Anti-suit injunctions: High Court considers proper approach where facts relevant to jurisdiction disputed

A recent decision sheds light on the court's approach to an application for an anti-suit injunction where there is a dispute of fact that affects the question of whether there is an exclusive English jurisdiction clause (or relevant arbitration clause, where the injunction is sought in support of arbitration). In particular, the decision suggests that if it is not clear, on the evidence, which of two competing clauses governs the contract, the court may decide to give case management instructions to allow the issue to be determined and continue the interim anti-suit injunction only up until that point: Tyson International Company Ltd v GIC Re, India, Corporate Member Ltd [2024] EWHC 236 (Comm).

The court in this case had to decide whether the claimant insurer had established a "high probability" that the reinsurance contract was governed by an exclusive English jurisdiction clause in the slip policy, rather than a New York arbitration clause in the facultative reinsurance certificate issued subsequently. Absent evidence of market practice, the judge would have concluded that the slip policy took precedence, in light of a hierarchy clause in the certificate. However, since he accepted that market practice could affect the question of construction, and he did not feel able to reach any conclusion on that issue in the face of the diametrically opposed expert opinions, the position was not clear. He therefore continued the anti-suit injunction until the determination of the defendant's jurisdiction challenge, so that evidence of market practice could be properly tested.

The decision is also of interest for the court's rejection of the defendant's suggestion that the threshold of "high probability" is higher than the balance of probabilities test. The court did not accept, in particular, that it could only continue the injunction if satisfied there was no real prospect that the competing clause (the New York arbitration clause) applied.

Background

The claimant is the captive insurer of Tyson Foods, a multi-national company operating in the food industry, and insures its property risks under a captive policy. The defendant is a Lloyd's of London syndicate that issued two reinsurance policies to the claimant in respect of the captive policy for the period 1 July 2021 to 1 July 2022 ("the Reinsurance").

Following a fire at Tyson Foods's poultry rendering plant in the USA in July 2021, the claimant accepted coverage under the captive policy and sought an indemnity from the defendant. The defendant purported to avoid the Reinsurance on the basis of alleged misrepresentations by the claimant on renewal of the Reinsurance.

Two documents were signed by the defendant in respect of each policy comprising the Reinsurance:

• A Slip Policy or MRC (Market Reform Contract) signed on 30 June 2021 which contained choice of law and jurisdiction provisions in the following terms:

“This Reinsurance shall be governed by and construed according to the Laws of England and Wales. The Courts of England and Wales shall have exclusive jurisdiction of the parties hereto on all matters relating to this insurance.”

• A Facultative Certificate signed on 9 July 2021 which included: an agreement for arbitration in New York under New York law; an entire agreement clause; and a clause referred to by the claimant and in the judgment as the “Hierarchy Clause” (but by the defendant as the “Confusion Clause”) which provided “RI slip to take precedence over reinsurance certificate in case of confusion”.

On 19 October 2023, the claimant became aware of an ex parte motion filed by the defendant in the New York court seeking an order restraining the claimant from commencing proceedings in England relating to the Reinsurance, or from seeking anti-suit relief in England. The following day, the claimant issued a claim in the English Commercial Court for an indemnity under the Reinsurance and applied for an interim anti-suit injunction, which was granted by Foxton J on 23 October and served on the defendant.

The defendant then withdrew its New York motion and filed an acknowledgement of service in the English proceedings indicating an intention to contest jurisdiction. It also applied to set aside the interim anti-suit injunction on the basis that the Reinsurance was subject to the arbitration agreement contained in the Facultative Certificates. The claimant applied to make the anti-suit injunction final.

Decision

The High Court (Christopher Hancock KC sitting as a High Court judge) held that the anti-suit injunction should be continued until the determination of the defendant's jurisdiction challenge.

Where a party seeks an anti-suit injunction on the basis that the dispute is subject to an exclusive English jurisdiction clause (or an arbitration clause), it is well-established that the claimant must establish to a "high degree of probability" that the relevant clause exists and covers the dispute in question. The court will then ordinarily exercise its discretion to restrain proceedings brought in breach of the clause unless the defendant can show strong reasons to refuse relief.

No such "strong grounds" were alleged in this case. The key question was whether the Reinsurance was subject to the exclusive English jurisdiction clause contained in the Slip Policies / MRCs or to the New York seated arbitration agreement contained in the Facultative Certificates.

The parties' submissions

The judge noted that there was a substantial dispute between the parties as to London market practice, and each side adduced expert evidence in support of its position. The claimant's case was that the Slip Policy / MRC is the standardised form of agreement used in the London market. It contains the terms of the policy in a schedule, including the choice of law and jurisdiction, and the contract is complete once that document is signed by the underwriters. A Facultative Certificate issued subsequently is merely an administrative document. The defendant contended, to the contrary, that the Slip Policy / MRC does not, at least not on its own, constitute the binding policy. Instead it is akin to a cover note, which is then superseded by the issuance of a Facultative Certificate or agreement which sets out the specific terms agreed between the reinsured and each reinsurer.

Consistent with its position as to market practice, the defendant argued that the Facultative Certificates in this case superseded the Slip Policies / MRCs, so that the New York arbitration agreement applied to the dispute. That was supported by the entire agreement clause in the Facultative Certificates. As to the Hierarchy Clause, the defendant argued that this was not intended to deal with a conflict between the Slip Policies / MRCs and the Facultative Certificates, but merely to allow reference to the Slip Policies / MRCs if there was a lack of clarity or uncertainty in the Facultative Policies - which was why, the defendant said, the clause used the term "confusion" rather than "inconsistency" or "conflict". There was therefore no "high probability" of a binding jurisdiction clause and the interim anti-suit injunction should be set aside.

In contrast, the claimant argued that the Reinsurance was complete when the Slip Policies / MRCs were signed, and so the parties were bound by the choice of English law and jurisdiction. The subsequent issue of the Facultative Certificates was simply an administrative act, and was not intended to change the fundamental terms of the parties' bargain. That was reinforced by the Hierarchy Clause which, on its ordinary and natural meaning, meant the Slip Policies / MRCs would prevail.

Following the hearing in the present case, the Commercial Court gave judgment in another case on very similar facts save for the absence of an equivalent to the Hierarchy Clause (TICL v Partner Re [2023] EWHC 3243). In that case, the court held that the Facultative Certificate superseded the Slip Policy / MRC, and therefore granted a stay of the proceedings in favour of New York arbitration, but granted permission to appeal. The judge in the present case invited further submissions from the parties in light of that decision. Predictably, the claimant pointed to the distinctions between the cases, most significantly the presence or absence of a hierarchy clause, whereas the defendant submitted that the other decision was consistent with its position in the present case.

The court's approach

The judge noted that the parties agreed the test for an anti-suit injunction was whether there was a high probability that there was a binding jurisdiction clause, and that this meant something more than a good arguable case. However, beyond that, there was little guidance as to what the phrase meant and how it should be applied in a case such as the present where there were competing jurisdiction and arbitration clauses. The judge rejected the defendant's suggestion, for which it had cited no authority, that the test required more than establishing the existence of the exclusive English jurisdiction clause on the balance of probabilities, and that the court would have to be satisfied that there was no real prospect that the competing clause (the New York arbitration clause) applied.

The judge referred to Midgulf International Ltd v Groupe Chimische Tunisien [2009] EWHC 963 (Comm) in which the court considered an application for an anti-suit injunction in support of arbitration where there was a dispute of fact which would affect the construction of the parties' exchanges of correspondence and therefore whether there was a binding arbitration clause. In that case, Teare J concluded that he should order a speedy trial of that issue, and should continue the interim anti-suit injunction only until the issue was determined and he could decide whether to grant a final injunction.

The judge in the present case concluded that he should take a similar approach. He would first consider whether, on the current evidence, it was clear which of the two competing clauses governed the dispute. If so then (by analogy with the law on summary judgment) the court should grasp the nettle and decide the point. However, if the answer was not clear, and especially if further evidence might be relevant, he should give case management directions to allow him to determine the point.

Application to the facts

Leaving aside the evidence of market practice, and simply viewing the documentation, the judge took the view that the Slip Policies / MRCs were binding contracts when issued, and that the effect of the Hierarchy Clause in the Facultative Certificates was to give priority to the jurisdiction provisions of the earlier agreements over the arbitration provisions of the later agreements.

However, he could not dismiss market practice as irrelevant: if there were market practices which were sufficiently well known to both parties, that could affect the construction of the Reinsurance. The judge could not place any weight on the evidence of market practice in this case since he was faced with diametrically opposed opinions from the parties' experts and, in the absence of cross-examination, he could not decide who was right.

In the circumstances, the judge held that he should continue the anti-suit injunction until the defendant's challenge to the English court's jurisdiction had been determined. That would enable evidence of market practice to be put forward and properly tested.