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Anti-Suit Injunctions

SSM Roundel

Steamship Mutual

Published: March 01, 2011

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The High Court decision in Angara Maritime v Oceanconnect was reported in an earlier website article: Payment for Bunkers - Are Owners Responsible?. Owners successfully evidenced that they had purchased the vessel’s bunkers from charterers in good faith and without notice of the bunker suppliers’ rights. The bunker suppliers, Oceanconnect, then appealed an earlier order of the High Court granting an anti-suit injunction in relation to proceedings they had already commenced in the U.S. state of Louisiana.

The factual background to the anti-suit injunction is set out briefly below:
 

  • On 3 July 2008 the “Fesco Angara” was time-chartered by Angara to Britannia Bulkers (“Britannia”). Under the charterparty it was Britannia’s obligation to provide and pay for bunkers.
  • On 30 September 2008 Britannia entered into a contract with Oceanconnect for the supply of bunkers.
  • Oceanconnect was never paid.
  • The bunker supply contract was expressly made “subject to the Law and jurisdiction of the courts of the United States of America”.
  • On 29 October 2008 Britannia redelivered the “Fesco Angara” prematurely and subsequently went into administration.
  • On 8 March 2009 Oceanconnect arrested the vessel in Amsterdam. On 11 March 2009 the parties agreed the release of the vessel upon the provision by Angara of security in the sum of US$230,000 and in accordance with the terms of an escrow agreement of that date.
  • The escrow agreement provided, inter alia, that it would be governed by English law with the exclusive jurisdiction of the High Court.
  • On the 12 March 2009, Angara brought proceedings against Oceanconnect in the High Court in London seeking a declaration of non-liability, which ultimately succeeded.
  • On 30 September 2009 Oceanconnect arrested the vessel in Louisiana, for the purpose of founding jurisdiction. The vessel was subsequently released on 2 October 2009 after a copy of the escrow agreement was filed with the U.S. Court as a “substitute res”. On the same day as the vessel’s release Angara issued an application in the High Court in London for an anti-suit injunction.
  • The anti-suit injunction was granted by Simon J on 6 October 2009.
  • Oceanconnect appealed against the grant of the anti-suit injunction.

The bunker supplier had arrested the vessel, in Louisiana in an attempt to establish jurisdiction for their bunker claim in the U.S., a much friendlier lien-granting jurisdiction than England. In contrast, the vessel owner had sought to confine proceedings to the jurisdiction of the English High Court pursuant to a jurisdiction clause contained in an escrow agreement into which the parties had entered in order to secure the vessel’s release following the earlier arrest.

At first instance, Simon J granted the anti-suit injunction. In his view the jurisdiction clause in the escrow agreement, on its proper construction, was intended to provide for the English court to be the exclusive forum for the resolution of disputes between the parties in relation to the supply of bunkers and that the U.S. proceedings were brought in breach of that agreement. The purpose of the anti-suit injunction was, as he saw it, to avoid unnecessary parallel litigation and duplication of procedings .

Oceanconnect were, therefore, ordered to take forthwith all reasonable steps to withdraw the proceedings commenced by them before the Western District Court of Louisiana. Oceanconnect appealed.

In granting the appeal the Court of Appeal held that clause 7 of the escrow agreement did not extend to the underlying substantive claim and was confined to the province of the escrow agreement itself. Accordingly, the anti-suit injunction could not be supported on the basis that the U.S. proceedings were brought in breach of an exclusive English jurisdiction clause.

The object of the escrow agreement, as the Court of Appeal of saw it, was simply to secure the release of the vessel. Its purpose was not to set out where the remainder of the issues between the parties would or should be resolved. The Appeal Judges were of the opinion that had the parties intended to agree a forum for resolving all the disputes between them, they could have done so by expressly providing wording to that effect in the escrow agreement.

Consequently, Oceanconnect were at liberty to pursue the U.S. maritime lien and were not hindered in this by the jurisdiction clause in the escrow agreement. The U.S. proceedings were neither vexatious nor oppressive in that, in this instance, they did not involve unnecessary parallel litigation.

Oceanconnect UK Ltd v Angara Maritime Ltd (The “Fesco Angara” (No 2)

A separate but related point on the issue of anti-suit injunctions generally; the European Court of Justice’s landmark ruling in the West Tankers v RAS Riunione Adriactica di Sicurta (the “Front Comor”) in February of 2009 has prohibited the English Courts from issuing an anti-suit injunction where proceedings are either commenced or threatened in another Member State in breach of an arbitration clause.

Article by Nooshin Moafi 

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