Background
Operating its business from Egypt, Dhunseri had purchased cargo shipped from China on Friendship Shipping’s vessel. The cargo was damaged and Dhunseri commenced court proceedings in Egypt against Friendship Shipping. Friendship Shipping served a notice of arbitration in Hong Kong on Dhunseri, which Dhunseri rejected.
While the Egyptian courts considered the matter, Friendship Shipping applied to the Court to grant the injunction to restrain the Egyptian proceedings. Friendship Shipping argued that the parties had agreed to an arbitration clause where any dispute would be resolved by arbitration in Hong Kong, applying English law. Dhunseri argued that there had been no arbitration agreement and, in any event, it was too late because the Egyptian Court had already reserved judgment.
Issues
The Court identified three core issues:
- When parties dispute the existence of an arbitration agreement, what applicable standard of proof must be met?
- Did Friendship Shipping establish the agreement to that standard?
- If so, did the circumstances mean that the Court must order an ASI?
The standard of proof
Had Friendship Shipping proven that prima facie there was an arbitration agreement?
Friendship Shipping pointed out that “Conditions of Carriage” existed alongside the bill of lading. The first part of the conditions described their function: All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the Law and Arbitration Clause, are herewith incorporated. The supposed Law and Arbitration Clause directed that Abtri if any in Hong Kong and English law to apply. The Court agreed that this was a valid arbitration clause. The Court also rejected Dhunseri’s arguments that “abtri” might not mean “arbitration” and “if any” implied that arbitration was optional.
Should the Court order an anti-suit injunction?
The Court started with the principle that a party to an arbitration agreement has a right to have the contract enforced. However, enforcement would also be dependent on any delay between the contested proceedings and the application for the injunction. This is partially to prevent court proceedings progressing too far.
The Court adopted the following principles:
- The party resisting the ASI does not need to show that the other party’s delay was detrimental.
- That the opposing party may have breached the agreement does not mean that a court should overlook the delay of the party seeking the injunction.
- The applying party should not adopt a ‘wait-and-see’ attitude towards the development of any foreign proceedings.
- The longer it takes for a party to seek an ASI, the further into proceedings a court will step. Courts should therefore take delays seriously and avoid rewarding them by granting the injunction.
- Considering the factors above, the longer an action continues without any attempt to restrain it, the less likely a court is to grant the injunction.
In the present circumstances, the Court readily found that Friendship Shipping had taken too long to bring forward the injunction. The delay in action suggested Friendship Shipping was doing nothing more than trying its luck in another dispute resolution forum:
In the absence of any other plausible explanation of the chronology, it appears that once it became apparent that things were going against [Friendship Shipping] in the Egyptian Action following the Expert Report, [Friendship Shipping] decided to try to have a second bite of the cherry in the Hong Kong arbitration.
The Court rejected Friendship Shipping’s application for an ASI.
