THE USE AND ABUSE OF ANTI-ARBITRATION INJUNCTIONS

Date01 December 2013
Published date01 December 2013
A Way Forward for Singapore

Concomitant with the rise of international arbitrations, anti-arbitration injunctions are becoming increasingly popular as a tactical strategy. Although it may seem contrary to the policy of minimal curial intervention, this article suggests that anti-arbitration injunctions are within the jurisdiction of courts and, used in the right circumstances, are compatible with the goals of international commercial arbitration. However, the line between the acceptable use and unacceptable abuse of anti-arbitration injunctions remains fine. As anti-arbitration injunctions have far-reaching consequences, courts should tread this path with caution.

Introduction

1 Singapore hosted the International Council for Commercial Arbitration Congress in 2012. It was the first time the event was held in South-East Asia, and it marks the importance of Singapore to the international arbitration community, and conversely, the importance of international arbitration to the Singapore legal and commercial communities. As arbitration continues to take root as the preferred alternative dispute resolution mechanism around the world, one question persists: to what extent should courts intervene in the arbitration process? There are many aspects to that question. This article focuses on a relatively uncharted area of curial intervention, in Singapore at least: the anti-arbitration injunction.

2 The law on anti-arbitration injunctions, described by some as “nightmare scenarios”,1 is far from consistent.2 Deconstructed into its

constituent elements, the law on anti-arbitration injunctions is actually a confluence of three other distinct areas of law, namely, civil procedure, conflict of laws, and arbitration. These three areas of law are in turn largely influenced by domestic statutes and rules of private international law and therefore differ from jurisdiction to jurisdiction. Seen in this light, the inconsistent positions across jurisdictions are understandable, and even expected.

3 This article will focus primarily on how the Singapore courts should address anti-arbitration injunctions in the context of international commercial arbitrations.3 The article seeks to address two basic questions: first, whether there is a case to be made for the granting of anti-arbitration injunctions; and second, if there are good reasons to grant the anti-arbitration injunction, whether the Singapore courts have such a power. There will be aspects of the anti-arbitration injunction that, though important, cannot be addressed within the confines of this article. These include the question of whether the anti-arbitration injunction should be a freestanding injunction, as well as a detailed analysis of the factors that the court should consider in determining when it should exercise its equitable jurisdiction to grant the anti-arbitration injunction.

4 In the final analysis, it is humbly suggested that the anti-arbitration injunction is a valuable tool4 of the supervisory court's arsenal of orders to regulate arbitrations seated within its jurisdiction, and that the supervisory court has the jurisdiction to grant such injunctions. At the same time, the courts' power to grant anti-arbitration injunction is a drastic remedy that must be exercised sparingly and with proper regard to the policy of promoting international commercial arbitration as an alternative autonomous dispute resolution mechanism. A measured approach towards the anti-arbitration injunction will ultimately yield benefits to adopters and practitioners of arbitration in Singapore.

II. Anti-arbitration injunction — An overview

A. Nature of an anti-arbitration injunction

5 The anti-arbitration injunction, as the name suggests, is an injunction to restrain arbitration from commencing or continuing.5

Though it has sometimes been referred to as the “anti-suit injunction”,6 it would be more accurate to term the injunction to restrain an arbitration as an anti-arbitration injunction. The anti-arbitration injunction is an extremely flexible instrument. It may be issued against a party or even against the arbitral tribunal.7 It may be sought before an arbitration commences, in the course of the arbitration hearing or after the substantive hearing has concluded, but before the final award is rendered. It may even be issued to prevent a party from enforcing an arbitral award.8 The effect of the anti-arbitration injunction evidently depends on when the injunction is sought and granted, and against whom it is ordered.

6 An order granting an anti-arbitration injunction acts in personam against the party who is being restrained (“the respondent”). As with any other in personam order, the anti-arbitration injunction only binds the respondent. It must be emphasised that the injunction does not negative the respondent's right to pursue its substantive rights. Indeed, the respondent may elect not to comply with the injunction and proceed with the arbitration. Nevertheless, anti-arbitration injunctions issued by courts are a powerful remedy for a party seeking to restrain arbitration (“the applicant”). A breach of an anti-arbitration injunction issued by a court amounts to contempt and the respondent may be punished by a fine or imprisonment.9 If a judgment obtained in breach of an anti-suit injunction is unenforceable,10 an award obtained in breach of an anti-arbitration injunction should meet the same fate. As Briggs observed of the anti-suit injunction, “[A]s an antidote to

jurisdictional shenanigans its usefulness is second to none.”11 The same can be said of the anti-arbitration injunction.

B. Similarities and differences between the anti-suit and anti-arbitration injunction

7 The anti-arbitration injunction is a direct derivative of its more prominent sister remedy, the anti-suit injunction. The history of the anti-suit injunction is well documented,12 and its pedigree, steeped in equity, should apply equally to the anti-arbitration injunction. Although there are similarities between the two, there are at least two key differences. First, the anti-arbitration injunction can be issued not just against a party, but against the arbitrators.13 While it is theoretically plausible that an anti-suit injunction may be issued against a judge of a foreign court, this has never occurred and would indeed be wholly inappropriate as a matter of judicial courtesy.14 Second, there is an undeniable element of intrusion into the foreign court's sovereignty when an anti-suit injunction is granted. Courts have been offended by the issuance of anti-suit injunctions by courts of other jurisdictions even if the anti-suit injunction is personal to the party being restrained.15 For this reason, issuing courts are generally extremely wary when considering whether to grant the anti-suit injunction.16 However, the anti-arbitration injunction does not offend the sovereignty of any foreign court or state machinery. Although an arbitration is subject to the curial regime of a particular jurisdiction,17 it is hardly expressed as an extension of the State's machinery. Indeed, the curial courts are, in many instances, the very court that may be asked to issue the anti-arbitration injunction. There will be no issue of trespass of sovereignty in those cases. Thus, protests against the anti-suit injunction premised on a breach of state sovereignty are less effective in the context of the anti-arbitration injunction.

C. The emergence of the anti-arbitration injunction

8 Anti-arbitration injunctions have been around for a long time, and have been permitted for a wide variety of situations, though there is little uniformity across judicial decisions. In the late 19th century and early 20th century,18 the bulk of the authority suggested that where a claim in arbitration fell outside an existing arbitration agreement, the court had no power to restrain it, as such an arbitration did not amount to an infringement of a legal or equitable right.19 Notwithstanding, a party could restrain the arbitration by contending that the arbitration agreement was void or voidable, had been discharged by frustration or breach, or that the terms of the arbitration agreement were not complied with.20 More recent authorities demonstrate that anti-arbitration injunctions have been granted in response to a breach of an agreement not to arbitrate,21 an arbitration of an issue that is res judicata,22 a breach of an exclusive jurisdiction agreement23 and the commencement of arbitration against a third party who was not party to the arbitration agreement.24 An applicant who maintains that it is not subject to the jurisdiction of the arbitral tribunal may seek injunctive relief from the courts to protect his right not to be subject to arbitration.25 Ostensibly, the applicant must establish that it is not bound by any arbitration agreement with respect to the dispute in question. The applicant may do so by seeking a declaration to that effect in court.26 If it satisfies the court that it is not subject to an arbitration agreement, the court will then have a basis on which to grant the anti-arbitration injunction.

9 It is beyond doubt that the anti-arbitration injunction is a relief recognised in numerous jurisdictions,27 from Pakistan28 to the US,29 the

UK30 and Australia,31 even if there are still some countries where the anti-arbitration injunction is frowned upon.32 Despite the modern recognition of the permissibility of the anti-arbitration injunction, the position in Singapore remains unsettled. Only one case has considered the issue: Mitsui Engineering and Shipbuilding Co Ltd v Easton Graham Rush33 (“Mitsui”). The High Court appears to have rejected the anti-arbitration injunction on grounds of incompatibility with the UNCITRAL Model Law on International Commercial Arbitration34 (“Model Law”). Mitsui, however, must be read carefully. As will be demonstrated later,35 a proper reading suggests that the decision...

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