Test for granting anti-suit injunction in breach of alleged arbitration agreement

In Transfield Shipping Inc v Chiping Xinfa Huayu Alumina Co Ltd [2009] EWHC 3642 (Comm), there was a dispute between the parties as to whether a contract had been concluded between them containing an arbitration agreement which provided for arbitration in London. The defendant commenced court proceedings in China, and the claimant applied for an anti-suit injunction from the English court pending determination by the arbitral tribunal in London as to whether or not there was a binding contract between the parties.

The claimant argued that the Chinese court proceedings were a breach of the arbitration agreement. It submitted that where there is a dispute as to whether there is a contract containing an arbitration agreement, it may be sufficient for the party seeking anti-suit relief to demonstrate "a good arguable case" as to the existence of the agreement (Youell v Kara Mara Shipping Co Ltd [2000] EWHC 220 (Comm)). Even if the test is higher, an applicant need show no more than a "high probability" that he is right (Bankers Trust Co v PT Jakarta International Hotels & Development [1999] 1 Lloyd's Rep 910), and that the court could conclude to a high degree of probability that the parties here had agreed the contract and agreed to London arbitration.

Mr Justice Christopher Clarke refused the claimant's application. He concluded that the appropriate test was whether or not the applicant had shown, on the material adduced at the interlocutory hearing, a high degree of probability that there was an arbitration agreement between the parties, relying on Bankers Trust and other cases, including Midgulf International Ltd v Groupe Chimique Tunisien [2009] EWHC 963 (Comm) (see Legal update, Standard of proof on anti-suit injunction application). While he accepted that the claimant had a good arguable case that there was a binding agreement between the parties containing a London arbitration clause, he was not persuaded there was a high probability of establishing that it was so. With reference to Youell, Clarke J noted that although the court in that case adopted the good arguable case test, the matter did not appear to have been the subject of specific argument.

The case follows several others in which the court has required the applicant to show a high degree of probability that there was an arbitration agreement before it will grant an anti-suit injunction, and it now seems doubtful that parties will be able to rely on Youell and the good arguable case test. As Clarke J concludes, it is one thing to enforce a clear agreement to arbitrate or one which, on an interlocutory basis, is highly likely to be established, but it is another to restrain a party from litigating his dispute in a foreign country if the position as to the arbitration agreement is less clear.