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  • Overview

    Asia-Pacific Trading Pte Ltd (formerly known as Toepfer International Asia Pte Ltd - v – PT Budi Semesta Satria [2016] EWHC 1427 (Comm).

    A number of recent decisions have emphasised the importance of acting promptly when seeking an anti-suit injunction or anti-enforcement injunction (see for instance Essar Shipping v Bank of China [2015] EWHC 3266 (Comm)). The Asia-Pacific case is the latest in this line of authorities. In this case the Respondent accepted that there was an argument that they were indeed in breach of the arbitration clause. However, even in these circumstances delay was still held to be a sufficient reason for refusing the anti-suit injunction.

    The dispute concerned payment for a shipment of soybeans. Buyers justified non-payment by raising a quality argument which Sellers did not accept. The parties had entered into a Stock Financing Agreement which was subject to the governing law and jurisdiction of Indonesia. The sale contract relating to the relevant consignment contained an arbitration clause providing for disputes to be referred to the Federation of Oils, Seeds and Fats Association (FOSFA) in London.
     
    The Buyers commenced proceedings in Indonesia in May 2013 pursuant to the SFA.  FOSFA arbitration proceedings in London were commenced by Sellers on 19 June 2013 pursuant to the sale contract. A few days later the Sellers were notified of the proceedings in Indonesia. Service of the Indonesian proceedings was not effected until May 2014. Thereafter Sellers engaged with the Indonesian proceedings from June 2014, disputing jurisdiction but also making submissions on the merits. In December 2014 the Indonesian Court upheld the Sellers challenge to jurisdiction. However, decision was then appealed by Buyers who were successful on 8 July 2015 whereupon the case was remitted back to a lower local Court. In the meantime, on 7 May 2014 the FOSFA tribunal issued its Award finding in favour of Sellers on both the question of jurisdiction and the merits holding Buyers in breach of contract. In September 2015 Sellers applied to the English Court for an anti-suit injunction. In October the Buyers challenged the arbitral award.

    The Judge confirmed that an anti-suit injunction will ordinarily be granted where a party has breached an arbitration clause restraining proceedings in foreign courts unless the party alleged to be breach can establish that there are strong reasons for issuing elsewhere (Donohue v Armco Inc [2001] UKHL 64).

    The High Court acknowledged that normally the first issue would be whether the Buyers were in breach of the arbitration clause by pursuing proceedings in Indonesia rather than in London. Buyers frankly acknowledged that there was an arguable case that they were in breach. However, the court did not determine this issue focusing instead on the question of whether the question of delay defeated the application in any event.

    Sellers argued that delay by itself did not constitute a sufficiently strong reason to refuse to uphold the arbitration clause. For delay to prevent an anti-suit injunction being granted it would need to be prejudicial to Buyers and unconscionable. Sellers argued that it was appropriate for them to await the outcome of the Indonesian Court’s determination of the jurisdiction challenge.

    The court found against the Sellers. Sellers should have applied for an anti-suit injunction when they were served with the Indonesian proceedings. No explanation had been provided by Sellers as to why they had failed to do so. The Court emphasised the fact that the Sellers had participated in the Indonesian proceedings filing a defence and claiming damages for breach of the arbitration clause. The Sellers were, in the Court’s judgment, attempting to “have the best of all worlds”.

    The Court was unimpressed that the Sellers had only applied for the injunction after they had received the unfavorable judgment of the Indonesian Court following Buyer’s appeal.

    Jurisdiction arguments are time consuming and costly. It is essential when faced with conflicts issues that advice is sought at the earliest opportunity in order to best protect your position at the earliest possible stage and avoid unwittingly submitting your dispute to an unfavorable jurisdiction.

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