Ecobank Transnational Incorporated v Tanoh

Factual and Procedural Background

The appeal concerns whether the refusal by Knowles J to grant Company A an injunction restraining the Appellant from enforcing two foreign judgments obtained in The State and The Country was correct. Company A is a major African bank headquartered in The State, employing the Appellant as Chief Executive Officer and Group Managing Director under an Executive Employment Agreement ("EEA") governed by English law and containing an arbitration clause specifying arbitration in London.

Following a governance crisis at Company A, the Appellant's employment was terminated by Company A in March 2014. The Appellant commenced proceedings in The State's Labour Court challenging the termination as unfair and in breach of local labour law. Company A challenged jurisdiction based on the arbitration clause but was ordered to plead to both jurisdiction and merits. The Labour Court ruled in favour of the Appellant, holding the arbitration clause unenforceable and awarded damages.

The Appellant also initiated defamation proceedings in The Country against Company A and others, arising from a letter by a Company A director criticizing the Appellant. The Country’s Commercial Court ruled in the Appellant’s favour, ordering damages and publication of the judgment. Company A appealed and was denied a stay of enforcement.

Company A subsequently commenced arbitration proceedings in London and sought anti-enforcement injunctions in England to restrain the Appellant from enforcing the foreign judgments. An initial ex parte injunction was granted but later discharged by Knowles J, who found Company A’s delay in seeking relief fatal.

Legal Issues Presented

1. Whether the claims in The State and The Country fall within the scope of the arbitration clause in the EEA.
2. Whether Company A lost its right to object to jurisdiction in either foreign court by pleading to the merits or seeking extensions in those courts.
3. Whether the delay by Company A in seeking injunctive relief before or during foreign proceedings affects entitlement to such relief.
4. The role of the principle of comity in the court’s approach to an anti-enforcement injunction application.

Arguments of the Parties

Appellant's Arguments

• The Appellant contended that the arbitration clause was unenforceable in The State because local labour law granted him a right to bring claims before the Labour Court, and that Article 27 of the EEA warranted compliance with local law.
• It was argued that Company A had submitted to the jurisdiction of the foreign courts by pleading to the merits and participating in the proceedings without proper reservation.
• The defamation claim in The Country fell outside the arbitration clause, as it was a tort claim distinct from the employment contract.
• Company A’s delay in seeking injunctive relief in England should bar relief due to prejudice and considerations of comity.

Company A's Arguments

• Company A submitted that the arbitration clause governed all disputes arising under or in connection with the EEA, including claims related to termination and defamation connected to the employment relationship.
• It was argued that pleading to the merits in the foreign courts was not a waiver of jurisdictional objections, as the courts required joinder of jurisdiction and merits pleas.
• Delay in seeking injunctive relief should not bar relief if the Appellant was always aware of the jurisdictional objection and continued proceedings in breach of contract.
• Comity requires respect for the parties’ agreement to arbitrate, reducing the role of comity in cases involving exclusive jurisdiction or arbitration clauses.

Table of Precedents Cited

Court's Reasoning and Analysis

The court first analysed whether the disputes in The State and The Country were within the scope of the arbitration clause. The employment termination dispute clearly fell within the clause governed by English law, and the defamation claim, although unusual for arbitration, was sufficiently connected to the employment relationship to fall within the arbitration agreement.

The court considered the effect of local law in The State, the Labour Code, which allowed the Appellant to bring claims before the Labour Court. However, the Articles of Association of Company A, established by a presidential ordinance, took primacy over local law and incorporated the arbitration clause and English governing law, making the arbitration agreement valid and enforceable under English law.

Regarding submission to foreign jurisdiction, the court applied established principles that pleading to the merits in foreign proceedings does not constitute submission if jurisdiction is clearly contested and pleas are made under compulsion of foreign procedural rules. Company A’s conduct did not amount to submission to foreign courts’ jurisdiction.

On the issue of delay, the court emphasised that injunctions are equitable remedies requiring prompt action. Company A’s delay in seeking relief until after judgments were obtained in foreign courts was significant and militated against granting injunctive relief. The court acknowledged that challenge to foreign jurisdiction does not eliminate prejudice caused by delay, including wasted costs and judicial resources.

The court analysed the role of comity, concluding that while comity is important, it does not override contractual rights to arbitration. However, comity and public policy considerations weigh against injunctions sought after foreign judgments have been entered and where delay has caused prejudice. The court distinguished anti-enforcement injunctions from anti-suit injunctions, noting the former involve greater interference with foreign judicial processes and require particular caution.

Finally, the court found no exceptional circumstances such as fraud or post-judgment agreements that would justify granting an anti-enforcement injunction in this case.

Holding and Implications

The court DISMISSED the appeal, upholding the refusal to grant an injunction restraining enforcement of the foreign judgments.

The direct effect is that the Appellant may seek to enforce the judgments obtained in The State and The Country without restraint from the English courts. The decision does not set a new precedent but reaffirms established principles regarding the enforcement of arbitration agreements, submission to foreign jurisdiction, the importance of promptness in seeking injunctive relief, and the role of comity in anti-enforcement injunction cases.