Anti-anti-anti-suit injunctions may be coming to forums near you

Jul 2021

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Before we start the ‘inception’ style mental gymnastics, it may be best to take a deep breath.

What are anti-suit injunctions?

In most common law jurisdictions, anti-suit injunctions are a widely used tool to force a party to withdraw (or not commence) proceedings in breach of a jurisdiction or arbitration clause, or to withdraw proceedings which are vexatious or oppressive.

Typically, these injunctions are sought where one party partakes in a cheeky spot of ‘forum shopping’ in a foreign, more exotic court or arbitration centre different to that which was (allegedly) agreed.  The other party may then seek an anti-suit injunction from the local competent court to restrain the moving party from doing the dirty.

If successful, the injunction is effective against the offending party (ad personam), but is not binding upon the foreign court. The aggrieved party may still have other remedies up its sleeve, including recourse to challenge an arbitral award during the enforcement stage.

There are several recent decisions in Hong Kong which illustrate the factors relevant to the grant of the anti-suit injunction, including a high fashion fracas, a Mexican-Chinese stand-off,  and a tragic Caribbean misadventure.

However, what happens if the aggrieved party is insistent on continuing proceedings in its chosen forum?

Here’s where the real fun begins.

What are anti-anti-suit injunctions (“AASIs”)?

Consider the following example:

  • you are a manufacturer based in Hong Kong with a large customer base in Europe;
  • your customer thinks that you have breached a supply contract and threatens proceedings in a European court;
  • in anticipation of a filing race, you commence arbitration proceedings in Hong Kong, and your customer then starts court proceedings in Europe;
  • you apply to the Hong Kong court for an anti-suit injunction to restrain your customer continuing proceedings in Europe;
  • your customer applies to the European court for an injunction to restrain you from continuing to bring the anti-suit injunction in Hong Kong.

Congratulations, you are now the respondent in an anti-anti suit injunction!

If your customer succeeds in its application before the European court, you will be liable for sanctions by that court should you continue with your anti-suit injunction in Hong Kong.

Note that this is not just hypothetical: French, German, English and Indian higher courts have dealt with similar circumstances in ordering AASIs. Read more about it in this great article in the Kluwer Arbitration Blog.  These scenarios are becoming increasingly prevalent in the IP space.

Assuming that all appeal rights are exhausted, do you just give up the ghost and instruct European counsel? Or do you simply ignore the European proceedings and deal with enforcement issues later?

Why not try an anti-anti-anti-suit injunction (“AAASI”)?

By extension, you could hypothetically apply to the Hong Kong court for an AAASI. In other words, you would be trying to restrain your customer from continuing its AASI effective in respect of Hong Kong proceedings.

If the jurisdiction / arbitration clause and the natural forum is not clear cut, this could go on in an infinite loop, somewhat similar to the Marvel universe of origin movies.

There are of course other important considerations which themselves fill up entire tomes of judicial and scholarly reasoning. For example, principles of comity, ‘back-door territorial sovereignty’, estoppel, and reasons of public policy (including a court’s supervisory and supporting role in arbitrations).

Such principles could mean that an AAASI may never see the light of day, but on the other hand, it would deprive the international legal community of a veritable treasure trove of quality memes in relation to the incongruity of it all.

How to not make an AAASI of yourself

When drawing up your contract, get a lawyer to help you draft clear governing law and arbitration clauses separately in simple language. If you are thinking of doing a copy & paste job, make an informed decision, at the very minimum. For example, HKIAC has nice and simple model clauses and so does SIAC. Other arbitration centres (as well as the IBA Guidelines) also provide similar model clauses.

In multi-party relationships governed by a suite of contracts (e.g financing arrangements, derivative products, large scale infrastructure projects, complex sales/offtake agreements), it is a bit more difficult to predict when, where, why, how and by whom you will be sued.  While some may enjoy the feeling of being on tenterhooks and re-reading the Fiona Trust decision at bedtime (for which, see my colleague’s Blog post here), most instead derive pleasure from having some certainty in life.

So in these situations, make sure that the arbitration and governing law clauses in each contract are identical or at least compatible, or perhaps opt for an umbrella dispute resolution agreement which also deals with other issues such as precedence, common arbitrators, consolidation, joinder, and concurrent hearings, amongst other things.  Drafting multi-party, multi-contract arbitration clauses is ultimately quite fact specific and we recommend careful deliberation before signing on the dotted line.

If, despite the above, you become an AAASI applicant or respondent, please let us know. It could be the (re-re-re) start of something new.

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