Restraining foreign proceedings: Delay at your peril

When
one party commences litigation in a foreign jurisdiction, in breach of an
arbitration agreement, this can leave the other party in a difficult
position.  Should it enter into those proceedings, if only to contest
jurisdiction?  If it does so but loses on jurisdiction, what should it do
then?  And what injunctive relief is available in other courts?

In Ecobank
Transnational Inc. v Tanoh [2015] EWHC 1874 (Comm), Ecobank did not apply
for an anti-suit injunction prohibiting Mr Tanoh from pursuing the foreign
proceedings.  Instead, it delayed and
then sought an injunction prohibiting Mr Tanoh from enforcing any judgment in those
proceedings.  The English High Court set
aside the anti-enforcement injunction, which had been granted on an ex-parte basis.  In reaching his decision, the Judge noted
that Ecobank had delayed taking any action in England and had engaged in the
foreign proceedings.  Furthermore, the
disputes subject to the foreign proceedings were not necessarily within the
scope of the English arbitration clause.

This case also acts as a reminder that a contractual
arbitration clause may not cover all forms of dispute that arise between the
parties. 

What was the dispute
about?

A dispute arose between Ecobank and its former CEO and Group
Managing Director, Mr Tanoh.  Mr Tanoh
brought proceedings in a Tongolese labour tribunal on 4 April 2014 after
Ecobank purported to terminate his contract. 
Separately, he also brought proceedings in the Ivory Coast in relation
to a letter published by Ecobank, which he considered defamatory.

Ecobank contested jurisdiction in both the Tongolese proceedings
and the Ivorian proceedings, on the basis of an arbitration clause in his
contract, but in each case was unsuccessful. 
That contract was stated to be governed by English law, with the seat of
arbitration being England.  Ecobank did
not, however, seek an anti-suit injunction from the English courts to prevent
the Tongolese proceedings and the Ivorian proceedings.

On 22 December 2014, Ecobank also commenced arbitration
against Mr Tanoh in relation to his dismissal (although the notice of
arbitration did not refer to Mr Tanoh’s defamation claim).  On 10 April 2015 Ecobank applied to the
English High Court, without notice to Mr Tanoh, seeking an anti-enforcement
injunction to prevent any judgments or awards in either the Tongolese proceedings
or the Ivorian proceedings from being enforced. 
An interim, worldwide anti-enforcement injunction was imposed to
preserve the status quo until the court had heard from both parties.

When will a court
grant an anti-enforcement injunction?

As the Judge acknowledged, there are few reported examples
of anti-enforcement injunctions being granted by the English courts.  Anti-enforcement injunctions may be granted
where a foreign judgement before the defendant has had the opportunity to seek
an anti-suit injunction.  For example, in
Bank St Petersburg OJSC and another v
Arkhangelsky and others [2014] EWCA Civ 593, an anti-enforcement injunction
was granted where the foreign judgment was allegedly obtained by fraud. 

Anti-enforcement (and anti-suit) injunctions are intended to
respect the doctrine of comity between the court of different countries, rather
than seeking to undermine the foreign court. 
Orders are directed at the parties to the dispute, not the court
itself.  Nevertheless, the longer the
foreign proceedings proceed, particularly where the parties are actively engaged
in those proceedings, the more serious it is for an English court to impose an
order restraining a party from enforcing the foreign judgment.

Delay and doubt over
scope of arbitration agreement

In Ecobank, the
Judge considered two key factors: Ecobank’s actions in response to the
Tongolese and Ivorian proceedings, and the underlying strength of the argument
that those proceedings were brought in breach of the arbitration agreement.

The Judge noted that Ecobank had waited 8 months before
commencing arbitration and even longer before seeking relief from the English
courts.  In the meantime, it had engaged
to an extent in both sets of proceedings.

The Judge rejected an argument that any delay in seeking
injunctive relief should not include any period during which a party is seeking
to challenge jurisdiction.  If this were
the case, it would give rise to the “reverse of comity”, whereby the
role of the English court would be to second-guess a decision by a foreign
court, that the foreign court had jurisdiction over a dispute.

The Judge also cast doubt on whether either of the disputes
would properly fall under the scope of the arbitration agreement. It is not
unusual for employment law to impose jurisdictional restrictions on disputes,
notwithstanding any contractual agreement to the contrary (Regulations 20-23 of
the Recast Brussels Regulation, (EU) 1215/2012, impose such restrictions in
relation to employment within the EU). 
The Judge felt it even less likely that the arbitration agreement would
cover defamation proceedings.

In all of the circumstances, therefore, the Judge declined
to continue the anti-enforcement injunction in relation to either set of
proceedings. 

Act promptly

The message from Ecobank
is clear: if a party considers that foreign proceedings have been brought in
breach of an arbitration agreement, it should act promptly if it wishes to use
the English courts to restrain those proceedings.  It should seek an anti-suit injunction to
prevent the other party from pursuing the foreign proceedings.  It should not wait and then seek an
injunction prohibiting enforcement of any judgment in the foreign
proceedings. 

Questions around what, if anything, should be done in the
foreign proceeding may be more complex, and will depend on foreign law, but any
interim action in England should be commenced in parallel.  Waiting for a decision in the foreign
proceedings can, as in Ecobank, be
fatal.