After investigating two significant claims by Sulpicio, the Club declined cover for one and terminated the entry of all Sulpicio’s vessels with effect from 1 December 2005 on the basis that there had been serious breaches of the rules of the Club (the Rules). As a result, Sulpicio brought a claim before the Makati City Regional Trial Court in the Philippines alleging, amongst other things, that the Club had committed fraud. The Club’s position was that Sulpicio’s claim could not be brought other than by way of arbitration in London.
The Club commenced arbitration proceedings in London based on an arbitration agreement set out in the Rules and then sought from the Commercial Court a permanent anti-suit injunction under Section 37 of the Supreme Court Act 1981 in support of the English arbitration proceedings. Sulpicio acknowledged neither the arbitration proceedings nor the application before the Court.
The Court agreed with the Club’s position that the contract between it and Sulpicio contained an arbitration clause and that Sulpicio’s claim fell within that clause. When addressing the question of whether or not the relief sought by the Club should be granted, Mr Justice Walker noted that where an interim injunction is sought in relation to arbitration proceedings, various restrictions are imposed by Section 44 of the Arbitration Act 1996 which require the court to act only with the permission of the arbitral tribunal or the agreement of the other parties. However, he endorsed the approach of the Court of Appeal (in Welex AG v Rosa Maritime Limited (“The Epsilon Rosa”) [2003] 2 Lloyd’s Rep 509), in which it was made clear that those restrictions do not come into play when one is considering a permanent anti-suit injunction, and of the Commercial Court (in Vale Do Rio Doce Navegacao S.A and another v Shanghai Bao Steel Ocean Shipping Co Ltd and another [2000] 2 Lloyd’s Rep 1), in which it was made clear that there was nothing in Section 1 of the 1996 Act which prohibited intervention on the part of the Court in the present circumstances.
Walker J stated that before granting an anti-suit injunction under Section 37, the Court must be satisfied of one or both of two elements: firstly, that the pursuit of legal proceedings abroad infringes or would infringe a legal or equitable right of the Club; secondly, that the pursuit of proceedings abroad is or would be unconscionable. He was satisfied that both elements were present in the case before him and therefore granted the anti-suit injunction.
This decision provides useful guidance as to the interrelationship between Sections 1 and 44 of the Arbitration Act 1996 and Section 37 of the Supreme Court Act 1981. It also serves as a reminder to insureds to review the terms of their insurance contracts, most particularly those relating to dispute resolution.
