Hong Kong Court of Appeal addresses the enforceability of English anti-suit injunction

In the recent case of Compania Sud Americana de Vapores S.A. v Hin-Pro International Logistics Limited (CACV 243/2014), the Court of Appeal (CA) held that an English anti-suit injunction with respect to legal proceedings in another jurisdiction (China) could not be enforced in Hong Kong.

This decision serves as a useful reminder that care is required when drafting contractual jurisdiction clauses. .The Hong Kong courts may not recognise interim relief granted by foreign courts where Hong Kong is not the primary forum. This was so in Compania even though substantial assets were located in Hong Kong.

Background

The disputes arose between the plaintiff and defendant in respect of a series of contracts for carriage by sea. The defendant claimed to enjoy ownership of the cargo and alleged that the plaintiff, as carrier, had wrongfully released the cargo without the production of bills of lading. The defendant brought proceedings before the Chinese courts. Although the plaintiff challenged the jurisdiction of the Chinese courts by relying on what it regarded as an exclusive jurisdiction clause in the bills of lading, the Chinese courts decided they had jurisdiction under Chinese law and found in favour of the defendant on the merits. The plaintiff appealed and in parallel, initiated actions before the English courts. There it obtained an anti-suit injunction against the defendant based on the jurisdiction clause. In an effort to enforce the English injunctions in Hong Kong, the plaintiff applied for a Mareva injunction to freeze the defendant's assets in Hong Kong. Such an injunction was initially granted but later discharged, hence the plaintiff's appeal.

Issues and Decision

The Hong Kong courts have the power to grant an injunction or other interim relief in relation to or in support of proceedings commenced outside Hong Kong. The CA emphasised that, in exercising such power, the court is required to abide by the general principles governing interim relief. In the context of Mareva relief, a plaintiff must amongst other things show a good and arguable case.

In this case, the substantive proceedings were conducted before the Chinese and English courts. The anti-suit nature of the injunction posed a special problem for the Hong Kong court, who lacked primary jurisdiction over the subject matter. International comity requires that the Hong Kong court should have a sufficient interest in, or connection with, the matter to justify interference.. In the current case, Hong Kong was not the natural forum for disputes in relation to the bills of lading, and the Chinese and English courts had arrived at different conclusions on jurisdiction after applying their respective domestic laws. Comity was a crucial consideration for the CA as it was not in a position to decide which set of rules should prevail. The CA found  that non-interference did not deprive a party of its contractual rights (here arising from the exclusive jurisdiction clause), as different jurisdictions could legitimately have different rules of contractual construction. Therefore, the CA decided that it could not enforce an English anti-suit injunction with respect to legal proceedings in another jurisdiction.

The CA left open one hypothetical caveat. In extreme cases where the conduct of the foreign state exercising jurisdiction is such as to deprive it of "the respect normally required by comity", the CA may consider intervening. The CA did not elaborate or give examples to illustrate such a scenario.

On a separate issue, the CA observed that even if the court decides to enforce an anti-suit injunction, an interim injunction restraining the relevant party from proceeding further is normally sufficient. If the freezing of assets is necessary, a Mareva injunction cannot go beyond the actual damage suffered by the applying party. It could not be more draconian than the anti-suit injunction itself. This final observation provides guidance on the extent of interim relief the court may deem appropriate when a party seeks to enforce an anti-suit injunction.