The anti-suit injunction and state immunity.

UK P&I Club NV and Another v República Bolivariana de Venezuela (The RCGS Resolute) – [2022] EWHC 1655 (Comm), raises, for the first time, the question of the effect of a claim to state immunity when a party claims an anti-suit injunction against a State.

A Venezuelan navy patrol intercepted a cruise liner, ‘Resolute’, in March 2020. A collision resulted and the navy vessel suffered hull damage and eventually sank. ‘Resolute’ was insured by UK P&I Club NV, a subsidiary of United Kingdom Steam-Ship Assurance Association. The Club’s Rules contained the two usual provisions relating to coverage: a “pay to be paid” clause under which liability to provide indemnity was postponed until actual payment of damages by the owners; and an English law and London arbitration clause.

In 2020 Venezuela brought civil claims in the courts of Dutch Curaçao and Venezuela against Resolute, the owners, head managers and the Clubs. The Clubs obtained an ex parte interim anti-suit injunction against Venezuela in the High Court and then sought a permanent anti-suit injunction against Venezuela to restrain it from pursuing both sets of foreign proceedings, on the basis that its direct action claim against them was subject to London arbitration.

Sir Ross Cranston held that Venezuela’s claim against the Clubs had been made under local legislation permitting a direct action. If the local law treats the claim as derived from the insurance policy the arbitration clause would be binding. He concluded that this was the case here and by pursuing judicial proceedings Venezuela was in breach of the arbitration clause. This was a ‘quasi-contractual’ claim which would be treated in the same way as a contractual claim. The court would ordinarily exercise its discretion to restrain the pursuit of proceedings brought in breach of an arbitration or jurisdiction clause, unless the injunction defendant could show strong reasons to refuse the relief.

However, there was the question of state immunity to consider. Although the commercial activity exception in s.3(1)(a) and the arbitration exception in s9(1)(a) of the State Immunity Act 1978 applied and meant that Venezuela did not have adjudicative immunity, it did have enforcement immunity under section 13(2)(a) which clearly states “relief shall not be given against a State by way of injunction …” Adjudicative immunity and enforcement immunity were separate and did not stand or fall together.

Article 6 of the European Convention on Human Rights applied in that s.13(2) deprived the Clubs of a remedy otherwise available to them. However Article 6 was not infringed as under customary international law there was no generally recognised right to an anti-suit injunction and section 13(2)(a) lies within the range of possible rules consistent with current international standards. Section13(2)(a) could also be justified as well by reference to legitimate domestic policy, if pursued by proportionate means.

Sir Ross Cranston noted [124]: “Finally, the fact that the Clubs will not have an injunction preventing parallel proceedings does not render worthless their right to have Venezuela’s claims determined by way of London arbitration. As well as an order to this effect, there may also be supportive remedies available to the Clubs including, at least in a contractual context, the compensation for breach of the arbitration agreement and declaratory relief which the Clubs are seeking in the arbitration, and which could be relied upon to resist enforcement of any judgment which Venezuela obtains in the foreign proceedings.”

The position may be different in respect of an anti-suit injunction ordered by arbitrators pursuant to their powers under s48(5) of the Arbitration Act 1996. In The London Steam-Ship Owners’ Mutual Insurance Association Ltd v The Kingdom of Spain [2020] EWHC 1582 (Comm) Henshaw J held that this was a matter for the arbitrators at first instance, but stated [188]:  “I consider the better view to be that SIA section 13 governs the exercise but not the existence of the court’s power to grant an injunction, and that AA 1996 section 48 permits an arbitrator to grant an injunction against a state.”

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Professor Simon Baughen

Professor Simon Baughen was appointed as Professor of Shipping Law in September 2013 (previously Reader at the University of Bristol Law School). Simon Baughen studied law at Oxford and practised in maritime law for several years before joining academia. His research interests lie mainly in the field of shipping law, but also include the law of trusts and the environmental law implications of the activities of multinational corporations in the developing world. Simon's book on Shipping Law, has run to seven editions (soon to be eight) and is already well-known to academics and students alike as by far the most learned and approachable work on the subject. Furthermore, he is now the author of the very well-established practitioner's work Summerskill on Laytime. He has an extensive list of publications to his name, including International Trade and the Protection of the Environment, and Human Rights and Corporate Wrongs - Closing the Governance Gap. He has also written and taught extensively on commercial law, trusts and environmental law. Simon is a member of the Institute of International Shipping and Trade Law, a University Research Centre within the School of Law, and he currently teaches at Swansea on the LLM in:Carriage of Goods by Sea, Land and Air; Charterparties Law and Practice; International Corporate Governance.

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