English Courts Protect Arbitration Agreements

In the recent judgment of Starlight Shipping Co and another v Ta

Ping Insurance Co Ltd and another1, the English courts confirmed their

willingness to grant anti-suit injunctions restraining parties from bringing court

proceedings in non-EU states in breach of an arbitration agreement. The House of Lords

judgment handed down last month in Premium Nafta Products Limited and Others v Fili

Shipping Company Limited2, ruling against a stay of arbitration proceedings

in favour of litigation proceedings, was a further indication of the English courts' strong

support for international arbitration.

Background To The Starlight Dispute

The claimant shipowner (Starlight) and manager (Overseas Marine) sought an interim

anti-suit injunction to restrain the pursuit of proceedings brought by the first defendant,

an insurer (Tai Ping), in the Wuhan Maritime Court in China. The application also sought to

restrain the second defendant, the owner of the shipped cargo, from commencing any similar

proceedings. The claimants submitted that the proceedings in the Chinese court had been

commenced in breach of an arbitration agreement contained in a bill of lading and charter

party. The defendants asserted that the arbitration agreement contained in the bill of

lading was ineffective under Chinese law, and that the Chinese court would not recognise any

order of the English court preventing the continuance of the proceedings in the Chinese

court, nor any award of the arbitrators.

The English Commercial Court held that the first claimant (Starlight) was entitled to an

interim injunction against both of the defendants. The second claimant (Overseas Maritime)

was not a party to the contract and arbitration agreement, and therefore was not entitled to

the relief sought.

Comity Not At Stake

In reaching its decision, the English court first dismissed the defendants' argument

that an arbitration agreement was ineffective under Chinese law. It ruled that any matter of

Chinese law was irrelevant by virtue of the fact that the contract (and hence arbitration

agreement) was governed by English law. While recognising that the jurisdiction of foreign

courts should be approached with "utmost respect", it was the opinion of the English court

that international comity would not be at stake in making the injunction in this case. In

entering into the arbitration agreement, the parties had agreed to the jurisdiction of the

English court, and the injunction was simply a means of...