‘Multi-Tier’ Dispute Resolution Clauses

25 June, 2018

In a judgment dated 8 June 2018 in Perkins Engines Co Ltd v. Ghaddar & another [2018] EWHC 1500 (Comm), Mr Justice Bryan granted an interim anti-suit injunction against the defendants in respect of proceedings commenced by them against the claimant in Lebanon. The sole issue before the court was the proper construction of a so-called ‘multi-tier’ dispute resolution clause contained in a written distributor agreement. The clause provided that the parties “hereby submit to the jurisdiction of the English Courts” but went on to provide for London arbitration “[t]o the extent there is no reciprocal enforcement procedures between the United Kingdom and the country in which the Distributor is located”.

The court was required to interpret the proper meaning of the phrase “reciprocal enforcement procedures” in this contractual context in circumstances where the defendants (Distributor) had commenced proceedings following termination of the agreement in Lebanon. The Defendants contended that procedures for enforcing judgments of the courts of each jurisdiction within the other jurisdiction existed in practice, notwithstanding the absence of any reciprocal enforcement treaty or convention between the UK and Lebanon.

In granting the anti-suit injunction, Bryan J concluded that the phrase “reciprocal enforcement procedures” referred to a legally binding treaty or convention existing between the UK and Lebanon. The Judge applied the principles of construction applicable to dispute resolution clauses as set out by Lord Hoffmann in Fiona Trust in so far as distinct from general principles of contractual construction set out more recently by the Supreme Court in Arnold v Britten or Wood v Capita. In the absence of such treaty or convention, the parties’ arbitration agreement was invoked. Alternatively, there were no “reciprocal enforcement procedures” in existence in the two jurisdictions either in respect of any judgment likely to be rendered in the parties’ dispute or more generally.

Bryan J did not need to determine the alternative analysis of the claimant, as to whether the language of the jurisdiction clause could impose an obligation on the defendants to discontinue prior foreign proceedings in the event that the claimant later elected to commence English court proceedings in respect of the same dispute; but he offered the view that this would be the case by reference to first instance decisions in BNP Paribas v. Anchorage Capital Europe [2013] EWHC 3073 (Comm) (Males J) and Global Maritime Investments Cyprus v. OW Supply & Trading [2015] EWHC 2690 (Comm) (Teare J).

Stephen Houseman QC (instructed by Kate Davies and Alice Englehart of Allen & Overy LLP) appeared on behalf of the Defendants. Read the judgment here.