In dealings between global businesses, disputes often arise around whether group companies other than those named in the original contract have been involved in the delivery of services. The extent to which a non-party to a contract can enforce its terms is sometimes contested in the context of exclusive jurisdiction clauses and applications for ‘anti-suit’ relief, to restrain proceedings commenced in another jurisdiction.
Osborne Clarke was recently instructed by two Dell EMC entities to obtain an anti-suit injunction against a Moroccan supplier, which was bringing multi-million dollar proceedings against Dell in Morocco, in breach of an exclusive English jurisdiction clause.
This case highlights the court’s approach to applications for anti-suit relief by non-contracting parties, including in relation to the proper interpretation of an exclusive law and jurisdiction clause, and also provides further judicial comment on the question of the “quasi-contract” ground for relief.
The full judgment for this decision is available here.
|What is anti-suit relief?
Unlike some jurisdictions, English courts have long been willing to take an ‘exorbitant’ approach to jurisdiction. Not confined to simply considering whether they have jurisdiction to hear a claim, English courts are also prepared to decide that other jurisdictions are not the correct place to bring a claim.
Where a claim has been unlawfully threatened or issued issued in another jurisdiction, another party can sometimes seek a court order from an English court, requiring the other party to cease or pause the proceedings in the other jurisdiction. Anti-suit relief is most commonly sought where the foreign proceedings are said to be in breach of a contractual English exclusive jurisdiction or arbitration clause.
What was the dispute about?
The first claimant, ‘Dell UK’ (a UK limited company), entered into a distribution agreement with the defendant, IB Maroc (a Moroccan company), granting the latter the non-exclusive right to distribute Dell products and services in Morocco. The agreement contained an exclusive law and jurisdiction clause which provided that ”any dispute arising out of or in connection with this contract” was to be determined before the English courts.
A number of years after entering into the agreement, IB Maroc advanced a claim in Morocco against ‘Dell’. In an apparent attempt to circumvent the exclusive English jurisdiction clause in the agreement, IB Maroc brought proceedings in Morocco against (a) Dell UK and (b) an affiliate of Dell UK based in Morocco, ‘Dell Maroc’, which was not a party to the agreement (but which IB Maroc alleged was at least partly responsible for the delivery of the project).
Dell UK and Dell Maroc denied IB Maroc’s claims, and also jointly applied to the English High Court for an anti-suit injunction to restrain the Moroccan proceedings, arguing that any claim by IB Maroc had to be brought in England, as a result of the exclusive jurisdiction clause. Before the return date of the anti-suit application, IB Maroc accepted that Dell UK was entitled to an injunction in respect of the proceedings brought against it, and discontinued its claim in Morocco against Dell UK.
However, the question of whether Dell UK and/or Dell Maroc were entitled to an injunction restraining IB Maroc from proceeding with its claim against Dell Maroc in Morocco remained in dispute.
Dell UK’s contractual claim for an injunction
Dell UK argued that the wording of the exclusive law and jurisdiction clause was sufficiently wide to capture a claim by IB Maroc against a Dell UK affiliate. The court agreed, and held that the expression in the exclusion jurisdiction clause “any dispute arising out of or in connection with this contract“, was wide enough to cover IB Maroc’s claim against Dell Maroc, even though the latter was not a party to the underlying contract in question. The Court noted that the contract contemplated that affiliates of Dell UK might provide products, and highlighted a separate clause within the agreement, which expressly contemplated claims by IB Maroc against an affiliate.
Accordingly, the court held that the natural construction of the exclusive jurisdiction clause was that it must have been intended to include claims by IB Maroc against an affiliate of Dell UK. It followed that Dell UK was entitled to an order to restrain IB Maroc’s Moroccan claim against Dell Maroc. The Court also noted that it would be vexatious and oppressive to permit the situation whereby Dell UK and Dell Maroc were facing the same claim by IB Maroc, but in different jurisdictions (i.e. England and Morocco respectively).
Dell Maroc’s “quasi-contractual” claim
Separately from Dell UK’s (successful) argument based on contractual interpretation, Dell Maroc maintained it had a free-standing “quasi-contractual” basis for an anti-suit injunction.
Dell Maroc’s primary position was that it did not have any contractual or other obligations to IB Maroc, nor did it have any responsibility for delivery of the project that was the subject of IB Maroc’s claim.
However, the “quasi-contractual” argument holds that where a party is facing a claim under a contract, the existence of which it denies, the claimant must respect the exclusive jurisdiction clause in that contract. The claimant cannot have its cake and eat it by bringing a contractual claim but ignoring the jurisdiction clause in the contract in question.
The court agreed with Dell Maroc’s argument and granted Dell Maroc the protection of an anti-suit injunction restraining the Moroccan proceedings brought against it, on the basis that it would be inequitable, or oppressive and vexatious, for IB Maroc to seek to enforce a contractual claim without respecting the jurisdiction clause within that contract.
This dispute shows: (a) the importance of having a clearly drafted exclusive jurisdiction clause covering the types of disputes that the parties anticipate may occur; and (b) the lengths to which the English courts will go to enforce such clauses in appropriate cases. That willingness of the English courts to enforce exclusive jurisdiction clauses, through anti-suit injunctions, is one of the reasons why English law and jurisdiction underpin many international contracts (as we discuss further here).It also shows that not being a party to the relevant contract might not be fatal to a party seeking anti-suit injunctive relief. However, the availability of such a remedy will depend on the wording of the contract that the party seeks to rely upon, and the nature of the claims against it.
Charlie Wedin, Tom Frapwell and Jamie Halpin advised Dell on this matter.