Star Reefers Pool Inc v JFC Group Co Ltd

Factual and Procedural Background

The Claimant entered into charterparty agreements with Kalistad Ltd. in April and July 2008, chartering vessels for 36 months each. The agreements included guarantees of due performance by the Defendant. Disputes under the charterparties were to be resolved by arbitration in London under English law. The Defendant issued documents certifying guarantees of performance. Subsequent difficulties faced by the charterer led to unpaid hire, prompting the Claimant to commence arbitration proceedings against the Defendant in March 2010. The Defendant contested the arbitration’s validity, asserting it was not a party to the charterparty and appointed an arbitrator nonetheless.

In June 2010, the Defendant commenced proceedings in Russia, disputing the existence of a binding guarantee. The Russian court scheduled hearings, but procedural issues delayed judgment. The Defendant alleged repudiatory breaches by the Claimant in September 2010. The Claimant issued proceedings in England in October 2010 seeking damages from the Defendant for breach of guarantees and obtained an anti-suit injunction restraining the Defendant from pursuing the Russian proceedings. The Claimant sought to continue this injunction in November 2010, but did not initially disclose a related application made in Russia seeking dismissal of the Russian proceedings for lack of jurisdiction.

Legal Issues Presented

1. Whether the English court is the natural forum for resolving the dispute between the Claimant and Defendant concerning the guarantees.
2. Whether the Defendant’s commencement of proceedings in Russia was vexatious, oppressive, or unconscionable, justifying an anti-suit injunction.
3. Whether the court has jurisdiction and power to grant and continue an anti-suit injunction in these circumstances, including service out of jurisdiction.
4. Whether the Claimant’s ex parte application for the anti-suit injunction was justified.

Arguments of the Parties

Claimant's Arguments

• The English court is the natural forum because English law governs the guarantees by implied choice, supported by the close connection between the charterers and the Defendant as guarantor.
• The Defendant’s commencement of Russian proceedings was a tactical attempt to frustrate resolution in England and was thus vexatious, oppressive, and unconscionable.
• The guarantees are governed by English law, the documents and witnesses are based in England, and the English proceedings address all disputes between the parties, unlike the limited Russian proceedings.
• The ex parte application for the injunction was appropriate given the risk of the Defendant obtaining a default judgment in Russia without notice.

Defendant's Arguments

• There was no implied choice of English law; Russian law applies as it is the law most closely connected to the guarantee given the Defendant’s central administration in Russia.
• The Russian proceedings were not vexatious as the Defendant had not submitted to English jurisdiction before commencing them.
• The court lacked power to permit service of the anti-suit injunction application out of jurisdiction.
• The Claimant’s ex parte application was unjustified and the injunction should not be continued.
• The situation involved parallel proceedings in two courts applying their own conflict of law principles, and neither party’s conduct was vexatious.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analysed whether English law governed the guarantees and concluded that there was a reasonable certainty of an implied choice of English law, given the close relationship between the charterers and the Defendant and the express choice of English law in the charterparties. This established England as the natural forum for dispute resolution.

The court found the Defendant’s initiation of Russian proceedings to be vexatious and oppressive, as it was a tactical move to frustrate the English proceedings where the dispute was properly to be resolved. The Russian proceedings were commenced without prior warning and raised a weak legal point under Russian law, which the court found unconvincing compared to the evidence of the Defendant’s acceptance of guarantor obligations.

The court held that it had jurisdiction to permit service of the anti-suit injunction application out of jurisdiction, viewing the application as ancillary relief protecting the court’s jurisdiction and the integrity of its judgments.

The court rejected the Defendant’s argument that vexatious conduct requires prior submission to English jurisdiction, holding that such submission is not a prerequisite. It acknowledged that parallel proceedings are not always vexatious but found that the circumstances here justified the injunction.

Regarding the ex parte nature of the initial injunction application, the court found it justified given the risk of a default judgment in Russia and the urgency of the situation.

The court noted the Claimant’s failure to disclose the November 1 Russian application during the November 8 hearing but did not consider this sufficient reason to refuse continuation of the injunction, though it should have been disclosed for completeness.

Holding and Implications

The court’s final decision was to CONTINUE THE ANTI-SUIT INJUNCTION restraining the Defendant from pursuing the Russian proceedings.

This decision prevents parallel litigation in Russia which would undermine the English court’s jurisdiction and the application of English law as the governing law of the guarantees. The injunction ensures that the dispute is resolved in the forum deemed natural and appropriate by the court. No new precedent was established; the ruling applies the established principles concerning natural forum, vexatious conduct, and jurisdiction to grant anti-suit injunctions.