An unusual decision in which the High Court saw fit to grant an injunction against the continuation of arbitration proceedings in Hungary, on the ground that the circumstances were sufficiently exceptional to justify such an order. Claxton Engineering Services Ltd v TXM Ola-J-Es Gazkutato KFT (2011).
The applicant (Claxton), applied for an injunction restraining a Hungarian company (TXM), from pursuing an arbitration in Hungary.
Claxton had sold engineering equipment to TXM. When Claxton issued English court proceedings following TXM's non-payment, TXM applied for a stay of these proceedings on the basis that the parties' contract contained a Hungarian arbitration clause or that, pursuant to article 2 of the Brussels Regulation, it had to be sued in Hungary. TXM commenced arbitration proceedings in Hungary and Claxton claimed that these proceedings were brought in breach of the English exclusive jurisdiction clause in the parties' contract.
The High Court decided that it had jurisdiction to issue an "anti-arbitration" injunction restraining the pursuit of the Hungarian arbitration proceedings. It clarified that the ECJ's judgment in the West Tankers (2009) case1 which disallows anti-suit injunctions against other Member States, under the terms of the Brussels Regulation, did not apply here given that the injunction was not directed at the courts of another Member State, but at arbitration proceedings which fell outside the remit of the Brussels Regulation. However, the Court emphasised that it would not grant such injunctions lightly and the circumstances needed to be sufficiently exceptional before it would be prepared to do so, especially where the proceedings against which the injunction was directed were foreign.
In order to establish exceptional circumstances, it would usually be necessary to establish that the applicant's legal or equitable rights were infringed or threatened by a continuation of the arbitration or that its continuation would be "vexatious, oppressive or unconscionable". This test was satisfied here since there was no arbitration agreement between the parties and secondly, the parties had clearly already agreed upon the English courts having exclusive jurisdiction. The Court was supportive of the parties' agreement to have their disputes resolved in the courts of England and Wales (and not to arbitrate) and went so far as to state that even if the circumstances were not sufficiently "exceptional" a "broader approach was justified" here making it appropriate to enforce that agreement by way of injunctive relief.
1 Allianz SpA (formerly Riunione Adriatica di Sicurta SpA) v West Tankers Inc. (2009).
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