Background
The case’s underlying dispute involved Wikely Family Trustee Limited (Wikely) alleging that Kea Investments Limited (Kea) had breached the parties’ contract and fiduciary duties. Wikely commenced proceedings in the United States Circuit Court of Kentucky (the Circuit Court). The Circuit Court issued a default judgment against Kea for US $123 million.
In the New Zealand High Court, Kea applied for an interim worldwide anti-suit and anti-enforcement injunction (the injunction). The High Court granted the injunction after finding the contract to have been obtained fraudulently. In the Court of Appeal, Wikely sought to set aside the injunction. Wikely argued that to maintain the injunction would be to uphold an unprecedented breach of international comity.
Dispute resolution clauses and the interest of justice
The Court discussed whether it should maintain the injunction. Maintenance ultimately would depend on the interest of justice. If one party is looking to have the dispute heard in a foreign jurisdiction or arbitral tribunal, then courts should assess the risk of justice failing if that is to occur. If any court leans towards a view that justice would fail, it is to be extremely cautious that this is the correct conclusion.
At [177], the Court discussed the relationship between dispute resolution clauses and comity. Comity is the doctrine that courts recognise each other’s decisions out of courtesy, if not necessarily as a matter of law. When applying comity, a court is responding to the fact that another court is hearing the same matter. As such, the court will not hear the matter at that moment.Â
The Court presented two views on the misguided nature of invoking comity to give effect to a dispute resolution clause. In Maritime Mutual Insurance Association (NZ) Ltd v Silica Sandport Inc [2023] NZHC 793, the High Court stated that when a court gives effect to an arbitration clause, it does so because of contractual rights. It does not do so out of comity. Professor Dickinson of the University of Oxford has similarly agreed, criticising the idea that the role of comity is to give effect to a dispute resolution clause.
The Court noted that Kea had since applied to the Kentucky Court of Appeals. In the spirit of comity, the Court stated that it had to defer to this judgment. However, the Court affirmed that Kea could reapply to the Court later.
