13/11/2015

The Dangers of Delay: Essar Shipping Ltd v Bank of China Ltd (The “Kishore”) [2015] EWHC 3266 (Comm)

This is a cautionary tale about the dangers of delay in applying for anti-suit injunctions.

The facts: The Claimant was the Charterer of the Vessel Kishore, and the Defendant Bank was the holder of a bill of lading. The time bar for any cargo claim expired on 11 January 2015. The Claimant maintained that the bill of lading incorporated English law and arbitration clauses. The Defendant Bank, however, commenced proceedings in the Qingdao Maritime Court (China) in March 2014, and ship arrest proceedings in the Tianjin Maritime Court (China) in September 2014. On 24 November 2014, the Claimant decided to challenge Chinese jurisdiction before the Qingdao court, on the grounds of the English law arbitration clause. The challenge was rejected and the Claimant appealed.   However, the Claimant did not apply for an anti-suit injunction in the English courts at the same time. The application to the English courts to restrain the Defendant Bank from the Chinese proceedings was not made until 8 July 2015, whilst the parties were still awaiting the outcome of the appeal in China. No arbitration proceedings had been brought in England by this stage, and would have been time barred from January 2015.

Decision of the English Court: In November 2015, Walker J determined that the English arbitration clause had been incorporated into the contract. He nevertheless declined to grant the anti-suit injunction sought. He found that the Claimant had no objective justification for thinking either that it would be successful in its jurisdictional appeal in China, or that the matter there would be resolved speedily. The correct interpretation and application of The Angelic Grace (Aggeliki Charis Cia Maritima SA v Pagnan SpA [1995] 1 Lloyd’s Rep 87) meant that lack of promptness alone could justify refusal of an anti-suit injunction. In a case where a time was due to run out in January 2015 (absent any good reason to the contrary), if the Claimant had wanted to seek an anti-suit injunction in England, it should have done so by no later than the end of November 2014.

Walker J held that it was unnecessary for the Defendant Bank to show that it had been prejudiced by the delay. The Defendant Bank had submitted that, if it had known that the Claimant would bring a jurisdictional challenge in England, it would have protectively commenced arbitration proceedings within time. Walker J considered that, given the prevalence of anti-suit injunctions sought against cargo owners, the Defendant Bank had been unreasonable in ignoring the danger of injunctive relief. However, the Defendant Bank did not need to rely on its complaint of prejudice in any event.

Walker J left open the possibility that the Claimant would be able to claim damages for breach of the arbitration agreement, though professed some scepticism as to what the actual loss might be.

Discussion: This case emphasizes the need for prompt action in applying for anti-suit injunctions. Even if the other party is not prejudiced by the delay, the failure to apply promptly may preclude the granting of injunctive relief. Attempts at stalling are likely to be met with an adverse response from the English courts.