Out-Law News 2 min. read
27 Mar 2014, 9:52 am
In an unreported case highlighted by Lawtel, the High Court ruled that it did not have the jurisdiction to prevent the parties from litigating in the Lithuanian courts. Even if this had not been the case, an application by one of the parties for an interim injunction to stop the proceedings was an abuse of process, it said.
Litigation expert Richard Twomey of Pinsent Masons, the law firm behind Out-Law.com, said that the decision showed that so-called 'anti-suit injunctions' aimed at preventing parties from pursuing litigation in other EU member states were "almost certainly doomed to fail".
"The case shows once again that the English Court will apply the Brussels Convention - as it is bound to - and will not seek to interfere with foreign proceedings in member states," he said.
"It also shows that the courts take a dim view of parties who seek to use the threat of anti-suit injunctions to obtain tactical advantage in litigation; as in this case where the application was considered abusive and brought with the purpose of securing an advantage in the foreign litigation," he said.
The general power of the UK courts to grant an injunction "in all cases in which it appears to the court to be just and convenient to do so" is set out in the Senior Courts Act. However that power is qualified, particularly in relation to the prevention of legal proceedings in countries that are parties to the Brussels Regulation or Lugano Convention.
In the case in dispute, one of the parties (X) had applied for an interim injunction to prevent another, P, from taking any steps in Lithuanian proceedings brought by and on behalf of a limited liability partnership (LLP). P had claimed beneficial ownership of the LLP and was seeking declarations that X was not and had never been members of the LLP. P opposed the application for injunction, arguing that as the court proceedings had already begun the English courts had no jurisdiction to grant an injunction. It also argued that the application was an abuse of process, as it was intended to give X an advantage in related legal proceedings in the Lithuanian courts.
According to Lawtel, the High Court held that there was "great force" in P's argument, as "the Lithuanian courts were already seized of the cases concerned". On that ground alone, it was unable to grant an injunction. The application was also abusive as it amounted to a "collateral attack" in respect of issues that the Lithuanian court had already decided on and would have given P an advantage in the related litigation, the High Court said.
The High Court then went on to consider P's other arguments and found that the injunction would not have passed the 'balance of convenience' test, which is where the court weighs up the likely inconvenience or damage that would be caused by the injunction not being granted against the likely inconvenience or cost of it being granted unjustly. It found that the effect of the order would have been "so manifestly one-sided ... that it was clearly inappropriate" as it would have allowed X to pursue litigation while preventing P from participating at all. In addition, X did not provide any cross-undertaking in damages, as would usually be required to compensate the party restricted from exercising its rights by the injunction if the underlying litigation went in its favour.