As per case facts, a dispute arose from an agreement related to telecasting a cricket tournament, where the appellants claimed loss of advertising revenue due to the respondent's actions concerning ...
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CASE NO.:
Appeal (civil) 422 of 2003
PETITIONER:
Modi Entertainment Network & Anr.
RESPONDENT:
W.S.G.Cricket Pte. Ltd.
DATE OF JUDGMENT: 21/01/2003
BENCH:
Syed Shah Mohammed Quadri & Arijit Pasayat
JUDGMENT:
J U D G M E N T
SYED SHAH MOHAMMED QUADRI,J.
Leave is granted.
This appeal is from the judgment and order
dated April 1, 2002 made by a Division Bench of
the High Court of Judicature at Bombay, in Appeal
No.287 of 2002, allowing the appeal filed by the
respondent and setting aside the order of the
learned Single Judge granting anti-suit injunction
against the respondent on the motion of the
appellants.
The plaintiffs in Suit No.2422 of 2001 on the
file of the High Court of Judicature at Bombay
(ordinary original civil jurisdiction) are the
appellants and the defendant therein is the
respondent in this appeal.
The short point that arises for consideration
is: whether the Division Bench of the High Court
erred in vacating the anti-suit injunction granted
by a learned Single Judge restraining the
respondent from proceeding with the action between
the same parties pending in the English Court, the
forum of their choice. It involves examination of
the principles governing grant of an anti-suit
injunction by a court of natural jurisdiction
against a party to a suit before it restraining
him from instituting and/or prosecuting the suit,
between the same parties, if instituted, in a
foreign court of choice of the parties.
It will be appropriate to note, in brief, the
factual background in which the aforesaid question
has arisen. The International Cricket Conference
(ICC) organised a tournament 'ICC Knockout
Tournament' (referred to as, 'the Event') in Kenya
between October 3 and 15, 2000. The respondent
had the exclusive right to grant commercial rights
relating to the Event. On September 21,2000, an
agreement was entered into between the second
appellant and the respondent granting exclusive
licence to telecast the Event on Doordarshan and
to sell advertisement slots thereon. The second
appellant assigned its right under the said
agreement to the first appellant on September 22,
2000. The agreement, inter alia, provided that
the licence granted thereunder was restricted to
exhibiting the Feed by terrestrial free to air
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television on Doordarshan only and the satellite
broadcast licence for India was granted to "ESPN -
Star Sports" (for short, 'ESPN'); the appellants
were to pay a minimum guaranteed amount of USD 35
lakhs (Rs.15 crores); if the revenue derived by
the appellants exceeded the aforementioned sum the
parties would share the excess amount in the
manner provided in the agreement. The Doordarshan
used the PAS-4 Satellite to transmit the signal
through its terrestrial transmitters. Soon after
the commencement of the telecast the respondent
registered a complaint with the Doordarshan that
the signal was being received in the Middle East
which would amount to breach of contract between
the parties and violation of the licence granted
to Middle East licensee, called upon the
appellants to rectify the same and threatened that
the Feed to the Doordarshan would be discontinued.
The response of the Doordarshan that it was
nothing but a natural spill over and that under
the agreement such spill over of other satellite
signals would not constitute a breach, was
communicated to the respondent. However, the
respondent was not satisfied with that explanation
and kept on repeating the threat that if the
Doordarshan did not switch from the PAS-4
satellite to the INSAT satellite it would
discontinue the signal Feed to Doordarshan. It
appears that during the period of the telecast
nothing was done by the respondent pursuant to the
threats. Even so, the appellants complained that
on account of the open threats of the respondent
the advertisers who had committed their
advertisements on Doordarshan, pulled their
advertisements out and switched them to ESPN and
that caused tremendous loss of revenue to them.
It was also alleged that diversion of
advertisements from Doordarshan to ESPN enabled
the respondent to benefit from the revenue sharing
arrangement it had with ESPN. To resolve the
disputes generated by cross allegations made by
the parties against each other some negotiations
were held and pursuant thereto the appellants
paid, from time to time between December 2000 and
February 2001, a sum of USD 7,13,714 to the
respondent. They also addressed letters to the
respondent seeking time till May 2001 to make
payment of the balance amount.
While the matter stood thus, the appellants
received a notice dated May 3, 2001 from the
solicitors of the respondent demanding full
minimum guaranteed amount. Anyhow, on May 9,
2001, the appellants filed a suit in the Bombay
High Court claming, inter alia, damages for the
loss of advertising revenue due to alleged illegal
threats of the respondent. On November 22, 2001,
the respondent also filed an action in the High
Court of Justice, Queen's Bench Division (referred
to as, 'the English Court'), praying for a money
decree for the minimum guaranteed amount and took
out writ of summons, calling upon the appellants
to notify the English Court of their intention to
contest jurisdiction; it was also stated therein
that failure to do so would amount to submitting
to jurisdiction of the English Court and rendering
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them liable to a default judgment. The appellants
entered appearance before the English Court on
January 9, 2002 and sought time till January 31,
2002. Despite this move, on January 15, 2002, the
appellants took out motion in the Bombay High
Court praying for anti-suit injunction against the
respondent in regard to the action in the English
Court on the ground that the Indian Court was a
natural forum for the adjudication of the dispute
and that continuance of the proceedings in the
English Court would, on the facts of the case, be
vexatious and oppressive. The respondent contested
the motion relying on the non-exclusive
jurisdiction clause in the contract.
After hearing both the parties, a learned
Single Judge of the Bombay High Court granted an
ad-interim injunction on January 30, 2002, in
terms of clause (a) and ordered notice of motion
returnable within six weeks. Aggrieved by the
said order of the learned Single Judge, the
respondent filed an appeal before the High Court.
With the consent of the parties the Division Bench
of the High Court which heard the appeal, disposed
of the notice of motion itself finally along with
the appeal by order dated April 1, 2002. The
Division Bench set aside the order of the learned
Single Judge, dismissed the motion of the
appellants and thus allowed the appeal. It is
against that judgment and order of the Division
Bench of the High Court that this appeal is
directed.
Mr.Ashok H.Desai, learned senior counsel
appearing for the appellants, contended that the
Indian Court was a natural and appropriate forum;
the principle for granting anti-suit injunction
was correctly noticed by the learned Single Judge
who recorded the finding that the action
initiated by the respondent in the English Court
was vexatious and oppressive; the Division Bench
without disturbing the said finding dismissed the
motion erroneously taking the view that only if a
party commenced litigation in a Foreign Court in
breach of a contract stipulating that the Indian
Courts would have exclusive jurisdiction, could an
anti-suit injunction be granted. He submitted
that reliance on Rule 32(4) of Dicey & Morris 'The
Conflict of Laws' by the Division Bench was
misconceived and that the correct rule applicable
was Rule 31(5) which referred to the decision of
the House of Lords in the case of Spiliada
Maritime Corporation vs. Cansulex Ltd. [(1986) 3
All.ER 842] and of the Privy Council in SNI
Aerospatiale vs. Lee Kui Jak & Anr. [(1987) 3
All.ER 510]. In his submission the English Court
is a forum non-conveniens as the appellants have
to take all the witnesses to London which would
cause great inconvenience and economic loss and
unless the court grants injunction against the
respondent, it would result in disastrous
consequences to the appellants. He further
contended that the appellants could not have
foreseen that the respondent who was contractually
bound to supply Feed for telecast only through
Doordarshan, would thereafter jeopardise the
appellants' advertising revenue by publicly
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threatening to discontinue the signal Feed to
Doordarshan on the alleged ground of spill over of
the Doordarshan signal beyond India. He
vehemently contended that the natural and
appropriate forum which had jurisdiction to grant
anti-suit injunction were Indian Courts so the
Division Bench erred in dismissing the motion. He
argued that the English Court had no nexus
whatsoever with the parties or the subject-matter
and that the contractual stipulation for non-
exclusive jurisdiction of the English Courts
(without reference to English conflict of law
rules) would not preclude the Indian2 Courts from
granting anti-suit injunction.
Mr.Iqbal Chagla, the learned senior counsel
for the respondent, argued that the prima facie
finding of the learned Single Judge in regard to
the action of the respondent in the English Court
being vexatious and oppressive would not bind the
learned Judge himself at the stage of final
hearing of motion much less would it bind the
Division Bench in appeal. According to the learned
counsel the suit was filed in India to foreclose
the right of the parties to approach the court of
their choice, namely, the English Court. He
pointed out that the parties had clearly
stipulated in the contract for resolution of their
disputes in accordance with the English Law and in
the English Court, therefore, the appropriate
forum would be the English Court. In any event,
it being the court of choice of the parties no
injunction could be granted against the respondent
from prosecuting the case before that Court. It
was submitted that the respondent continued the
Feed during the stipulated period; the appellants
had the advantage of telecasting the Event and
receiving the benefit of the advertisement slots
fully; they made payments till the end of
February; and, therefore, they could not be
allowed to evade the liability under the contract
by seeking injunction. It was also submitted that
the foreseeability test pleaded by the appellants
was not relevant; the parties had chosen neutral
forum in preference to natural forums - Indian
Courts and Singapore Courts. In any event,
submitted the learned counsel, when a party had
approached an agreed jurisdiction under a
contract, whether exclusive or non-exclusive, the
other party could not be allowed to contend that
the suit so filed was vexatious and oppressive;
only in extra-ordinary and unforeseen
circumstances which would justify a party to claim
relief from its bargain of non-exclusive
jurisdiction clause that an anti-suit injunction
could be claimed but certainly not on the ground
of convenience such as expenses and hardship of
getting the witnesses to the agreed neutral forum.
The Courts in India like the Courts in
England are courts of both law and equity. The
principles governing grant of injunction - an
equitable relief - by a court will also govern
grant of anti-suit injunction which is but a
species of injunction. When a court restrains a
party to a suit/proceeding before it from
instituting or prosecuting a case in another court
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including a foreign court, it is called anti-suit
injunction. It is a common ground that the Courts
in India have power to issue anti-suit injunction
to a party over whom it has personal jurisdiction,
in an appropriate case. This is because courts of
equity exercise jurisdiction in personam. However,
having regard to the rule of comity, this power
will be exercised sparingly because such an
injunction though directed against a person, in
effect causes interference in the exercise of
jurisdiction by another court.
In regard to jurisdiction of courts under the
Code of Civil Procedure (CPC) over a subject-
matter one or more courts may have jurisdiction to
deal with it having regard to the location of
immovable property, place of residence or work of
a defendant or place where cause of action has
arisen. Where only one Court has jurisdiction
it is said to have exclusive jurisdiction; where
more courts than one have jurisdiction over a
subject-matter, they are called courts of
available or natural jurisdiction. The growing
global commercial activities gave rise to the
practice of the parties to a contract agreeing
beforehand to approach for resolution of their
disputes thereunder, to either any of the
available courts of natural jurisdiction and
thereby create an exclusive or non-exclusive
jurisdiction in one of the available forums or to
have the disputes resolved by a foreign court of
their choice as a neutral forum according to the
law applicable to that court. It is a well-settled
principle that by agreement the parties cannot
confer jurisdiction, where none exists, on a court
to which CPC applies, but this principle does not
apply when the parties agree to submit to the
exclusive or non-exclusive jurisdiction of a
foreign court; indeed in such cases the English
Courts do permit invoking their jurisdiction.
Thus, it is clear that the parties to a contract
may agree to have their disputes resolved by a
Foreign Court termed as a 'neutral court' or
'court of choice' creating exclusive or non-
exclusive jurisdiction in it.
We shall now refer to Rule 32(4) on which
reliance is placed by the High Court and Rule
31(5) on which learned counsel for the appellants
relies. These Rules are formulated in the
Conflict of Laws by Dicey and Morris, (13th
Edition) on the basis of judgments of the House of
Lords and the Privy Council. It would, therefore,
be useful to quote them here.
"31(5). An English Court may restrain a
party over whom it has personal
jurisdiction from the institution or
continuance of proceedings in a foreign
court, or the enforcement of foreign
judgments, where it is necessary in the
interests of justice for it to do so."
"32(4). An English Court may restrain a
party over whom it has personal
jurisdiction from the institution or
continuance of proceedings in a foreign
court in breach of a contract to refer
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disputes to an English (or, semble,
another foreign) court."
A careful perusal of these Rules makes it
clear that clause (5) of Rule 31 deals with a case
not covered by a jurisdiction agreement whereas
clause (4) of Rule 32 deals with a case involving
jurisdiction agreement. Indeed, the learned
authors themselves in para 12.123 state as
follows:
"The general principles upon which an
English Court may order a party who is
subject to its personal jurisdiction not
to institute, or to discontinue,
proceedings in a foreign court have been
examined above [clause (5) of Rule 31].
But where the basis for the exercise of
the court's discretion is that the
defendant has bound himself by contract
not to bring the proceedings which he
threatens to bring, or has brought, in
the foreign court, the principles which
guide the exercise of discretion of the
court are distinct from those which were
examined under clause (5) of Rule 31."
Thus, it is clear that the principles governing
the exercise of discretion by the court to grant
anti-suit injunction against a person amenable to
the jurisdiction where by contract the defendant
has bound himself not to bring the proceedings
which he threatens to bring or has brought in the
foreign court, are different from the principles
laid down in Rule 31(5) which deals with cases in
general where an English Court may restrain a
party over whom the court has personal
jurisdiction from the institution or continuance
of the proceedings in a foreign court. The test
for issuance of the anti-suit injunction to a
person amenable to the jurisdiction of the court
in person has been varying; first it was 'equity
and good conscience' as could be seen from the
decision of the House of Lords in Carron Iron
Company Vs. Maclaren (1855 5 HLC 416). The test
later adopted was 'to avoid injustice' [See:
Castanho Vs. Brown & Root (U.K.) Ltd. & Anr.
(1981 Appeal Cases 557)]. The test adopted in the
recent cases is whether the foreign proceedings
are "oppressive or vexatious" SNI Aerospatiale's
case (supra). Even about this test it is
commented,
"In most decisions, the courts have
considered whether the foreign
proceedings were vexatious or
oppressive. Historically, since the
19th century, these terms were used in
the exercise of the court's jurisdiction
whether or not to grant anti-suit
injunctions. But, in the context of
stay of proceedings on ground of another
forum being the more appropriate forum,
these terms were effectively abolished
by the House of Lords in Macshannon vs.
Rockware Glass Ltd. [(1978) 1 All ER
625]. This was because of the moral
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connotations attached to these words and
the difficulty for the defendant to
prove that there was something wrong in
the character of the plaintiff.
Although Lord Goff explained, in SNI
Aerospatiale vs. Lee Kui Jak & Anr.
[(1987) 3 All.ER 510], that these words
could have different meaning in
different contexts, he was inclined, in
Airbus Industrie GIE vs. Patel & Ors.
[(1998) 2 All ER 257], to agree, albeit
obiter, with Judge Sopinka in Amchem
Products Inc Vs. Workers Compensation
Board [(1993) 102 DLR (4th) 96], who
preferred to use, simply, 'ends of
justice'. However, Lord Goff did not
expressly abandon these words."*
These expressions are not clearly defined but in
C.S.R. Ltd. Vs. Cigna Insurance Australia Ltd.
(1997 (189) C.L.R. 345), the High Court of
Australia used them in the sense "only if there is
nothing which can be gained by them over and above
what may be gained in local proceedings". The
Supreme Court of Canada adopted the test of the
requirement of "the ends of justice". The essence
or the ultimate objective is to enquire how best
the interests of justice will be served; whether
grant of anti-suit injunction is necessary in the
interests of justice. However, in a case where a
jurisdiction agreement exists it is not necessary,
in all cases, to show that foreign proceedings are
vexatious, oppressive or that the local court is a
natural forum for the claim and there is no
obligation upon the claimant to seek relief from
foreign court first. The case on hand is a little
different from the category which is subject of
formulation in Rule 32(4). Here the appellants
who are parties to the contract containing a non-
exclusive jurisdiction clause of English Court and
resolution of disputes in accordance with the
principles of English law, are seeking anti-suit
injunction against the respondent to restrain it
from proceeding with the action brought by it in
English Court.
Before endeavouring to discern the principles
applicable to the type of the case on hand, we may
with advantage refer to the cases cited at the
Bar.
In Oil and Natural Gas Commission vs. Western
Company of North America [1987 (1) SCC 496], this
Court considered the question of granting anti-
suit injunction. The appellant, Oil and Natural
Gas Commission, entered into a drilling contract
with the respondent Western Company of USA.
Pursuant to the contract the parties referred
their disputes to arbitration, governed by the
Indian Arbitration Act, 1940. A non-speaking
award was made which was followed by supplementary
award without affording any hearing to the
parties. At the instance of the foreign company
the awards were filed in the Bombay High Court.
But thereafter the foreign company filed a plaint
in the US District Court, New York, seeking an
order confirming the awards and a judgment for
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payment of interest till the date of judgment and
costs. The ONGC filed an application under the
Indian Arbitration Act for setting aside the
awards of the umpire in the Indian Court and
further prayed for an interim anti-suit injunction
restraining the foreign company from proceeding
further with the plaint filed in the US Court. At
the initial stage an interim injunction was
granted by a learned Single Judge of the High
Court but the same was vacated after contest.
From the said order an appeal was taken to this
Court. It was held by this Court that when it was
necessary or expedient to do so or when the ends
of justice so required, the High Court had
undoubted jurisdiction to grant such an injunction
and that it would be unfair to refuse the
restraint order because the action in the foreign
court would be oppressive in the facts and
circumstances of the case. It was pointed out
that although the Supreme Court would sparingly
exercise its jurisdiction to restrain a party from
proceeding further with an action in a Foreign
Court, that case was one of those rare cases where
the Court would be failing in its duty if it
hesitated to grant the order of injunction. It
was observed that since under the contract the
parties were governed by the Indian Arbitration
Act, and as such the Indian Courts had exclusive
jurisdiction to determine the validity and
enforceability of the awards, the American Court
had no jurisdiction in that behalf. The appellant
invoked the jurisdiction of the New York Court to
pronounce on the same question which was required
to be pronounced upon by the Indian Court and if
the restraint order was not granted serious
prejudice would be occasioned and a party
violating the very arbitration clause on the basis
of which the award had come into existence would
also secure an order enforcing the award from a
foreign court. However, it may be pointed out
that in that case there was no stipulation
agreeing to non-exclusive jurisdiction in the
Foreign Court.
In British Indian Steam Navigation Co.Ltd.
vs. Shanmughavilas Cashew Industries & Ors. [1990
(3) SCC 481], the respondent purchased from East
Africa a specified quantity of raw cashewnuts
which were shipped in a vessel chartered by the
appellant-company incorporated in England. The
bills of lading incorporated a clause to the
effect that the contract evidenced by it shall be
governed by English law and disputes determined in
England or, at the option of the carrier, at the
port of destination according to English law to
the exclusion of the jurisdiction of the courts of
any other country. There was short supply of
cashewnuts so the first respondent filed a suit in
the Court of Subordinate Judge, Cochin, seeking
damages for the short supply. The appellant
defended the suit on the ground that it was a mere
charterer of the vessel and not the owner and that
as per the bills of lading the court at Cochin had
no jurisdiction and only the English Courts had
jurisdiction. The suit was dismissed by the trial
court, so also the appeal of the appellant by the
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High Court. On further appeal to this Court, it
was held that for purposes of jurisdiction the
action of the first respondent was an action in
personam in Private International Law and that
such action might be decided upon the parties
themselves. The chosen court may be a court in
the country of one or both the parties, or it may
be a neutral forum. The jurisdiction clause may
provide for submission to the courts of a
particular country or to a court identified by a
formula. It is a question of interpretation,
governed by the proper law of the contract,
whether a jurisdiction clause is exclusive or non-
exclusive, or whether the claim which is the
subject-matter of the action falls within its
terms. If there is no express choice of the
proper law of the contract, the law of the country
of the chosen court will usually, but not
invariably, be the proper law.
In SNI Aerospatiale's case (supra), the Privy
Council laid down the principles to be applied by
a Court in deciding whether to restrain foreign
proceeding. They are as follows :
"The principles applicable to the grant
by an English Court of an injunction to
restrain the commencement or continuance
of proceedings in a foreign jurisdiction
were not the same as those applicable to
the grant of a stay of English
proceedings in favour of a more
appropriate foreign forum, and where a
remedy for a particular wrong was
available both in an English Court and a
foreign court the English Court would
normally only restrain the plaintiff
from pursuing the foreign proceedings if
it would be vexatious or oppressive for
him to do so."
In that case, a passenger in a helicopter was
killed when it crashed in Brunei. The helicopter
was manufactured in France by a French Company
which had a subsidiary in Texas to whom the
helicopter was sold. At the time of the crash,
the helicopter was owned by an English company and
operated and serviced by its Malaysian subsidiary
under contract to a Brunei subsidiary of an
international oil company. The widow of a
passenger filed suits against the defendants in
both Brunei and Texas. The defendants applied in
Brunei for an injunction restraining the
plaintiffs from continuing the Texas proceeding.
The Trial Court did not grant injunction. In the
Court of Appeal both sides agreed to accept that
in any trial in Texas the liability of the
defendants would be determined according to the
law of Brunei. The Appeal Court held that Texas
had become the natural forum by reason of the pre-
trial discovery and in that forum the case could
be more suitably tried, therefore, it dismissed
the appeal. On further appeal to the Privy
Council, it was held that Brunei was the natural
forum at the time of the commencement of the
proceedings because the fatal accident had
occurred there, the deceased and the plaintiffs
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were resident there and the law governing the
claim was the law of Brunei and there was nothing
to connect the action with Texas, and pre-trial
discovery and other steps taken by the attorneys
in Texas would not change its position and had not
made Texas the natural forum. The Court in Brunei
remained the natural forum for the action and it
would be oppressive for the plaintiffs to proceed
in Texas because the defendants might well be
unable to pursue in those proceedings their own
contribution claim against the Malaysian company
which serviced and operated the helicopter. The
appeal was thus allowed. Though, in that case
also there was no jurisdiction agreement for
resolution of disputes the discussion suggests
that a suit in breach of an exclusive jurisdiction
clause is in itself not conclusive of being
'vexatious and oppressive'. It will be useful to
refer to the following observations of Lord Goff :
"In the opinion of their Lordships, in a
case such as the present where a remedy
for a particular wrong is available both
in the English (or, as here, the Brunei)
court and in a foreign court the English
(or Brunei) court will, generally
speaking, only restrain the plaintiff
from pursuing proceedings in the foreign
court if such pursuit would be vexatious
or oppressive. This presupposes that,
as a general rule, the English or Brunei
court must conclude that it provides the
natural forum for the trial of the
action, and further, since the court is
concerned with the ends of justice that
account must be taken not only of
injustice to the defendant if the
plaintiff is allowed to pursue the
foreign proceedings, but also of
injustice to the plaintiff if he is not
allowed to do so. So, as a general
rule, the court will not grant an
injunction if, by doing so, it will
deprive the plaintiff of advantages in
the foreign forum of which it would be
unjust to deprive him."
In regard to the test laid down in this case,
in the Oxford Journal of Legal Studies*, Vol.17,
it is rightly commented :
"The focus is on the interests of the
parties not just the appropriateness of
the forum. Injunctions will henceforth
be available only on a more limited
basis; but that basis expressly balances
both the fairness to the parties and the
naturalness of the forum. It is open,
sufficiently narrow in scope, even-
handed and fair. In short, an entirely
suitable contemporary test."
In Spiliada Maritime's case (supra), the
House of Lords laid down the following principle:
"The fundamental principle applicable
to both the stay of English proceedings
on the ground that some other forum was
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the appropriate forum and also the grant
of leave to serve proceedings out of the
jurisdiction was that the court would
choose that forum in which the case
could be tried more suitably for the
interests of all the parties and for the
ends of justice".
The criteria to determine which was more
appropriate forum, for the purpose of ordering
stay of the suit, the court would look for that
forum with which the action had the most real and
substantial connection in terms of convenience or
expense, availability of witnesses, the law
governing the relevant transaction and the places
where the parties resided or carried on business.
If the court concluded that there was no other
available forum which was more appropriate than
the English Court it would normally refuse a stay.
If, however, the court concluded that there was
another forum which was prima facie more
appropriate, the court would normally grant a stay
unless there were circumstances militating against
a stay. It was noted that as the dispute
concerning the contract in which the proper law
was English law, it meant that England was the
appropriate forum in which the case could be more
suitably tried.
In Airbus Industrie GIE vs. Patel & Ors.
[(1998) 2 All ER 257], some British citizens of
Indian origin travelled in an Airbus-320 aircraft
when it crashed at Bangalore airport. They
commenced proceedings in Texas against the
plaintiff-company. A similar claim was made by the
American claimants in Texas court. The plaintiffs
obtained a declaration from the City Civil Court,
Bangalore that the defendants were not entitled to
proceed against them in any court of the world
other than in Bangalore, India. Thereafter, they
approached the English Court to enforce the
judgment obtained from the Bangalore court and to
obtain an injunction restraining the defendants,
who were resident in England, from continuing
their action in Texas on the grounds that the
pursuit of that action would be contrary to
justice and/or vexatious or oppressive. The
learned Judge at the first instance dismissed the
application but the Court of Appeal allowed the
plaintiff's appeal and granted injunction prayed
for. On appeal of the defendants, the House of
Lords held that as a general rule, before an anti-
suit injunction could be granted by an English
Court to restrain a person from pursuing
proceedings in a foreign jurisdiction, comity
required that the English forum should have a
sufficient interest in, or connection with, the
matter in question to justify the indirect
interference with the foreign court which such an
injunction entailed. However, in cases where the
conduct of the foreign state exercising
jurisdiction was such as to deprive it of the
respect normally required by comity, no such limit
was required in the exercise of the jurisdiction
to grant an anti-suit injunction. Since, in the
instant case, the English Court had no interest
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in, or connection with the matter in question the
Court could not grant injunction sought as it
would be inconsistent with the principles of
comity. The injunction granted by the Court of
Appeal was set aside and the appeal of the
defendants was allowed. Two aspects underlying
this decision are worth noticing - the first is
the requirement of ends of justice and the second
is respect for other court's jurisdiction
(comity).
British Aerospace Plc vs. Dee Howard Co.
[1993 (1) LLR 368], deals with stay of English
action. In that case, a British Company (BAe)
entered into an agreement with an American Company
(DHC) to provide assistance and information in
connection with a re-engining programme which it
was undertaking. It was provided that the
agreement should be governed by and be construed
according to the English law and that the courts
of law in England should have jurisdiction to
entertain any action in respect thereof. The DHC
suspended further work on the re-engining
programme claiming that the BAe failed to carry
out its obligation under the agreement. The DHC
initiated action in Texas State Court. After
service of notice of that action the BAe applied
to the American Court to dismiss the proceedings
in view of the jurisdiction clause in the
agreement. The BAc also initiated proceedings in
English Court duly impleading the parent company
(Alenia) of the DHC, with the leave of the Court.
While so, the DHC applied to the English Court for
the following reliefs: (i) to set aside the leave
and (ii) to stay the proceedings against the
parent company in the English Court as the action
was pending in American Court which was the
appropriate forum. Waller,J. on construing the
jurisdiction clause in the agreement held that the
parties had agreed that the English Court should
have exclusive jurisdiction and that even if it
was not an exclusive jurisdiction clause, it
showed that the parties had freely negotiated
agreeing not to object to the English Court's
jurisdiction, therefore, it should not be open to
the DHC to argue the relative merits of contesting
the case in Texas as compared with contesting the
case in London as the relevant factors would have
been eminently foreseeable at the time of entering
into the contract and that the contentions that
there would be two sets of proceedings one in
Texas and another in London and that there would
be inconvenience for witnesses having regard to
the location of documents, the timing of a trial
and all such like matters to support stay of
English action could not be permitted to be urged.
In Donohue vs. Armco Inc and others [2002 (1)
All.ER 749], there were three contracts for the
sale of shares in the Armco insurance group of
companies (for short, 'the A group') containing
exclusive jurisdiction clauses providing that the
parties irrevocably submit themselves to the
exclusive jurisdiction of the English Courts to
settle any dispute which might arise out of or in
connection with the agreement. Disputes having
arisen the 'A group' initiated proceedings in New
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York against D and others. D applied to the
English Court for an anti-suit injunction
preventing the 'A group' from bringing claims
arising from the sale of the shares against D in
any forum other than England. The learned Judge
at the first instance declined to grant the
injunction prayed for but the Court of Appeal
granted the prayer of anti-suit injunction. On
the appeal of D to the House of Lords, it was held
that where the parties had bound themselves by an
exclusive jurisdiction clause, effect should
ordinarily be given to that obligation in the
absence of strong reasons for departing from it.
The question whether strong reasons exist to
displace the claim under the contract would depend
on the facts and circumstances of each case. Lord
Bingham of Cornhill with whom other Law Lords
agreed held thus:
"Where the dispute was between two
contracting parties, one of which sued
the other in a non-contractual forum,
and the claims fell within the scope of
the exclusive jurisdiction clause in
their contract, and the interests of
other parties were not involved, effect
would in all probability be given to the
clause. However, the court might well
decline to grant an injunction or a stay
where the interests of parties other
than parties bound by the exclusive
jurisdiction clause were involved or
grounds of claim not the subject of the
clause were part of the relevant dispute
so that there was a risk of parallel
proceedings and inconsistent decisions.
In the instant case, D's strong prima
facie right to be sued in England on
claims made by the other parties to the
exclusive jurisdiction clause insofar as
those claims fell within that clause was
matched by the clear prima facie right
of the A group to pursue other claims in
New York. The crucial question was
whether, on the facts, the A group could
show strong reasons why the court should
displace D's prima facie entitlement.
Moreover, if strong reasons were found,
such reasons would have to lie in the
prospect, if an injunction was granted,
of litigation continuing partly in
England and partly in New York, and that
was a consideration to which great
weight should be given."
Our attention was also invited to a decision
of Court of Appeal in SABAH Shipyard (Pakistan)
Ltd. Vs. (1) Islamic Republic of Pakistan (2)
Karachi Electrics Supply Corporation Ltd.(2002)
(2002 EWCA Civ 1643). In that case SABAH, a
limited Company incorporated in Pakistan by its
Malaysian parent, entered into an agreement with a
state owned corporation - KESC, in regard to the
design, construction, operation and maintenance of
a barge-mounted electricity generation facility at
Karachi. The Government of Pakistan (GOP) entered
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into a guarantee in favour of SABAH which, inter
alia, provided that the parties consented to the
jurisdiction of the Courts of England for any
action under the agreement to resolve any dispute
between them and waived the defence of
inconvenience of forum in any action or proceeding
between them in the Courts of England. The GOP
brought an action in the Court of Senior Judge,
Islamabad and obtained an anti-suit injunction
against SABAH. However, SABAH also brought an
action in English Court and sought an anti-suit
injunction which was granted restraining the GOP
from continuing proceeding in the Court of Senior
Judge, Islamabad. Against the order continuing the
injunction, the GOP went in appeal before the
Court of Appeal. Waller, L.J. with whom the other
members of the Court of Appeal agreed in
reaffirmation of the principles laid down in SNI
Aerospatiale's case (supra), held that the
learned judge in the first instance was right in
construing that the clause in the agreement was a
non-exclusive jurisdiction clause and that as GOP
had agreed to submit any disputes between the
parties to the jurisdiction of the English Court
and to waive any objection that any action brought
in England was in an inconvenient forum,
therefore, it could not have been the intention of
the parties that if proceedings were commenced in
England, parallel proceedings could be pursued
elsewhere unless there was some exceptional reason
for doing so. The action of GOP in seeking to
prevent SABAH in commencing proceedings in the
agreed jurisdiction was construed as a clear
breach of contract and it was observed that the
proceedings in Pakistan might also be vexatious if
commenced after the English proceedings and/or
simply to attempt to frustrate the jurisdiction
clause which expressly dealt with the forum
conveniens aspect so as to enable England to be
the most likely forum for resolution of disputes
and that England was the agreed jurisdiction to
which neither party could object. It was noted
that the GOP could not show any exceptional reason
why parallel proceedings were justified and that
the fact that the GOP commenced the proceedings
first, did not change the position because they
did so as a pre-emptive strike.
From the above discussion the following
principles emerge :
(1) In exercising discretion to grant an
anti-suit injunction the court must be
satisfied of the following aspects : -
(a) the defendant, against whom
injunction is sought, is amenable to the
personal jurisdiction of the court;
(b) if the injunction is declined the
ends of justice will be defeated and
injustice will be perpetuated; and
(c) the principle of comity - respect
for the court in which the commencement
or continuance of action/proceeding is
sought to be restrained - must be borne
in mind;
(2) in a case where more forums than one are
available, the Court in exercise of its
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discretion to grant anti-suit injunction
will examine as to which is the
appropriate forum (forum conveniens)
having regard to the convenience of the
parties and may grant anti-suit
injunction in regard to proceedings
which are oppressive or vexatious or in
a forum non-conveniens;
(3) Where jurisdiction of a court is invoked
on the basis of jurisdiction clause in a
contract, the recitals therein in regard
to exclusive or non-exclusive
jurisdiction of the court of choice of
the parties are not determinative but
are relevant factors and when a question
arises as to the nature of jurisdiction
agreed to between the parties the court
has to decide the same on a true
interpretation of the contract on the
facts and in the circumstances of each
case;
(4) a court of natural jurisdiction will not
normally grant anti-suit injunction
against a defendant before it where
parties have agreed to submit to the
exclusive jurisdiction of a court
including a foreign court, a forum of
their choice in regard to the
commencement or continuance of
proceedings in the court of choice, save
in an exceptional case for good and
sufficient reasons, with a view to
prevent injustice in circumstances such
as which permit a contracting party to
be relieved of the burden of the
contract; or since the date of the
contract the circumstances or subsequent
events have made it impossible for the
party seeking injunction to prosecute
the case in the court of choice because
the essence of the jurisdiction of the
court does not exist or because of a vis
major or force majeure and the like;
(5) where parties have agreed, under a non-
exclusive jurisdiction clause, to
approach a neutral foreign forum and be
governed by the law applicable to it for
the resolution of their disputes arising
under the contract, ordinarily no anti-
suit injunction will be granted in
regard to proceedings in such a forum
conveniens and favoured forum as it
shall be presumed that the parties have
thought over their convenience and all
other relevant factors before submitting
to non-exclusive jurisdiction of the
court of their choice which cannot be
treated just an alternative forum;
(6) a party to the contract containing
jurisdiction clause cannot normally be
prevented from approaching the court of
choice of the parties as it would amount
to aiding breach of the contract; yet
when one of the parties to the
jurisdiction clause approaches the court
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of choice in which exclusive or non-
exclusive jurisdiction is created, the
proceedings in that court cannot per se
be treated as vexatious or oppressive
nor can the court be said to be forum
non-conveniens; and
(7) the burden of establishing that the
forum of choice is a forum non-
conveniens or the proceedings therein
are oppressive or vexatious would be on
the party so contending to aver and
prove the same.
Now adverting to the facts of this case, the
jurisdiction clause in the contract runs thus :
"This agreement shall be governed by and
construed in accordance with English law
and the parties hereby submit to the
non-exclusive jurisdiction of the
English Courts (without reference to
English conflict of law rules)."
A plain reading of this clause shows that the
parties have agreed that their contract will be
governed by and be construed in accordance with
English law and they have also agreed to submit
to the non-exclusive jurisdiction of English
Courts (without reference to English conflict of
law rules). We have already observed above that
recitals in regard to submission to exclusive or
non-exclusive jurisdiction of a court of choice
in an agreement are not determinative. However,
as both the parties proceeded on the basis that
they meant non-exclusive jurisdiction of the
English Courts, on the facts of this case, the
Court is relieved of the interpretation of
jurisdiction clause. Normally, the court will
give effect to the intention of the parties as
expressed in the agreement entered into by them
except when strong reasons justify disregard of
the contractual obligations of the parties. In
Donohue's case (supra) although the parties to
the agreement stipulated to submit to the
exclusive jurisdiction of the English Courts,
the House of Lords found that it would not be in
the interests of justice to hold the parties to
their contract as in that case strong reasons
were shown by the respondent. It was felt
necessary that a single trial of all the claims
of the parties by one forum would be appropriate
and as all the parties to the New York
proceedings were not parties to the agreement
stipulating exclusive jurisdiction of the
English Court and as all the claims before the
New York court did not arise out of the said
contract so they could not have been tried in
the English Court. It was urged that in the
circumstances parallel proceedings - one in
England and another in New York - would have to
go on which might result in inconsistent
decisions. Those facts were considered as strong
reasons to decline to grant anti-suit injunction
though the parties had agreed to the exclusive
jurisdiction of the English Court. In contrast
in SABAH's case (supra) even though GOP filed
the suit first in the court of natural
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jurisdiction and sought anti-suit injunction
against SABAH restraining them from proceeding
with the action brought by them in the English
Court, the Court of Appeal found that non-
exclusive jurisdiction clause in the agreement
of guarantee executed by GOP was binding on
them. The action of GOP in filing the suit
earlier in the court of natural jurisdiction was
held to be clearly in breach of contract and in
the context of the non-exclusive jurisdiction
clause, oppressive and vexatious unless the GOP
could show strong reasons as to why parallel
proceeding would be justified. The only ground
urged for continuance of proceeding in Pakistan
Court was that it was a convenient forum which
was considered not strong enough for the GOP to
disregard the contractual obligation of
submission to the jurisdiction of the English
Court for resolution of disputes. The Court of
Appeal, upheld the anti-suit injunction granted
by the learned Judge at the first instance as
also the order declining to stay the English
suit.
In the instant case, though the learned
single judge proceeded on the prima facie
finding that the proceedings in the English
Courts would be oppressive and vexatious, in our
view, those findings, recorded at the stage of
passing an ad-interim order, would not bind the
same learned judge much less they would bind the
appellate court or the parties thereto at
subsequent stage of the same proceeding because
it cannot operate as issue estoppel. It cannot
be laid down as a general principle that once
the parties have agreed to submit to the
jurisdiction of a foreign court, the proceedings
or the action brought either in the court of
natural jurisdiction or in the court of choice
will per se be oppressive or vexatious. It
depends on the facts of each case and the
question whether the proceedings in a Court are
vexatious or oppressive has to be decided on the
basis of the material brought before the court.
Having perused the plaints in both the suits and
the contract we are of the view that the
proceeding in the English Court for recovery of
the minimum guaranteed amount under the contract
cannot, at this stage, be said to be oppressive
or vexatious. It is true that the courts would
be inclined to grant anti-suit injunction to
prevent breach of contractual obligation to
submit to the exclusive or non-exclusive
jurisdiction of the court of choice of the
parties but that is not the only ground on which
anti-suit injunction can be granted. As is
apparent the appellants brought the suit in the
court of natural jurisdiction for adjudication
of the disputes arising under the contract for
which the parties have agreed to submit to the
non-exclusive jurisdiction of the English Court
in accordance with English law though the
English Court has no nexus with the parties or
the subject-matter and is not the natural forum.
But then the jurisdiction clause indicates that
the intention of the parties is to have the
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disputes resolved in accordance with the
principles of English law by an English Court.
Unless good and sufficient reasons are shown by
the appellants, the intention of the parties as
evidenced by their contract must be given effect
to. Even when the appellants had filed the suit
earlier in point of time in the court of natural
forum and the respondent brought action in the
English Court which is the agreed forum or forum
of the choice having regard to the expressed
intention of the parties, no good and sufficient
reason is made out to grant anti-suit injunction
to restrain the respondent from prosecuting the
English action as such an order would clearly be
in breach of agreement and the court will not,
except when proceedings in foreign court of
choice result in perpetuating injustice aid a
party to commit breach of the agreement. To
apply the principle in Donohue's case good and
sufficient reasons (strong reasons) should be
shown to justify departure from the contractual
obligations. Here, two contentions have been
urged; the first is that the English Court is
forum non-conveniens in view of the alleged
breach of the agreement by the respondent in the
manner not foreseen. This, in our view, is far
from being a good and sufficient reason to
ignore the jurisdiction clause. Even otherwise
the fact that the parties had agreed to resolve
their disputes arising under the agreement,
shows that they had foreseen possible breach of
agreement by any of the parties and provided for
the resolution of the disputes which might arise
therefrom. In the context, the foreseeability
test would take in circumstances which render
approaching the forum of choice impossible like
the court of choice merging with other court and
losing its identity or a vis major etc., which
would make it impossible for the party seeking
anti-suit injunction, to prosecute the case
before the forum of choice. In our view, on the
facts of this case, the foreseeability test
cannot be extended to the manner of breach of
the contract so as to turn the forum of choice
into forum non-conveniens. Circumstances such as
comparison of litigation expenses in England and
in India or the hardship and incurring of heavy
expenditure on taking the witnesses to the
English Court, would be deemed to have been
foreseen by the parties when they agreed to
submit to the jurisdiction of the English Court
in accordance with the principles of English law
and the said reasons cannot be valid grounds to
interdict prosecution of the action in the
English Court of choice. And the second is that
English Court has no connection with either of
the parties or the subject-matter and it is not
a court of natural jurisdiction. This reason can
be taken note of when strong reasons are shown
to disregard the contractual obligation. It
cannot be a good and sufficient reason in itself
to justify the court of natural jurisdiction to
interdict action in a foreign court of choice of
the parties.
We, therefore, find no valid reasons to grant
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anti-suit injunction in favour of the
appellants, in disregard of jurisdiction clause,
to restrain the respondent from prosecuting the
case in the foreign forum of the choice of the
parties - the English Court.
For the aforementioned reasons, interference
in the order of the High Court, under challenge,
is not warranted. The appeal fails and it is
accordingly dismissed with costs.
* Modern Admiralty Law by Aleka Mandaraka-Sheppard (First Edition at page 275).
? Recognition of Foreign Judgments at Common Law - The Anti-Suit Injunction Link
by Jonathan Harris.
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