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English court grants injunction blocking Jordanian proceedings

The High Court in England has granted an anti-suit injunction blocking litigation of a construction dispute in Jordan, as the contract provided that the dispute must be referred to arbitration.13 Mar 2019

Contractor Soletanche Bachy France SAS (SB) was hired to carry out development work at the Aqaba Container Terminal. The owner of the container terminal, ACT, gave notice to terminate the contract, which SB referred to arbitration. The arbitrator found that ACT had terminated the contract on valid grounds, and denied SB's claim for damages.

SB then began proceedings against ACT and the local development corporation in the Jordanian court, seeking to declare unconstitutional a law on which the construction contract had been based. SB's argument was that a claim based on constitutional law did not fall within the terms of the arbitration agreement "or was otherwise non-arbitrable". The English court disagreed, granting ACT the injunction that it sought.

The judge, Mr Justice Knowles, noted that the wording of the arbitration agreement extended to a "dispute (of any kind whatsoever) aris[ing] between the Parties in connection with ... the [construction contract]".

"I regard it as plain that a claim to invalidate the construction contract falls within the language of the arbitration agreement," he said in his judgment.

"I can find no strong reasons for not granting an injunction to prevent further breach by [SB] of the agreement it made to arbitrate a claim to invalidate the construction agreement (as a 'dispute … aris[ing] between the parties in connection with … the [construction contract]'). The suggestion is that in order to have standing in the Jordanian proceedings to pursue a constitutional claim [SB] needs to bring a civil claim ... to invalidate the construction contract. But that is something [SB] agreed not to do when it entered into the arbitration agreement," he said.

The judge also declined to use his discretion to dismiss ACT's claim for an injunction. In his view, it was just to grant the injunction sought given SB's previous reliance on the arbitration agreement in its unsuccessful proceedings against ACT.

Commercial litigation and international arbitration expert Richard Dickman of Pinsent Masons, the law firm behind Out-Law.com, said that the case "neatly illustrates the principle that the English court will not hesitate to hold the parties to the promises they made, including by injunction to restrain them from pursuing court proceedings they had promised not to bring".

"Parties who agree to refer their disputes to arbitration are expected to abide by that agreement," he said. "Although described as a 'constitutional challenge', the Jordanian proceedings were clearly designed to subvert the unfavourable arbitration award the parties had obtained. The court was therefore satisfied that there was no good reason not to grant the injunction."

"Had the court proceedings been brought in another EU member state, the court would have been unable to grant the anti-suit injunction following the decision in the West Tankers case, in which the CJEU held that it was incompatible with EU law for an English court to do so. However, in the event of a 'no deal' Brexit, an English court may be able to issue anti-suit injunctions even where proceedings have been brought in an EU member state in breach of an arbitration agreement," he said.