common law system, if the ASI was granted ex parte, without the presence of the respondent, by default there will be a return hearing at which the respondent can be heard). Compliance with the ASI may be required within a given time period and may require the disclosure of information to the other party, e.g. proof of the withdrawal or stay of the foreign proceedings. The sanctions for breaching an ASI vary across jurisdictions and proper legal advice should be taken over the scope of the penal notice, if applicable. 

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