Forum-Shopping in International Disputes - Pressing Home your First Mover Advantage

Summary

When any international transaction turns bad, absent of an arbitration clause or exclusive jurisdiction clause, one of the most critical early decisions a party must make is where to have the dispute resolved. Where the facts of the case involve more than one country, or where the parties are based in different countries, each will likely want to "forum shop". This involves bringing the dispute before the courts of the country considered likely to offer the greatest overall advantages. This advantage may be as simple as geographic proximity to where a party is based or ease of giving evidence. More likely, the advantages sought may include lower cost, or quicker/slower procedures and processes, or - above all - the "home advantage" of a judge and legal system likely to be more receptive to the arguments the party intends to rely on. On 20 January 2012, the Court of Appeal re-confirmed that as long as the parties have not already agreed to litigate or arbitrate in England, it is a perfectly valid strategy to act quickly to attempt to secure a favourable venue for the case by starting an action in another connected country. Looking into the facts of Star Reefers Pool Inc v JFC Group Co Ltd shows how this strategy can pay off.

The Case

JFC is a Russian company. It brought proceedings in the Russian courts for a declaration that it was not bound under guarantees in respect of unpaid hire of chartered vessels between JFC's nominee company and Star Reefers, a Cayman Islands company. Star Reefers objected to this by bringing an anti-suit application before the English courts preventing JFC from taking further steps in the Russian proceedings. At first instance, Teare J granted an anti-suit injunction. On appeal by JFC, this order was overturned. Rix LJ, giving the judgment for the Court of Appeal, held that although the disputed guarantees that JFC provided to Star Reefers were arguably governed by English law, it did not follow that England was the natural or most appropriate forum where the dispute should be resolved. JFC had legitimate grounds to bring an action in Russia. These are the courts of its domiciliation, at the place where the obligation fell to be performed and the place where, if there were contracts of guarantee, these contracts were made. In addition, the Court of Appeal held that the Russian courts would apply Russian law (not English law) to the guarantees, and that some advantage from the application would accrue from...