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Hong Kong Court of Appeal Upholds Decision Refusing Anti-Suit Injunction

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We recently reported on the decision of the Hong Kong High Court in the case of Sea Powerful II Special Maritime Enterprises (ENE) v Bank of China Ltd [2016] HKCFI 39, in which the court refused to grant an anti-suit injunction because the party seeking relief failed to apply for the injunction in a timely manner, maintaining the principle that anti-suit applications should be made promptly even in circumstances where the applicant would suffer no prejudice from the delay.

Sea Powerful appealed the decision to the Hong Kong Court of Appeal (Sea Powerful II Special Maritime Enterprises (ENE) v Bank of China Ltd [2016] HKCA 205), arguing that the judge had erred in law by following English decisions that had departed from well-established principles upholding the sanctity of parties’ contractual agreements to refer disputes to arbitration. Sea Powerful submitted that “mere delay” in seeking an anti-suit injunction was not a sufficient freestanding reason for the court to refuse the injunction. Further, Sea Powerful argued that a distinction should be drawn between anti-suit injunctions in the context of forum non conveniens cases (“FNC anti-suit injunctions”) and anti-suit injunctions enforcing arbitration agreements (“contractual anti-suit injunctions”), with considerations of comity being of almost no relevance (if any) to the latter case.

The Court of Appeal rejected the appeal, holding that the lower court’s weighing of the facts properly considered the relative importance of protecting the parties’ contractual bargain. Specifically, the Court of Appeal observed that the granting of an anti-suit injunction by a Hong Kong court in this case would have resulted in two PRC court decisions essentially being overturned, which would likely be regarded as an unnecessary intrusion into the sovereignty of the PRC courts. In exercising judicial discretion, the court found that the appropriate weight accorded to a particular factor would vary with the particular circumstances of each case, and in this case, the lower court judge was entitled to attribute significant weight to this comity consideration.

Further, while the Court of Appeal agreed that a distinction should be drawn between FNC anti-suit injunctions and contractual anti-suit injunctions, it held that comity considerations have reduced − but not zero − importance in the latter situation. The Court of Appeal found that delay and comity were related, stating that both issues required anti-suit relief being sought with appropriate speed. In light of the lower court’s finding that Sea Powerful had engaged in “deliberate, inordinate and culpable delay” with the tactical objective of allowing a contractual limitation period to expire in an attempt to bar the Bank of China from pursuing its cause of action through arbitration in Hong Kong, the Court of Appeal held that the decision of the lower court to exercise judicial discretion to refuse Sea Powerful’s anti-suit application was not made in error.

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