High Court holds that significant delay will not necessarily be a bar to a successful anti-suit injunction
Issue 8 of the Energy and Natural Resources Case Law Update
In Africa Finance Corp. and others v Aiteo Eastern E&P Co. Ltd1, the High Court confirmed that significant delay, even as long as a year, will not prevent an English court from awarding an anti-suit injunction where the delay could be properly justified.
Key takeaways
The court upheld the grant of an anti-suit injunction awarded to the claimants against the defendant, even though the claimants had taken a number of steps in foreign parallel proceedings and had delayed for more than a year from the commencement of those proceedings in seeking relief. The case provides helpful guidance on the type of actions by which a party might lose the right to rely on an arbitration clause or exclusive jurisdiction agreement.
Facts
At stake was a USD2 billion debt which was borrowed by Aiteo from the nine claimants (Lenders) to purchase an interest in Nigerian oil fields and facilities. The funding came from an onshore facility agreement, which was governed by Nigerian law, and an offshore facility agreement, which was governed by English law. Both facility agreements contained an arbitration agreement providing for London-seated arbitration under the ICC Rules.
In November 2019, eight days after the Lenders’ Nigerian lawyers sent a letter demanding payment of the debt, in breach of the arbitration clauses in the facility agreements, Aiteo initiated court proceedings in Nigeria against the Lenders, seeking a declaration that it was not liable to pay the debt. The Nigerian court granted an interim injunction which prevented the Lenders from initiating legal proceedings “or taking any step to enforce any right in respect of alleged indebtedness of the plaintiff (being contested and disputed in this suit)” (Nigerian Injunction).
Rather than immediately seeking an anti-suit injunction in English courts in support of the English-seated arbitration, the majority of the Lenders appealed to the Nigerian Court of Appeal seeking an order setting aside the Nigerian Injunction and an order dismissing/ striking out Aiteo’s suit. On the same day, the remaining Lenders filed a notice of preliminary objection before the Nigerian courts on the grounds of immunity from their jurisdiction. The Lenders also filed a motion before the Nigerian courts seeking a stay of execution of the Nigerian Injunction and a stay of further proceedings in the suit pending the hearing and determination of their appeal. The return date for the Nigerian Injunction fell on the same date, and notwithstanding the actions taken by the Lenders, the interim Nigerian Injunction was made final.
Further motions were filed in Nigeria and the parties entered discussions to restructure the loan. Eventually, in December 2020, once it had become clear that there would be no restructuring, the Lenders commenced arbitration proceedings in London and sought an anti‑suit injunction in the English courts on the basis that the parties had agreed to arbitrate disputes; a total of 13 months after Aiteo brought proceedings in Nigeria in breach of the agreement to arbitrate.
The High Court’s decision to grant a final anti-suit injunction
Aiteo argued that by appealing in Nigeria, the Lenders had submitted to the Nigerian jurisdiction and had therefore lost their right to enforce the arbitration agreement.
In particular, Aiteo argued that the Lenders should have, at the return date hearing for the interim Nigerian Injunction, sought a stay of the Nigerian High Court proceedings pursuant to section 5 of the Nigerian Arbitration and Conciliation Act and the setting aside of the interim Nigerian Injunction. Aiteo’s case was that, by issuing a Notice of Appeal instead, the majority of the Lenders had taken a substantive step in the foreign proceedings. Aiteo further argued that by making its preliminary objection on the basis of immunity the remaining Lenders had similarly taken a substantive step.
The court considered the substance of the steps taken and concluded that the Lenders had not submitted to the Nigerian jurisdiction by appealing against the injunctive relief in the Nigerian court as the appeal did not (i) demonstrate an intention not to go to arbitration and (ii) was not an act done in furtherance of a defence.
Having confirmed that the Lenders had not lost their right to enforce the arbitration agreement, the court then considered the delay from November 2019 until December 2020 in seeking the anti-suit injunction. While the court recognised that it was incontestable that there was a very substantial delay in seeking the relief, it continued by considering the reasons for the delay. The court concluded that the existence of negotiations by the Lenders and Aiteo to restructure the Facility Agreements, to assist the borrower to pay its debts and to bring the Nigerian proceedings to an end, was a reasonable explanation for the delay. It was also of relevance that very little had happened in Nigeria during the period of delay, and accordingly there had been no significant waste of court time and expense.
Comment
It is not unusual for parties to seek to frustrate agreements to arbitrate by starting parallel proceedings. This decision highlights the importance of ensuring that any acts taken in a foreign court to contest such proceedings are not inconsistent with a jurisdiction clause or agreement to arbitrate. In considering whether to take such steps, parties should:
- consider the legal status of the steps taken as a matter of the local law of the foreign jurisdiction;
- ensure that the intention to rely on the exclusive jurisdiction or arbitration clause is reiterated in each submission made in the foreign court; and
- avoid any steps in the foreign jurisdiction which might be interpreted as being in furtherance of a substantive defence on the merits of the claim.
Parties will naturally seek to avoid the cost and expense of seeking injunctive relief and commencing arbitral proceedings if they can possibly do so. However, where parallel proceedings are ongoing, parties should be extremely cautious of delaying enforcement of their rights under an agreement to arbitrate or exclusive jurisdiction agreement. Although the significant delay did not affect the outcome in this case, this was a fact-sensitive decision. Any delay will be highly scrutinised to see whether it was reasonable in the circumstances, and carries with it a risk that injunctive relief will not be granted. Where significant wasted costs would result from restraining the foreign proceedings as a result of the delay, for example because the foreign proceedings are well-advanced with both parties having participated, an English court is unlikely to award an anti-suit injunction.
