26/05/2020

Court of Appeal grants anti-suit injunction to block US extraterritorial enforcement measures

SAS Institute Inc v World Programming Limited [2020] EWCA Civ 599

On 12 May 2020, the Court of Appeal gave judgment reversing Cockerill J granting an injunction to World Programming Ltd (WPL) to block extraterritorial enforcement of a US judgment for some US$79 million obtained by SAS Institute Inc (SAS) against its English competitor, WPL.

Thomas Raphael QC and Josephine Davies of Twenty Essex appeared for WPL.

The judgment arises in extraordinary circumstances, with competing liability and enforcement judgments from the English and US courts. It deals with many interesting points of law on enforcement and anti-suit injunctions. Not least, the judgment has clarified there is no special threshold for an anti-enforcement injunction. And it makes it clear that the English court will act to protect the integrity of its liability and enforcement judgments and English assets. This is so even where the foreign orders purport to act against the judgment debtor in person.

The liability litigation

WPL, an English software company, created data analytics software (World Programming System) which had similar functionality to software produced and licensed by SAS (SAS System). Until WPL’s product emerged, there had been no competitor for SAS System.

In 2009, SAS sued WPL for breach of licence agreement and copyright infringement in England. WPL won in the English proceedings because, apart from anything else, the pro-competitive EU Software Directive (implemented in the Copyright Designs and Patents Act 1988) rendered the contract terms relied upon by SAS null and void.

However, in 2010 SAS had begun overlapping claims in its home state of North Carolina, USA. Notwithstanding the prior English judgments, applications for stay on grounds of forum non conveniens were refused, and the North Carolina court did not give preclusive effect to the English judgments, broadly because the North Carolina court refused to apply the Software Directive on the basis of North Carolina public policy. In the result, SAS was awarded damages for breach of contract and other parasitic claims, including under local statutes. But these parasitic claims, as Cockerill J has later found, repackaged the old wine of the breach of contract claims which had failed in England in new bottles. The sums awarded were trebled, under one head, to US$79 million by the North Carolina court.

The failed enforcement attempt in England ([2019] FSR 30)

In 2017, undeterred by its earlier English failure, SAS sought to enforce the US judgment by a claim in the Commercial Court.

Following trial, at which Paul Lowenstein QC and Josephine Davies appeared for WPL, on 13 December 2018, Cockerill J rejected SAS’s attempt at enforcement in England. This was because it would be contrary to public policy (a rare ground to refuse enforcement). The detailed reasons were: (1) issue estoppel which would have defeated the breach of contract claim equally defeated the parasitic claims; (2) there was Henderson v Henderson abuse of process; (3) enforcement would be contrary to the important public policy against monopolisation of ideas embodied in the Software Directive; and (4) the trebled head of claim was barred in its entirety by s.5 of the Protection of Trading Interests Act 1980 (PTIA). The judge also found in favour of WPL on its counterclaim under s.6 PTIA to recover punitive/multiple damages – the first judgment of this kind known in England.

This Enforcement Judgment meant that WPL was safe from the enforcement of the US Liability Judgment in England by the English courts. The Court of Appeal refused SAS permission to appeal.

The anti-suit injunction

SAS did not just try to enforce its US judgment in England. It applied to the California District Court (“CDC”) for extraterritorial enforcement orders to compel WPL to make payments from England to the US, and assign contractual rights to payment, in order to satisfy the US judgment.

If made, the CDC orders would achieve a backdoor route to the relief Cockerill J had refused in 2018. So, WPL sought an anti-suit injunction to block the orders or similar orders.

The injunction was granted by Knowles J without notice in December 2018. On 25 September 2019 [2019] EWHC 2481, Cockerill J decided that the injunction should not be continued. However, she also granted WPL permission to appeal and continued the injunction pending the appeal.

The Court of Appeal has in its judgment now held it should grant a wide ranging anti-suit injunction covering debts and assets situate in the United Kingdom although not debts situate in the USA (it indicated it would accept an undertaking in respect of customer debts situate in the United Kingdom, but an injunction would otherwise have been granted).

The Court’s reasoning included SAS’s attempted enforcement relief was markedly exorbitant, and contrary to comity because it interfered with assets here which were situate within the jurisdiction of the English court; and was inconsistent with the Enforcement judgment. Consequently, an anti-suit injunction was appropriate.

This was despite the fact that the US Court of Appeal’s 4th Circuit had reached different conclusions on the implications of comity.

The Court emphasised that although anti-enforcement injunctions of the typical kind (to restrain any enforcement of the foreign judgment) were rare, “there is no distinct jurisdictional requirement” of exceptionality or otherwise. This, however, was a case that raised different considerations.

WPL was represented by Thomas Raphael QC and Josephine Davies of Twenty Essex, instructed by Alexander Carter-Silk and Claire Blewett of Keystone Law.

SAS Institute was represented by Monica Carss-Frisk and Andrew Scott of Blackstone, instructed by MacFarlanes.