Modi
Entertainment Network & Anr Vs. W.S.G. Cricket Pvt. Ltd [2003] Insc 16 (21 January 2003)
Syed
Shah Mohammed Quadri & Arijit Pasayat 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 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 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 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 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 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 later adopted was 'to avoid injustice' [See: (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
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 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 (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 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 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 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 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 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 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) 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 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
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 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
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 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 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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