A “quasi-contractual”, “non-contractual” anti-suit injunction – Law firm

The English Commercial Court recently granted an anti-suit injunction based on an arbitration clause in an insurance policy (QBE Europe and other against Generali Espaňa de Seguros Y Reaseguros [2022] EQHC 2062 (Comm)). The points of interest in this case were that (i) the anti-suit injunction was directed against a party that was not pursuing a claim under the policy, but rather a claim under a statute, and (ii) the party seeking anti-prosecution – an injunction to prosecute (and relying on the London Arbitration Clause in the Police) denied being a party to the Police. The Commercial Court concluded that the circumstances nevertheless justified an anti-prosecution injunction.

This shows the flexibility of the courts’ approach to anti-prosecution injunctions. This was also another example of an anti-prosecution injunction issued by the English courts in the context of a dispute before the courts of an EU country (Spain), which had not was not possible when the UK was a member of the EU.

Facts

In July 2016, the submarine electric cable connecting Mallorca and Menorca was damaged. It was alleged that the superyacht “Angara” caused the damage. Red Eléctrica de Espaňa, owner of the cable, made an insurance claim and its insurers (Generali) paid it 7.7 million euros. Generali then sought to recover this sum from Angara’s insurers. QBE UK had been the yacht’s insurer in 2016, but in 2020 there was a reorganization of QBE’s business which meant QBE Europe took over the insurance.

In February 2022, Generali took legal action against QBE UK in Madrid. He relied on the insurance policy and claimed QBE UK as the yacht’s insurer. However, he also said his claim was a tort claim under Spain’s shipping law, not a contract claim under the policy, which meant that the policy’s arbitration clause did not apply. not. In response, QBE UK, together with QBE Europe, applied to the English courts for an anti-suit injunction to prevent Generali from pursuing the claim against QBE UK in Spain and to prevent it from initiating similar legal proceedings against QBE Europe.

“Quasi-contractual” and “non-contractual” anti-suit injunctions

Most anti-suit injunctions are issued by a party declaring that it and the defendant are parties to the arbitration agreement (or jurisdiction agreement) in a contract, and that the defendant has committed or will initiate legal proceedings arising out of this contract, in violation of the arbitration agreement.

However, sometimes the right that the defendant seeks to assert in these legal proceedings arises only from a contract, rather than being included in it, which means that the arbitration agreement is not directly linked to this right but that it is simply incidental to it. In these circumstances, the right that is being pursued can be described as being “conditioned” by the arbitration agreement. For example, as here, a victim of a crime might be authorized by statute to sue the offender’s liability insurance provider directly. The judge in the QBE Europe noted that an anti-suit injunction granted in such circumstances can be characterized as “quasi-contractual” and explained on the basis of “benefit and burden”: the defendant cannot benefit from the benefit of secondary law without also respecting the associated obligation to pursue the right only in the contractual forum.

There may also be “non-contractual” anti-suit injunctions. For example, an injunction may be granted where there is a claim under a contract which has no agreed forum for disputes, or where the asserted claim is under a statute without any reference to a contract (it is more difficult to seek an anti-suit injunction in these situations). Another variation is when a claim is made under a contract that contains an agreed forum for disputes, but the party seeking the anti-suit injunction denies being a party to that contract.

The anti-suit injunction against Generali

To decide whether to grant an anti-suit injunction here, the judge first had to decide whether the request could be characterized as “quasi-contractual”. This involved examining the claim in Spain and assessing whether, under English conflict of law rules, that claim sought to enforce a contractual obligation arising from the insurance contract (meaning that the arbitration agreement was incidental thereto) or asserted an independent right of recovery under the relevant law.

After reviewing the statement of claim of the Madrid proceeding and reviewing the expert evidence on Spanish law that had been presented by the parties, the judge concluded that Generali’s claim was, in substance, a claim for execution of the insurance policy. The relevant provisions of the Marine Navigation Act gave a party who had suffered damage the right to enforce an insurer’s contractual obligation to indemnify. Arguably, the Act denied the insurer some of the defenses available to it under the policy, but not to the extent of changing the view that the obligation performed is essentially a contractual right. This meant that Generali’s claim was conditioned by the London arbitration agreement in the policy, and an anti-suit injunction on “quasi-contractual” grounds was appropriate.

The judge also found that QBE UK could be granted the anti-suit injunction, even though it denied being a party to the policy, as Generali claimed it under that policy. A “non-contractual” anti-suit injunction was therefore also appropriate. Additionally, QBE Europe (which has not denied being a party to the policy) could be granted the injunction, even if Generali did not claim it, as there was a real risk that Generali would seek to join QBE Europe in court. Spanish procedures in the future.

Comment

In modern trading, many complexities can arise. Contractual and statutory rights may overlap. The parties to a contract may change. Sometimes, when considering whether to issue an anti-suit injunction, a court must grapple with these complexities and determine what, in essence, is the true situation. And if the court finds that, in fact, a foreign legal proceeding is being brought in breach of an English arbitration or litigation clause, it can issue an anti-suit injunction to compel the parties to comply with that clause.