Commercial Court blocks foreign proceedings to invalidate an arbitration agreement on constitutional grounds

United Kingdom

In Aqaba Container Terminal (PVT) Co. v Soletanche Bachy France SAS [2019] EWHC 471 (Comm), the Commercial Court granted a permanent anti-suit injunction to restrain Jordanian proceedings that breached the arbitration clause in a construction contract.

Background

The underlying arbitration related to a contract for the construction of extensions to Aqaba’s terminal by Soletanche. Following delays to the project, Aqaba gave notice to terminate the contract. Soletanche commenced an ICC arbitration in London claiming wrongful termination and repudiatory breach.

The tribunal accepted Aqaba’s submission that the contract had been properly terminated, ordering Soletanche to pay damages and costs. Challenges to the award by Soletanche on the grounds of serious irregularity and lack of substantive jurisdiction were dismissed (Soletanche Bachy France SAS v Aqaba Container Terminal (PVT) Co. [2019] EWHC 362 (Comm)).

Soletanche then commenced court proceedings in Jordan against Aqaba, seeking to have the contract declared void on the basis that it depended on an article of Jordanian law which was unconstitutional. It submitted that this constitutional claim did not fall within the terms of the arbitration agreement and was non-arbitrable.

Aqaba applied to the English court for (i) a declaration that Soletanche had breached the arbitration agreement and (ii) an urgent interim anti-suit injunction.

Breach of arbitration agreement

The court agreed with Aqaba that a claim to invalidate the construction contract plainly fell within the arbitration agreement. Further, while the constitutional claim to invalidate a Jordanian law was inarbitrable, the consequences of the invalidity of that law for a contract governed by English law was not.

Grant of injunction

The court reiterated that anti-suit injunctions based upon an exclusive jurisdiction clause will be granted unless there are strong reasons not to do so (The Angelic Grace [1995] 1 Lloyd's Rep 87). In this case, there were no such reasons. In order to have standing to pursue a constitutional claim, Soletanche first had to bring a civil claim in Jordan to invalidate the contract, which was something it had agreed not to do when it entered into the arbitration agreement.

Comment

The judgment provides a reminder that the English courts will not hesitate to grant an injunction where there has been a breach of an arbitration agreement and will do so even after an award has been published. It illustrates the court’s determination to hold parties to their promise by restraining them from bringing proceedings they had promised not to bring. The court’s willingness to take a bold approach in support of arbitration extends even as far as to prevent a party, albeit indirectly, from pursuing a constitutional law claim overseas.

The authors would like to acknowledge the assistance of Kiana Banafshe, intern at CMS London, in preparing this article.