English Court rejects anti-suit injunction seeking to restrain Chinese proceedings

Posted on: November 23rd, 2015

As fraud and asset recovery specialists, injunctions are an important tool of PCB Litigation’s trade, whether they be freezing injunctions, anti-suit injunctions, injunctions in support of overseas proceedings or similar forms of relief. In such cases, it is crucial for applicants to take steps in a timely manner. A recent case involving an attempt to restrain Chinese proceedings demonstrates what can go wrong when such steps are delayed.

In that case, Essar Shipping Ltd v Bank of China Ltd [2015] EWHC 3266 (Comm), the bank had issued proceedings in China in September 2014 for over US$11 million. Those proceedings concerned a bill of lading which, under Chinese law, did not include a governing law and arbitration clause. In response, Essar challenged the Chinese court’s jurisdiction, asserting that the bill of lading contained a valid London arbitration clause under English law (the governing law of the contract, itself incorporated under English but not Chinese law). Essar’s challenge was issued in November 2014. This was shortly before, under English law, a potential time bar for commencing proceedings had expired.

Nevertheless, it was not until July 2015 that Essar applied for an anti-suit injunction against the Bank in the specialist Commercial Court of England and Wales. The injunction sought to restrain the Chinese proceedings for having been commenced in breach of the London arbitration clause.

The Commercial Court observed that it could grant anti-suit relief as long as it was “sought promptly and before the foreign proceedings are too far advanced”. Given that the time bar was 12 months, the length of the delay by Essar was considered to be significant, notwithstanding the ongoing jurisdictional challenge in China. In any event, the judge felt that there was no objective justification for considering that such challenge would be resolved speedily or that Essar would be successful, such as to justify the delay. Accordingly, Essar’s application was rejected.

The case emphasises the need to proceed promptly when seeking injunctive relief. Having acted in such matters against parties from domestic and overseas locations like China, PCB Litigation is well placed to represent potential applicants and respondents in such circumstances.