David Lewis QC and Oliver Caplin acted for the defendant charterers (“Containerships”) in this case about an anti-suit injunction restraining direct action proceedings in Turkey against an international P&I Club (“the Club”).
The Club had obtained a without notice anti-suit injunction to restrain Containerships from pursuing the proceedings in Turkey (the “Turkish Proceedings”). The Club wished any proceedings to be in London, where it could rely on the “pay to be paid” provision in its Club Rules, which were part of the shipowners’ P&I Cover. The Club contended that the Turkish Proceedings would be in breach of the arbitration clause contained in their Club Rules, and that in any event the Turkish Proceedings were vexatious and oppressive in nature, and ought to be restrained.
On the with notice return date, Teare J characterised the direct action claim in the Turkish Proceedings as contractual in nature. However, the Judge held that as Containerships itself was not a party to that P&I Cover, it could not be said to be in breach of the arbitration agreement contained therein. The Club’s primary case, that it was entitled to an anti-suit injunction to restrain a breach of contract, failed.
The alternative case then asked whether Containerships’ conduct in bringing the Turkish Proceedings was “vexatious and oppressive” such that they ought nevertheless to be restrained.
Teare J concluded that the Turkish Proceedings were vexatious and oppressive because the Club was being deprived of the contractual rights it had bargained for under its P&I Cover with the shipowners (ie. the right to arbitrate, and rely on the “pay to be paid” rule). For the time-being, the Judgment may fortify P&I clubs who wish to rely on the “pay to be paid” rule.
However, recognising the difficult nature of the law in this area on the approach to characterisation and to what amounts to vexatious and oppressive conduct, Teare J granted permission to appeal to the Court of Appeal on both issues.