Brexit and Its Effects on Dispute Resolution - A How-to Guide on Civil Disputes Post-Brexit (Vol.4): Anti-Suit Injunctions in EU after Brexit

In the recent published parts of our "Brexit-Series" we focussed on the consequences of Brexit on Civil Disputes (Vol. 1 and Vol. 2). Our last part of the so-called "Brexit-Saga" highlighted a recent decision of the Regional Court of Berlin regarding corporate law classification of a UK corporation with an administrative seat in Germany and the procedural acknowledgement of such post Brexit (Vol. 3). Last but not least, this part emphasises the effects of anti-suit injunctions in the European Union after Brexit.

What to do if you want to prevent your counterparty from starting or continuing legal proceedings in a foreign country? There might be good use for an anti-suit injunction. These injunctions could become even more relevant after Brexit. In the following we will briefly explain the fundamentals of these injunctions and show what is happening in the UK after Brexit. Recent developments in France and Germany show that there could be also some new measures against these injunctions. In any event, an anti-suit injunction should always be considered in a cross-border dispute: On the one hand as a measure to prevent proceedings outside the chosen jurisdiction for proceedings and on the other hand regarding the consequences and defence against a potential anti-suit injunction.

Anti-suit injunctions are by no means new. The concept of anti-suit injunctions has a long history, dating back to the period from the Norman Conquest (1066) to the reign of Henry III (1261-1272), which witnessed the inception and growth of the common law administered by the King's Justices. Inter alia, the Court of Chancery granted commonly injunctions to refrain proceedings before the Courts of Common Law. Injunctions have been issued to both, parties and counsels.

What is an anti-suit injunction?

In a nutshell, an anti-suit injunction is a judicial order that restrains one party from initiating or continuing a lawsuit in another court or jurisdiction. This action is typically taken against the applicant in an ongoing lawsuit and the primary aim of it is to prevent the party from initiating parallel or continuing concurrent proceedings in one or several different jurisdiction(s). In the common law countries, in particular, anti-suit injunctions are widespread. They are often used to prevent so-called ‘forum shopping’, where a party deliberately chooses a jurisdiction that seems more favourable to its position.

Considering pre-Brexit, the recast Brussels I Regulation prohibited intra-EU anti-suit injunctions. Specifically, English courts were unable to grant such injunctions if another EU Member State had jurisdiction over the dispute. However, Brexit has revived the issue of anti-suit injunctions in English courts concerning disputes already before EU Member State courts.

Anti-suit injunctions can be particularly helpful in situations where a party is attempting to initiate or continue proceedings in a foreign court that could potentially affect the jurisdiction and sovereignty of other courts. This could jeopardize the right to effective legal protection. For instance, a party might seek an anti-suit injunction to prevent the other party from disregarding an arbitration agreement by turning to a state court in a foreign country. In such cases an English court could also order an anti-suit injunction. In general, anti-suit injunctions are used to protect the choice of arbitration or choice of jurisdiction clauses.

Anti-suit injunctions in the EU - before Brexit

Before Brexit it was quite clear that - even regarding the UK - an anti-suit injunction regarding another EU-member state was not admissible. The legal basis for an anti-suit injunction in the UK was and is Sec. 37 (1) Supreme Court Act 1981. This provision remained unchanged since its introduction. The competence to issue injunctions in general and anti-suit injunctions, in particular, is also acknowledged for arbitral tribunals under Sec. 44 (1), (2) (e) Arbitration Act 1996. Under the Brussels Regime both, an anti-suit injunction to support a jurisdiction or an arbitration clause was not admissible. The European Court of Justice decided in 2004 (C-159/02 Turner v Grovit [2004] ECR I-3565) that " the Convention is to be interpreted as precluding the grant of an injunction whereby a court of a Contracting State prohibits a party to proceedings pending before it from commencing or continuing legal proceedings before a court of another Contracting State, even where that party is acting in bad faith with a view to frustrating the existing proceedings." This consequence was based on the principle of mutual trust between the courts of EU-members states laid down in the Brussels I Regulation.

The European Court of Justice, furthermore, outlined in 2009 (Case 185/07 Allianz v West Tankers [2009] ECR I-00663) that the same rationale applies regarding anti-suit injunctions which were directed to support arbitration clauses. Such an anti-suit injunction undermines the effectiveness of the general regime in the Brussels I Regulation.
Since 31 December 2020 this rationale does not apply anymore.

The return of the anti-suit injunction? - First decision after Brexit

For the post Brexit times the opinions diverged as to whether the UK will revert again to the anti-suit injunctions. Two recent judgments show what will be the standard now. The decision of the UK not to implement the Brussels I Regulation recast and the respective EU case law into domestic law gave already an indication. In general, the EU legislation in the form of the English language version was brought under certain premises into domestic law pursuant Sec. 3 of the European Union (Withdrawal) Act 2018. Even EU case law could be included in the transfer into domestic law. However, the UK decided to exclude the Regulation (EU) No 1215/2012, i.e. the (recast) Brussels Regulation in Regulation 89 of the Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019. Hence, the mutual trust between EU-Member states regarding courts and jurisdiction could no longer be applied to the UK decisions. The UK decided to bring the courts of EU-Member states down to the same level of trust like any other foreign court.

The consequence of this decision can be illustrated with the judgments Ebury Partners Belgium SA/NV v Technical Touch BV & Anor [2022] EWHC 2927 (Comm) of 18 November 2022 and QBE Europe SA/NV and another v Generali España de Seguros y Reaseguros [2022] EWHC 2062 (Comm) of 1 August 2022. While Ebury v Technical Touch concerns jurisdiction agreements in (i) the terms and conditions and (ii) a personal guarantee and indemnity in favour of the English courts between two Belgian companies, QBE v. Generali relates to a dispute resolution clause with reference to arbitration in London.

The initial proceedings in Ebury v Technical Touch started in Belgium concerning the validity of the agreements between the parties. The respondent of the Belgium proceedings brought the issue to England and asked for an anti-suit injunction. In essence the reasoning for the request was a potential breach of the jurisdiction agreement in favour of the English courts. The court considered, inter alia, the probability of the incorporation of an agreement on jurisdiction in the contract.

The legal situation concerning QBE v. Generali was a little more complicated as the anti-suit injunction related to an insurance contract. The proceedings in Spain were directed between the insurance company of harmed and the at-fault party. Under Spanish law a decision in such proceedings may be directly enforced against the insurer. As the insurance contract included the arbitration clause and the proceedings in Spain concerned a quasi-contractual relationship, since the respondent's insurer was not actually a party to the underlying policy that contained the arbitration agreement. Nevertheless, the court granted an anti-suit injunction in favour of the arbitration clause.

Both judgments referred to the key principles for granting anti-suit injunctions (QBE v. Generali, para 10; Ebury v Technical Touch, para 20). Following these principles, "the injunction applicant must establish with a "high degree of probability" that there is an arbitration or jurisdiction agreement which governs the dispute in question". The injunction will be granted if the defendant has not presented "strong reasons to refuse the relief". The defendant bears the burden of proof for these strong reasons.

Regarding the "high degree of probability" component, in the case Ebury v Technical Touch it was enough "to demonstrate that the jurisdiction clause contained in standard terms was incorporated into the agreement between the parties" (Ebury v Technical Touch, para 23). Meanwhile, in the case QBE v. Generali, there was direct arbitration agreement between parties, however according to English law, the court follows a similar approach as it would in a regular contractual arbitration agreement. Thus, in the second case, abovementioned component was satisfied, because defendant was seeking to advance claims, that essentially amounted to an attempt to enforce contractual rights within the insurance policy (QBE v. Generali, para 16).

These two judgments set out what can be expected in future regarding anti-suit injunctions concerning proceedings in EU-Member states. Moreover, parties based in EU Member States should consider the potential consequences of initiating legal proceedings in EU Member State courts when they have entered into contracts that include an exclusive jurisdiction clause favouring the courts of England and Wales, or an English law arbitration clause.

How to defend against anti-suit injunctions? - The era of anti-suit injunctions?

Anti-suit injunctions from the UK or any other country outside the EU can be an impediment for proceedings in courts of EU-Member states. A new and competitive approach could be anti-anti-suit injunctions. These injunctions are directed against the party that requests for an anti-suit injunction in another jurisdiction. An anti-anti-suit injunction orders the applicant of the anti-suit injunction to refrain from commencing anti-suit injunction proceedings. Anti-anti suit injunctions have been granted in France and Germany in specific circumstances. A judgment of March 2020 by the Court of Appeal of Paris granted an anti-anti-suit injunction concerning the application for an anti-suit injunction in the US.

Two recent German decisions had also relations to US proceedings for anti-suit injunctions. The anti-anti-suit injunctions were awarded by the Higher Regional Court of Hamm on 2 May 2023 and by the Higher Regional Court of Munich on 12 December 2019. The Higher Regional Court of Munich decided in a overall patent related dispute between Continental and Nokia (judgment of 12 December 2019 – 6 U 5042/19; English summary here). The Higher Regional Court of Hamm decided in relation to enforcement proceedings of an investment arbitration award (judgment of 2 May 2023 – 9 W 15/23). The party seeking for an anti-suit injunction in the US tried to prevent the other party from claiming before the Regional Court of Essen. The proceedings in Essen were directed at prohibiting an enforcement of the arbitration award outside Europe. The legal basis for the authority to render anti-anti-suit injunctions derives from substantive law and not, as in the UK, from a procedural principle. The right that might be violated by the party seeking for an anti-suit injunction is the entitlement to justice (Justizgewährleistungsanspruch). This fundamental right is laid down in Art. 19 (4) of the German Constitution. Even though the German courts are not capable to render anti-suit injunctions concerning proceedings in EU-Member states, the substantive law gives the parties the opportunity to prevent anti-suit injunctions in non-EU jurisdictions with requests for anti-anti-suit injunctions.

What's next? - Case by case decision

The essence of the German judgments is that it is possible to successfully apply for anti-anti-suit injunctions in Germany. An anti-anti-suit injunction can be a direct answer to the opposing party's attempt to obtain an anti-suit injunction abroad. Whether this approach will be successful or what other measures could also be used, has to be determined on a case by case basis. Brexit and the recent decisions of UK courts make it likely that anti-suit injunctions and the question of how to respond will be more relevant in the future. This highly complicated assessment of the right measures has to be done by the parties in short notice. The breach of an anti-suit injunction or anti-anti-suit injunction could be quite expensive due to potential orders for a fine against the party. The breach of an injunction in Germany can be fined with up to EUR 250,000.00 for each breach. Other countries might have even higher fines.

Christina Weinzierl
Tobias Pörnbacher
Alexander Braun