3 5월 2022 Mridul Godha ArbitrationLinks

Attempts to settle helped justify a delayed anti-suit injunction application

In Africa Finance Corp & others v Aiteo Eastern E & P Company Limited [2022] EWHC 768 (Comm), the English Commercial Court granted an anti-suit injunction despite a 13-month delay in seeking it since this was justifiable partly as the parties had been engaged in negotiations to facilitate payment of the disputed debt. The case illustrates that although promptness is important in such an application, the English court will exercise its discretion to take into account the circumstances of a case.

Background

Under two facility agreements, a loan of US$2 billion was advanced by nine lenders (the “Lenders”) to the defendant borrower (the “Borrower”) to purchase an interest in Nigerian oil fields and facilities. Both the facility agreements contained arbitration clauses providing for London-seated arbitration under the ICC Rules.

In October 2019, the Lenders sent the Borrower a letter demanding payment of the debt. The Borrower then commenced proceedings against the Lenders in the Nigerian High Court seeking declarations of non-liability. It also obtained ex parte interim injunctive relief. Eight of the nine lenders appealed, seeking to dismiss the Borrower’s substantive claim and the interim injunction on the basis of the arbitration agreements, whilst the remaining lender disputed the Nigerian courts’ jurisdiction on the basis of immunity. The appeal and the application were transferred to the Nigerian Court of Appeal and remained pending.

From early November 2019 to late November 2020, the parties engaged in commercial negotiations in respect of the Borrower’s alleged debt. When the negotiations failed, the Lenders commenced arbitration proceedings under the two facility agreements and obtained an interim anti-suit injunction which restrained the Borrower from bringing any claims under the facility agreements in any forum other than London-seated ICC arbitration.

The Borrower applied to set aside the interim anti-suit injunction and this application was heard together with the hearing on the Lenders’ request for a final anti-suit injunction. In that application, the main issues were whether the Nigerian proceedings for the negative declaration were a breach of the arbitration agreements, and, if so, whether the Lenders’ delay in applying for the anti-suit injunction formed “strong reasons” not to grant it.

Breach of the arbitration agreement

In this regard, the main issue before the court related to one of the facility agreements whose arbitration agreement was governed by Nigerian law. In that respect, the Borrower claimed that the Lenders had waived their arbitration rights by appealing to the Nigerian Court of Appeal, rather than seeking a stay of the Nigerian High Court proceedings. As this fell to be determined by Nigerian law, the court considered evidence from experts. In the event it preferred the view that as the Lenders had, in that appeal, continued to evidence an intention to rely on the arbitration agreements, there was no loss of those rights.

In relation to the other facility agreement, the tribunal had determined that there had been a breach and it was not, in this application, subject to challenge. In relation to both, the Nigerian proceedings were, therefore, a breach of the arbitration agreements.

Delay

Despite the above, the Borrower argued that the Lenders’ delay in seeking an anti-suit injunction from November 2019 until December 2020 was a strong reason for not granting the requested injunction. The court agreed that there was a very substantial delay in seeking relief, however, it noted that promptness is not an end in and of itself. The court took note of the following aspects:

  • During that time, the Lenders were engaged with the Borrower in seeking to negotiate a restructuring of the facility agreements and there was evidence showing that this was also what the Borrower had wanted.
  • The intention of the Lenders was to avoid initiating the arbitration proceedings because they feared that would kill off the restructuring negotiations. Further, any success in negotiations would have also brought the Nigerian proceedings to an end.
  • Once the negotiations between the parties had fallen through in late November 2020, the time taken to issue the application for anti-suit relief on 11 December 2020 was reasonable.
  • The proceedings before the Nigerian court were frozen since November 2019 so this was not a case where the grant of a late application for an anti-suit injunction would mean a waste of time and money expended in the foreign court.

On the basis of the above, the court concluded that the Lenders’ delay in seeking anti-suit relief was justified, and there was no “strong reason” not to grant it.

Lucky Lenders?

It is important to note that an application for an anti-suit injunction should generally be made promptly. Nonetheless, as this case illustrates, the English court retains a discretion to determine whether delay should preclude the grant of the remedy; which it will exercise in the light of the circumstances of the case. Here the court was sympathetic to the attempt to resolve the issues by negotiation. But, it should be noted, that did not mean the Lenders’ actions were risk free: one aspect of the court’s reasoning concerned the lack of progress in the Nigerian proceedings during the period of delay. The court noted that had this not been the case, the Lenders ran the risk of having their belated request for relief refused due to the resources expended in the Nigerian court. Therefore, even if there seems some overriding need for delay, a carefully calibrated approach will still be needed.

Click here for a copy of the judgment.