G2 Ocean AS v Tokio Marine Brasil Seguradora SA

This is an application made without notice for a contractual anti-suit order in aid of a maritime arbitration agreement which requires the relevant dispute to be, so it is submitted, resolved by arbitration in London.

The circumstances which lead to the claim are relatively straightforward. The claimant is the disponent owner of MV Tanchou Arrow (“Vessel”), and the contractual carriers of a quantity of about 4,500 metric tonnes of bagged urea which is the subject of the underlying dispute.

The issues which arise in an application of this sort are well-established by the case law: where, as here, an application is advanced for an anti-suit injunction to enforce an arbitration or exclusive jurisdiction agreement, the applicant must first show to a relatively high degree of certainty that the arbitration agreement relied upon has been incorporated into the contract between the parties and that the underlying dispute comes within the scope of the arbitration agreement as a matter of its true construction. Where that has been established, then an injunction will be granted unless there are strong countervailing reasons for not granting the injunction. The test in relation to contractual incorporation is conventionally described as being "a high degree of probability". The contractual arrangements that apply in this case are, on the face of it, slightly less certain than many others, although I make clear immediately that I am satisfied that the claimant has made good its case to the relevant high standard in relation to incorporation.

The relevant bills of lading are in the CONGENBILL 2016 form and identify the shipper as "Allied Harvest Company Limited" of Beijing in China. The consignee is identified as "Yara Brasil Fertilizantes SA" Thus, amongst other things, the bill of lading constitutes either a contract of carriage or evidence of a contract of carriage between the parties to it. On the face of the bill of lading there is a statement that freight is "… payable as per charterparty dated 12 June 2024." There also appears on the face of the bill of lading a notice that "For conditions of carriage see page 2. On page 2 of each of the bills there appears at paragraph 1 the standard term:

It will be readily appreciated therefore that the cargo the subject of this dispute is 4,500 metric tonnes of urea in bags and the nature and quantity of the cargo covered by the two booking notes is 4,500 tonnes of urea in bags. Furthermore, both are dated 12 June 2024. In those4 circumstances, it is relatively easy to conclude that although the booking notes are not described on their face as being charterparties, they are nonetheless very likely to be the documents referred in the bills of lading relevant to this dispute. In those circumstances I have no difficulty in concluding that, even allowing for the need to show to a high degree of probability that there has been incorporated into the contract the arbitration clause relied upon, that requirement is satisfied in the circumstances of this case.

The only other fact to mention at this stage is that the claim that has been brought in Brazil has been brought by an insurer of the original consignee, who sues on the basis that it has been subrogated to the rights of the consignee in relation to the cargo. As a matter of English law it is well established that where a party becomes subrogated to the rights of another party those rights are taken subject to the qualifications which apply to those rights in the hands of the original contracting parties. In principle that means that if the rights to which an insurer becomes subrogated are rights which must be enforced, if they are to be enforced at all, by arbitration in London then the insurer necessarily comes under an obligation to advance such a claim in arbitration. The underwriter cannot be in any better position in relation to a subrogated right than the insured – see by way of example the Jay Bola [1997] 2 Lloyd's Reports 279 at 286. Where an ante suit injunction is sought on this basis it is known as a derived rights claim.

I am satisfied that the claim which is being brought by the claimant in the Brazilian proceedings, is a claim brought in breach of the arbitration agreement contained in the booking notes which have been incorporated by reference into the contract of carriage contained in or evidenced by the bills of lading to which the defendant has become bound by it becoming subrogated to the rights of the consignee. There is no even arguable issue as to whether the dispute the subject of the proceedings in Brazil comes within the scope of the arbitration agreement as a matter of construction because the arbitration agreement is in the usual extremely wide terms.

In those circumstances the only question which then arises is whether or not it can be said there has been such a delay or some other strong reason, why an injunction should not be granted - see the Angelic Grace [1995] 1 Lloyd's Reports 87, which has been approved or followed on countless occasions since it was decided, in which it was decided that where an injunction is sought to restrain a party from proceeding in a foreign court in breach of an arbitration agreement governed by English law, the English Court should feel no diffidence in granting the injunction, providing it is sought promptly and before foreign proceedings are too far advanced.

In the circumstances of this case, I am satisfied delay on the part of the claimant in commencing these proceedings is immaterial. This is so because delay itself is not the issue which arises. In Qingdao Huiquan Shipping v Shanghai Dong He Xin Industry Group [2018] EWHC 3009 (Comm), [2019] 1 Lloyd's Reports at 520, Bryan J noted that delay and comity are linked with the concern being whether the delay has been such as to allow the foreign proceedings to reach such an advanced stage that to grant an injunction would interfere with proceedings in a way that may indirectly give rise to comity type issues. In the circumstances of this case that is not the position, however, because the proceedings that are taking place in Brazil so far have got no further than an as yet unresolved jurisdiction challenge brought on the advice of the Brazilian lawyers by the claimant.

The only other point that I should perhaps mention concerns the fact that the contractual limitation period, which otherwise applies to the claims brought by the defendant have expired in the time that has gone by. That is not a strong reason for not granting the injunction however, because it cannot credibly be asserted on behalf of the defendant in the circumstances that it was not or could not, with reasonable diligence, have become aware of the existence of the arbitration agreement. In those circumstances I am satisfied that the claimant has acted sufficiently promptly not to justify refusing the relief which is sought.

Entirely properly, given that this is an ex parte on notice application, the claimant has identified, in the interests of satisfying its duty to fully and frankly disclose any issues adverse to the interests of the claimant, a number of such issues which are identified at length in the skeleton argument and touched on in the evidence as well. Those include the identity of the contractual carrier. As to that, it is perfectly true to say that the parties named in the booking notes are not named in the bills of lading. However that can only have been the result of commercial expediency within the group of which the claimant is part. The point is not material to the wider dispute because the bills of lading are properly to be understood as incorporating the terms and conditions of the booking notes by reference for the reasons already explained. I have touched on the question of incorporation of the arbitration clause. I need say no more about that. I have dealt with the question of delay and prejudice to the defendant underwriters if an order in these terms is made and I need say no more about that. There is a possibility identified in the skeleton argument that it might be alleged that the claimant has submitted to the Brazilian jurisdiction. I am satisfied for the reasons identified there that there has been no such relevant submission. The defence which has been filed has been filed on the advice of the Brazilian lawyers acting for the claimant for the purposes of enabling the claimant to challenge jurisdiction. Conventionally, challenges to jurisdiction and steps taken in connection with such applications are not regarded as a submission to the jurisdiction. Comity of itself is not relevant either because the orders are directed to and take effect against the individual and do not purport to take effect against foreign courts. The only relevance of comity is an indirect one which arises where the delay has been such as to allow the foreign proceedings to develop to an advanced stage. As I have explained, that does not arise.

The issues that remain concern, firstly, the question of fortification of the cross-undertaking in damages. The claimant is not an English registered company or a company with assets in the English jurisdiction. There is always a potential problem in relation to a cross-undertaking in damages given by a foreign claimant in aid of an injunction sought from the English Court because if for any reason the injunction is subsequently set aside, and there is an enquiry as to the losses caused by the grant of the injunction there can be difficulties in enforcement which involve the respondent either having to seek to enforce in foreign jurisdictions, which might be expensive and time-consuming, and/or the prospect of a judgment based on a cross-undertaking not being enforced in particular jurisdictions. In the circumstances of this case, I am satisfied it is appropriate there should be fortification at any rate over until a return date.

It was submitted on behalf of the claimant that an appropriate way of providing security would be by an LOU provided by the claimant's P&I Club. I agree that is an appropriate way to proceed, providing, however, that the LOU is provided by the London office of the P&I Club concerned. I was told in the course of these submissions that that was not a difficulty as a matter of principle, and I am prepared to accept that the provision of an LOU by the London Office of Guard (the P&I Club concerned) is an acceptable form of security in the circumstances.

The only issue that remains concerns the amount. Conventionally, security in relation to injunctions of this sort will be expressed in United States dollars and I propose to so express it in the circumstances of this case. In order to arrive at an appropriate sum, it is necessary to arrive at an intelligent estimate of the likely losses that would accumulate between now and a return date. Those losses are likely to be modest. They are likely to involve primarily the cost of defending these proceedings initially down to the first return date. Thus, the principal sum involved would be the cost of instructing London solicitors to prepare for and then respond to this application at the first return date. I say "the first return date" because even if the first return date is not the effective return date, the issue of how much security should be provided can at least be reviewed on the first return date.

How much then should be provided? I suggested in the course of argument that the appropriate range was something between US$75,000 and US$100,000, which was not strenuously objected to on behalf of the claimant, although it was said that the sum should be much closer, I think, to $75,000 than to $100,000. The question, therefore, is whether the respondents could instruct a London firm of solicitors to respond to this application from a standing start and expect to be able to do so for US$75,000 or the sterling equivalent. In my judgment that sum is too modest in the circumstances. I conclude, therefore, that the appropriate figure would be US$85,000.

Just as the amount of security can be reviewed on the first return date in favour of a respondent if the respondent turns up to dispute the continuation of the injunction I am proposing to grant, by the same token if the defendant continues not to participate or engage with this process then the question of whether security should be continued can too be reviewed on the first return date.

The next issue that I have to determine concerns the question of service out. The point which is made on behalf of the claimant is that permission to serve out is probably not required, but nonetheless, if it is, then it should be granted. I agree and grant permission to serve these proceedings out of the jurisdiction for the reasons identified in the skeleton submissions in support of this application at paragraph 49 of the skeleton.

The final issue which arises concerns whether or not I should give permission to serve these proceedings by an alternative means. The alternative means proposed is by email. The evidence does not suggest, nor was it submitted in the course of the hearing, that the alternative methods of service proposed are illegal according to the laws of Brazil. Therefore, in principle, there is no reason why service by the proposed alternative means should not be permitted if otherwise justified.

Brazil is a Hague Service Convention state. The case law in England and Wales establishes that where that is so, then there should be a departure from the Convention only if there are exceptional reasons for making such an order. The Commercial Court has recognised in a number of judgments over the last 5 years or so that it is appropriate to depart from the requirements of the Hague Service Convention where an injunction has been granted on a without-notice basis with a short return date. This is so essentially for two reasons. Firstly, such a departure is necessary in order that the respondent can be left in no doubt that an order has been made by the English Court which either precludes that party from taking particular steps or requires it to take particular steps within a fixed time. The second reason why exceptionally service out by alternative means should be permitted where an injunction has been granted on a without-notice basis is because inevitably the return date is likely to be listed a relatively short time ahead and notice therefore needs to be given in early course to enable the respondent to obtain effective representation before that return date takes place. In those circumstances I am prepared to direct service by alternative means in the form proposed by the claimant.