KB-2025-001929 - [2025] EWHC 2966 (KB)

The second basis for granting injunctive relief is because there is a “major issue” to be tried. The claimants allege serious misconduct by the defendant, including the strongly denied allegations of customs fraud and tax evasion. As a basis for interim injunctive relief on public interest grounds, the claimants cite American Cyanamid v Ethicon [1975] AC 396. In the claimants’ skeleton argument at para 6.7, it is stated:

“Due to public interest in transparency and accountability, it is submitted that these matters are more appropriately determined by the Court rather than in private arbitration. In light of these considerations and given that the allegations in the present claim concern potentially fraudulent activity and tax irregularities, it is submitted that the matters raised are of legitimate public interest.”

However, I do not understand the “serious issue to be tried” constituent element of the tripartite American Cyanimid test to be focused on questions of great public interest. The test is directed at the arguability issue rather than its wider public importance. A putative issue may have a theoretically vital public interest, but nevertheless be so fanciful and flimsy on its merits not to satisfy the serious issue to be tried test. As Lord Diplock pointed out, the test operates as a filter to eliminate claims that are frivolous or vexatious. The claim must have a real prospect of success. This is not about public importance but the intrinsic evidential quality of the claim.

It is important not to lose sight of the ball. The defendant’s claim is for repayment of sums said to be owed to it under what it asserts to be a valid SA. If the arbitrator determines that the arbitration contract does not exist or the arbitration clause has no validity due to the lack of Bill’s ostensible or actual authority or otherwise, there is nothing to prevent the claimants pursuing such claims as legitimately arise from their allegations against the defendant in the appropriate forum, be it this court or elsewhere.

If the arbitrator finds that she has jurisdiction, the public interest arguments the claimants advance in their skeleton argument can be developed for her consideration. It will be a matter for her whether what the claimants allege fall within scope or whether they rendered it inappropriate to proceed with the arbitral proceedings. Once more, that is a matter for her and this court does not intrude or constrain her assessment by comment at this point.

In their argument in favour of injunctive relief, the claimants submit that it is well established that where the existence or validity of an arbitration agreement is itself disputed, it is for the court - not the arbitral tribunal - to determine that question as a matter of jurisdiction. This is said to be consistent with the principle affirmed in Midgulf International Ltd v Groupe Chimique Tunisien [2010] EWCA Civ 66 (“Midgulf”). It is that the court emphasised its jurisdictional primacy in resolving threshold matters. These submissions fail to give weight to the careful analysis of the Court of Appeal in Al-Naimi (t/a Buildmaster Construction Services) v Islamic Press Agency Inc [2000] C.L.C. 647 (“Al-Naimi”). As I will shortly elaborate, due to the principled approach approved by the Court of Appeal in that case, I have concluded that the most appropriate course is for the arbitrator to determine the validity of the arbitration clause and hence whether her jurisdiction is established. For these reasons, the injunction application largely falls away on the basis it has been pleaded.

Nevertheless, in opposing the injunction application, the defendant points to the exceptional nature of injuncting arbitral proceedings. It placed reliance on Claxton Engineering Services Ltd v TXM Olaj-Es Gazkutato Kft [2011] 2 All E.R. (Comm) 128 (“Claxton”). Hamblen J (as he then was) observed that the question of an anti-arbitration injunction was a matter of “debate and controversial” in the international arbitration community. However, he noted that English courts have the jurisdiction to grant such an injunction (para 28). He continued:

“[29] Modern examples of the English court granting such injunctions are Republic of Kazakhstan v Istil Group Inc and, in respect of an arbitration outside the jurisdiction, Albon’s case. The authorities indicate that such injunctions will generally only be granted in exceptional circumstances: see Weissfisch v Julius [2006] 2 All ER (Comm) 504 at [33] and Republic of Kazakhstan v Istil Group Inc [2008] 1 Lloyd’s Rep 382 at [48].

[30] This is consistent with the doctrine of Kompetenz-Kompetenz and with the ‘principles of the law of international arbitration agreed under the New York Convention and recognised by this country in the 1996 Act’: see Weissfisch v Julius at [33].”

Vitally for this case, he said at para 34:

“In order to establish exceptional circumstances, it will usually be necessary, as a minimum, to establish that the applicant’s legal or equitable rights have been infringed or threatened by a continuation of the arbitration, or that its continuation will be vexatious, oppressive or unconscionable”.

Examples of qualifying abuse has been found in various decisions. To give but one example, in Injazat Technology Capital Ltd v Hamid Najafi [2012] EWHC 4171 (Comm) an injunction was granted in respect of second and third arbitrations which were vexatious and oppressive. These further proceedings were a bald attempt to evade enforcement of the first award by re-litigation of issues already decided by the arbitrator in the first arbitration and/or by raising matters which could and should have been raised by way of defence and counterclaim in the first arbitration proceedings (see para 22). In Claxton, Hamblen J provided a valuable working out of these principles in the case before him. There was infringement of the claimant’s legal rights:

“[35] In the present case the claimant can establish that the continuation of the arbitration will be a breach of its legal rights. This court has held that the contract was subject to an English exclusive jurisdiction clause and the proceedings brought by the defendant are a clear breach of that contractual agreement. Not only that, but this is a legal right of a nature which the English courts have recognised it is generally appropriate to enforce by way of injunctive relief unless there are ‘strong reasons for not giving effect to the exclusive jurisdiction clause’: see Donohue v Armco Inc [2001] UKHL 64 at [36], [2002] 1 All ER (Comm) 97 at [36], and subsequent authorities summarised by Burton J in Deutsche Bank AG v Sebastian Holdings Inc [2009] EWHC 3069 (Comm) at [14]–[24], [2010] 1 All ER (Comm) 808 at [14]–[24].

[36] This is also a case in which the claimant can establish that it would be vexatious and oppressive to allow the arbitration to continue since this court has already held that there is no arbitration agreement. Allowing the arbitration to continue will therefore not only involve the claimant in duplication of work and needless expense, but it will do so on a jurisdictional basis which this court has already held does not exist.

[37] Since this court has already held that there is no arbitration agreement, the reliance sought to be placed by the defendant on the New York Convention is misplaced.”

The contrast with the instant case cannot be greater. No court has ruled on whether an arbitration agreement exists and/or is valid. It is precisely that dispute between the parties that must be resolved. I cannot see how in principle the matter proceeding to a resolution of the dispute about clause 3 is vexatious or oppressive. I judge it to be the opposite: necessary and inevitable. The real question is in which forum that dispute should be determined. That is the subject-matter of the forum question about the dispute around Bill’s authority and the heart of the defendant’s first application. I will come to that shortly.