Non-exclusive jurisdiction clauses: Court of Appeal declines to grant anti-suit injunction

The Court of Appeal has recently considered the principles governing the grant of anti-suit injunctions, which restrain a party from initiating or pursuing parallel proceedings in a foreign court in proceedings not governed by the EU Regulations on Jurisdiction.

A US hedge fund, contracted to buy tranches of asset-backed collateralised loan obligations (the underlying assets being predominantly US real estate) from a multi-national bank. The purchase was financed by a number of revolving purchase transactions under which the hedge fund agreed to sell the securities to the bank and then repurchase them one month later at a higher price. The master purchase agreement between the hedge fund and the bank was subject to English law and contained a non-exclusive jurisdiction clause in favour of the English courts.

Following a dispute on margin calls made under the master purchase agreement by the bank on the hedge fund (essentially a call to the hedge fund to transfer funds to plug a net exposure to the bank under the purchase agreement), the hedge fund commenced proceedings in Texas. The bank subsequently issued proceedings in the Commercial Court in London and sought a court order preventing the hedge fund from continuing proceedings in Texas.

The Court of Appeal held that no injunction should be granted. In doing so, the court set out the principles to be applied where the parties have agreed a non-exclusive jurisdiction clause and the case is not governed by the EU Regulations.

• The court will always exercise caution when faced with an anti-suit injunction since by definition it involves interference with the process of a foreign court. Where the foreign court has accepted jurisdiction, the English court would grant an anti-suit injunction only in exceptional cases.
• Although not an absolute rule, where a matter is capable of being decided by an English and a foreign court, the party seeking the anti-suit injunction from the English court must generally show that proceeding before the foreign court is or would be vexatious or oppressive.
• The wording of the jurisdiction clause is the starting point. By entering into a non-exclusive jurisdiction agreement in the terms they did, the parties had anticipated and accepted the possibility of parallel proceedings. Therefore the clause of itself did not suggest that pursuing proceedings in another jurisdiction was oppressive and vexatious. And there were no additional factors which justified the granting of an injunction.

This is the most recent in a series of cases this year on anti-suit injunctions. If the case had been governed by the EU Regulations, then there would have been no scope for obtaining an anti-suit injunction in any event. Where a case falls outside the EU regulations, it is, in appropriate circumstances, open to a party to protect proceedings before the English courts through the use of this procedure. Where, however, parties draft a non-exclusive jurisdiction clause there is a risk that parallel proceedings may be pursued in a different jurisdiction. To avoid this, parties should draft clear exclusive jurisdiction clauses in their agreements.

Further reading: Deutsche Bank AG and another v Highland Crusader Offshore Partners LP and others [2009] EWCA Civ 725