Jurisdiction dispute? Consider anti-suit injunctions in England and Wales

Can you successfully be sued abroad despite having an exclusive jurisdiction clause in favour of the courts of England and Wales? The short answer is: probably not. The longer answer, however, involves a more detailed analysis of the legal principles surrounding exclusive jurisdiction clauses and the potential remedies available to enforce them.

The importance of exclusive jurisdiction clauses 

Exclusive jurisdiction clauses are important in ensuring legal certainty between contracting parties. These clauses specify the agreed courts that will have the exclusive authority to resolve disputes arising from the contract.  

In practice, if your contract stipulates that any disputes will be resolved by the courts of England and Wales, both parties will be legally bound to bring any claims before those courts, otherwise this will amount to a breach of contract.

So, what are the next steps if a party has brought proceedings in a foreign country in breach of contract?

Anti-suit injunctions

One of the most powerful tools available to enforce an exclusive jurisdiction clause is the anti-suit injunction. In effect, an anti-suit injunction is an order from the English courts restraining a party from pursuing foreign proceedings in violation of the jurisdiction agreement.

This remedy is available under section 37 of the Senior Courts Act 1981 ('SCA 1981'), which grants the court the discretion to issue injunctions to prevent a party from commencing or continuing foreign proceedings outside the agreed jurisdiction. 

An anti-suit injunction carries significant consequences. For example, these injunctions typically are accompanied by penal notices confirming, among other things, that if the party fails to comply with the injunction, it may be held to be in contempt of court.

The court will ordinarily exercise its discretion to grant an anti-suit injunction where proceedings are brought in breach of an exclusive jurisdiction clause. However, this discretion is not absolute. If the party attempting to pursue foreign proceedings can demonstrate strong reasons why the injunction should not be granted, the court may refuse to issue the order.  In such cases, the party trying to initiate or continue foreign proceedings would bear the burden of proof.   

Arbitration agreements

In addition, outside of exclusive jurisdiction clauses, this remedy may be useful in relation to arbitration agreements. The court's power to grant anti-suit injunctions restraining foreign proceedings brought in breach of an arbitration agreement similarly stems from section 37 of the SCA 1981.

The Supreme Court has also recently confirmed that where a party pursues foreign court proceedings in breach of an arbitration agreement governed by English law, the English court will generally have jurisdiction to grant an anti-suit injunction, even if the parties had chosen another country as the seat of the arbitration (UniCredit Bank GmbH v RusChemAlliance LLC [2024] UKSC 30).  

What if the foreign jurisdiction disregards English law?

A common concern is that a foreign court may refuse to recognise or enforce an English jurisdiction clause, based on its own domestic laws. 

While this is a possibility, where foreign proceedings are initiated in breach of contract, the English courts will usually prioritise upholding the contractual agreement and grant an anti-suit injunction, even if the foreign court may not enforce the clause.

Practical considerations

In practice, if you find yourself facing foreign legal proceedings in breach of an exclusive jurisdiction clause or an arbitration agreement, it is essential to seek legal advice. An anti-suit injunction can be a crucial remedy to safeguard your interests and enforce the agreed-upon jurisdiction clause. In these circumstances, you must act promptly, as delays could undermine the effectiveness of the remedy.

 In addition, the complexity of international jurisdiction disputes means that there may be other factors to consider, such as the potential costs of litigation, the nature of the foreign proceedings, and the specific laws of the country where the foreign court is located. 

Conclusion

 While the possibility of being sued in a foreign court in breach of an exclusive jurisdiction clause or arbitration agreement is a concern, the remedy of an anti-suit injunction provides a powerful safeguard for parties who are facing such situations. By seeking an injunction from the English courts, you can prevent the foreign proceedings from continuing and ensure that any disputes are resolved in accordance with the agreed jurisdiction. In these circumstances, even if the foreign court carries on with its proceedings in spite of the anti-suit injunction, there will be strong grounds to reject the validity of any decision from that foreign court and thereby resist any attempts at enforcement of that court’s judgment.

This remedy reinforces the importance of jurisdiction clauses in commercial contracts and highlights the need for clear and enforceable agreements in international business.

If you would like further information on anti-suit injunctions or require assistance relating to a jurisdiction dispute, please contact Eleni Polycarpou or Ciara Samuels.