Tortious claims against third party may trigger anti-suit injunction

10 October 2019. Published by Chris Ross, Partner and Kirtan Prasad, Associate

A party's attempt to circumvent a jurisdiction clause by bringing tortious claims against a third party has been thwarted by the High Court.(1) In granting an anti-suit injunction, the court explored the substance of the claims and found them to be "vexatious and oppressive", designed simply to evade the exclusive jurisdiction clause.

Background

The claim centred on a series of contracts relating to the chartering of a vessel. The charter itself contained an exclusive jurisdiction clause in favour of the English courts.

A portion of the cargo (oil) carried by the vessel was detained by Chinese Customs on the grounds that (contrary to what was stated in the shipping documents) the cargo had not originated in the Philippines. The events unfolded as follows:

  • The purchaser of the oil, China-Base, brought proceedings against the vessel owner, Xiang Da, in Singapore, alleging misrepresentations in the shipping documents.
  • In turn, Xiang Da brought third-party claims in Singapore against:

      • the charterer, Clearlake, and the sub-charterer, Gunvor, for misrepresentation in respect of the switch bills of lading; and
      • Clearlake under an indemnity.
  • The English court granted interim anti-suit injunctions restraining Xiang Da's third-party proceedings against Clearlake and Gunvor in Singapore.
  • Xiang Da applied to vary the injunctions on the basis that it wished to pursue only those claims in Singapore that were not subject to the exclusive jurisdiction clause in the charter – namely, a claim against Clearlake under the indemnity and tortious claims against Gunvor for fraudulent and negligent misrepresentation.

Law relating to anti-suit injunctions

The court summarised the law applicable to the grant of anti-suit injunctions. In broad terms, an anti-suit injunction is a discretionary remedy granted by the English courts on two main grounds:

  • where foreign proceedings constitute the breach of a contractual jurisdiction clause (the ‘contractual basis’). In such circumstances, an anti-suit injunction will be granted unless there are strong reasons not to do so; and
  • where the foreign proceedings are otherwise vexatious or oppressive. Under this ground, the court must also be satisfied that:
    • England is clearly the more appropriate forum for the trial (sometimes referred to as 'the natural forum'); and
    • it is necessary in the interests of justice to grant the injunction taking into account considerations of comity.

When does a tortious claim against a third party trigger an anti-suit?

The court set out the following three-step approach to determine whether a contracting party could enforce an exclusive jurisdiction clause, by an anti-suit injunction, so as to prevent tort proceedings by the other contracting party against a third party:

  • Does the jurisdiction clause extend to the tort proceedings against the third party, applying general principles of contractual interpretation?
  • If yes, the contractual basis will apply and the court will grant the injunction unless there are strong reasons not to do so.
  • Applying privity of contract, only a contracting party (B) and not a third party (C) can enforce a jurisdiction clause (against A) by an anti-suit injunction on the contractual basis. However, the jurisdiction clause may be a relevant factor in granting the contracting party (B) an anti-suit injunction against the other contracting party (A) on the basis that the foreign proceedings are vexatious or oppressive.

Given that there was no contractual basis on which to grant the anti-suit in the present case, were the tortious claims against Gunvor (a third party) vexatious and oppressive in relation to the exclusive jurisdiction clause in the charter? If so, was Clearlake entitled to an anti-suit injunction to prevent these claims from proceeding in Singapore?

On the facts, the court found that Xiang Da had manipulated its third-party claims to try to avoid being caught by the exclusive jurisdiction clause in the Clearlake charter. The alleged misrepresentation was in fact contained in an email from Clearlake, not Gunvor. The claim against Gunvor rested on the misrepresentation being passed via Clearlake. If Gunvor was found liable for misrepresentation, it was hard to see why Clearlake would not also be liable. In the circumstances, it would normally be expected for Clearlake to be sued for misrepresentation as well, and the appropriate forum to sue Clearlake would be England.

Given the above, the court found that the bringing of a tortious claim solely against Gunvor in Singapore and not against Clearlake was a procedural manoeuvre designed to evade the exclusive jurisdiction clause in favour of the English courts.

This precise type of procedural manoeuvre may not have previously triggered an anti-suit injunction. Nevertheless, the court was prepared to grant an injunction in this case. In doing so, it emphasised that the categories of conduct which may be deemed vexatious or oppressive should not be regarded as closed.

Comment

This case demonstrates the courts’ willingness to look into the substance of an impugned foreign claim in order to assess whether it is in fact a tactic designed to evade an exclusive jurisdiction clause. On that basis, claims which are ostensibly framed as falling outside the ambit of a jurisdiction clause may nevertheless be deemed vexatious or oppressive. 

Further, the sort of conduct which may be regarded as vexatious or oppressive is not closed. To this end, parties must bear in mind that any litigation tactic in foreign proceedings which is designed to circumvent a jurisdiction clause may similarly give rise to an anti-suit injunction.

 

(1) Clearlake Shipping Pte Ltd v Xiang Da Marine Pte Ltd [2019] EWHC 2284 (Comm).