Injunction

Rochester Resources Ltd and others v Lebedev and another: Queen’s Bench Division, Commercial Court: 9 September 2014

Foreign proceedings – Discretion – Claimants applying for injunction restraining first defendant from pursuing or taking any step in proceedings issued by first defendant in New York – Whether high degree of probability that first defendant obliged to arbitrate claims

In February 2014, the first defendant, LL, commenced proceedings against the second and third claimants, VV and LB, in the Supreme Court of New York. The claimants applied for an injunction pursuant to section 37 of the Senior Courts Act 1981 to restrain LL from pursuing or taking any step in those proceedings. They did so on the basis that LL was bound by an arbitration agreement contained in an acquisition agreement dated 20 June 2003.

Alternatively, they applied for the similar relief pursuant to section 44(2)(e) of the Arbitration Act 1996 pending an order by an arbitral tribunal.

It was common ground that if the court was to grant an anti-suit injunction the claimants had to establish that there was a high degree of probability that LL was obliged to arbitrate his claims against VV and LB under the arbitration clause in the acquisition agreement. The principle issues were: (i) whether LL was bound by the arbitration clause; and (ii) whether VV and LB were bound by the arbitration clause.

The claimants’ applications would be dismissed.

On the evidence, LL was probably not bound by the arbitration clause, and it had certainly not been established to a high degree of probability that he was bound. The decision in relation to LL applied with equal force to VV and LB.

Accordingly, the claimants’ application under section 37 of the 1981 act for an anti-suit injunction had to fail. There was no agreement requiring LL to arbitrate his disputes with VV and LB. Further, the application under section 44 of the 1996 act also had to fail. It was also dependant on LL being party to the arbitration agreement.

Furthermore, it was an established principle that where an injunction was sought to restrain foreign proceedings in breach of an arbitration agreement, whether on an interim or a final basis and whether at a time when arbitral proceedings were or were not on foot or proposed, the source of the power to grant such an injunction was to be found not in section 44 of the 1996 act, but in section 37 of the 1981 act (see [49], [51], [52] of the judgment).

Transfield Shipping Inc v Chipping Xinfa Huayu Alumina Co Ltd [2009] EWHC 3642 (Comm) applied; AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC [2014] 1 All ER 335 applied; Midgulf International Ltd v Groupe Chimique Tunisien [2010] All ER (D) 114 (Feb) considered.

Richard Millett QC (instructed by White & Case LLP) for the claimants; Lord Grabiner and Orlando Gledhill (instructed by Enyo Law LLP) for LL; The second defendant did not appear and was not represented.