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Insurance Law Monthly
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Anti-suit injunctions
rofessor R M Merkin
LL.B, LL.M Lloyd's Law Reports
Professor of Commercial Law Southampton University
Consultant, Barlow, Lyde & Gilbert
English lawyers have now become used to the concept that it is no longer possible for the English courts to award an anti-suit injunction against a person who has commenced proceedings in some other EU court in breach of an exclusive jurisdiction clause. In Advent Capital plc v G N Ellinas Imports-Exports Ltd [2005] EWHC 1242 (Comm) Colman J considered a variation on the usual factual situation, that in which an anti-suit injunction was obtained in respect of proceedings brought in contravention of an English exclusive jurisdiction clause in Cyprus before the accession of Cyprus to the EU and to the Convention itself. Colman J was able to reach an elegant solution which in effect held the parties to their agreement.
INSURANCE
Advent Capital: the facts
The claimant was the insurer of two consignments of cargo loaded into containers on board the vessel Lynn for carriage from Cyrpus to Thessaloniki. The two defendants were the owners of the cargo and were each insured under a certificate issued by the insurers. Those certificates stated that the insurance was 'subject to the exclusive jurisdiction of the English courts'. The vessel was lost within 12 hours of departing from Cyprus. The insurers refused to meet the assureds' claim for the lost cargo, arguing that the policy was voidable for non-disclosure and misrepresentation and also that the claim was a fraudulent one in that the vessel had been wilfully sunk with the complicity of the assureds.
The assureds each commenced an action against the insurers in Nicosia, http://www.ukassignment.org/ in clear breach of the exclusive jurisdiction clauses. The proceedings were in fact issued against the wrong insurers, and the correct insurers were subsequently joined to the actions. The insurers contested the jurisdiction of the Nicosia court on a number of procedural grounds, including service on the wrong persons and failure to translate the documents into English, but the jurisdictional challenges were dismissed and subsequently withdrawn. At this stage the insurers had not relied upon the exclusive jurisdiction clauses, but on the dismissal of the procedural challenges in October 2003 they indicated their intention to do so. The assureds' response was that the insurers had submitted to the jurisdiction of the Cypriot court. In the meantime, in September 2003, the insurers commenced proceedings in England seeking an anti-suit injunction to prevent the assureds from continuing the Nicosia actions, and in October 2003 permission was given for service on the assureds outside the jurisdiction. The assureds contested the jurisdiction of the English court, arguing that the insurers had submitted to the jurisdiction of the Nicosia court and accordingly they could no longer rely upon their exclusive jurisdiction clauses.#p#分页标题#e#
Later events
The outcome of all of this was that by November 2003 the insurers had initiated their own action for anti-suit relief in England, while at the same time were contesting the jurisdiction of the Nicosia court by reference to the exclusive jurisdiction agreements. The matter came before the English court at the end of November 2003. Morison J held that it was inappropriate to rule on the issue of whether or not the insurers had submitted to the jurisdiction of the Cypriot court, but that the English court had jurisdiction and an anti-suit injunction should be granted. The Court of Appeal refused permission to appeal, with the result that in February 2004 the insurers were able to apply to the Nicosia court for an order recognising and enforcing Morison J's judgment.
On 1 May 2004 Cyprus joined the EU and became bound by Council Regulation (EC) No 44/2001. As is well known, under that Regulation the court first seised of proceedings is required to determine its own jurisdiction, and no other court can grant an anti-suit injunction precluding a person from pursuing those proceedings. Three weeks later, the Cypriot court ruled that the insurers' application for a stay should be dismissed as they had submitted to the jurisdiction of that court. The insurers appealed, and then in July 2004 launched a second English action seeking a declaration that they had lawfully avoided the insurance certificates. The English claim form was duly served on the assureds.
In the present hearing the assured sought: (a) an order setting aside the injunction, on the basis that this could not be sustained under Council Regulation 44/2001; (b) an order setting aside the insurers' second action for a declaration, on the ground that the English court had no jurisdiction by reason of the fact that the Cypriot court was first seised of the action, in accordance with Council Regulation 44/2001 and the English action had been commenced after the date on which the Regulation came into force in Cyprus. The insurers argued that the injunction was a final one which had been made before Cyprus became bound by Regulation 44/2001 and could not be set aside other than by an appeal to the Court of Appeal, and the insurers also relied upon art 66 of the Regulation which states that it is only to apply to proceedings brought after it came into force.
Staying the declaration action
The insurers' action in England for a declaration was commenced just under three months after Council Regulation 44/2001 became binding in Cyprus. When that action was commenced, there were existing proceedings in Cyprus, and under the transitional provisions of art 66 of Regulation 44/2001, as construed by the European Court of Justice, an action commenced after the Regulation came into force was subject to its rules and thus had to be stayed if some other court was first seised of the action before the Regulation came into force. On the face of things, therefore, the Cypriot court was first seised and the English proceedings brought after the implementation of the Regulation had to be stayed. The insurers attempted to avoid this conclusion by arguing that the assureds' participation in the Cypriot proceeding had been in breach of the English anti-suit injunction and accordingly that it was contrary to English public policy to stay the English action. Colman J disagreed, holding that public policy had to be viewed in the light of the Regulation, and that provided for a first seised rule. The inevitable conclusion was that the English court had to decline jurisdiction to hear the insurers' application for a declaration of non-liability.#p#分页标题#e#
Setting aside the injunction
Colman J held that the court had jurisdiction, either under CPR r3.1(7) or by virtue of its inherent jurisdiction, to vary or discharge a permanent anti-suit injunction in the event of a material change in circumstances. The fact that the assureds had been in contempt of the injunction by continuing to pursue their Cypriot action did not preclude the court from hearing their application. Turning first to the transitional provisions of art 66 of the Regulation, Colman J — having reviewed the earlier English and ECJ authorities — concluded that the Regulation did not apply to a case in which two sets of conflicting proceedings had been commenced before it came into force. In the present case the anti-suit injunction had been legitimately obtained before the accession of Cyprus, and the Regulation did not seek to remove accrued rights. Accordingly, the English court had jurisdiction to maintain the anti-suit injunction even though the English court was not first seised of the proceedings.
That, however, was not the end of the matter, because it remained necessary to consider the impact of the Court's decision that the declaration proceedings could not be maintained. As Colman J noted, if the English court maintained the anti-suit injunction in force, proceedings could not go ahead in Cyprus, but given that the declaration proceedings in England fell foul of Regulation 44/2001 there could be no action in England either. That did not mean, however, that there was a stalemate, because it remained open to the assureds to bring a fresh action on the certificates in England, which was precisely what they had been obliged to do in the first place. Colman J thus held that there had not been a material change in circumstances which required the injunction to be discharged, and that if the assureds wished to press their claims they had to comply with the terms of the exclusive jurisdiction clauses.
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