Anti-suit injunctions and Trade Practices claims

20 December 2010

Contacts

In brief

by Ben Allen and Jesse Kennedy

  1. Qantas has obtained an “anti-anti-suit injunction” against Rolls-Royce
  2. The law remains unsettled in Australia as to the effect of a claim under the Trade Practices Act on jurisdictional issues that arise in cross-border disputes
  3. Arbitration agreements provide greater certainty on jurisdictional issues even when there are claims under the Trade Practices Act

The Qantas proceedings

On 2 December 2010, Qantas Airways Limited filed a claim against Rolls-Royce plc in the Federal Court of Australia which included a claim under the Trade Practices Act 1974 (Cth) (TPA).  On the same day, Moore J made interlocutory orders restraining Rolls-Royce from seeking, in another court, to restrain the proceedings commenced in Australia.  The order, also known as an “anti-anti-suit injunction”, as it prevents Rolls-Royce from seeking an “anti-suit injunction” to restrain the Australian proceedings, is to apply until otherwise ordered.

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TPA claims and jurisdictional issues

Although the law relating to anti-suit injunctions (and by extension anti-anti-suit injunctions) is mostly settled since the decision of the High Court in CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345, uncertainty still remains as to the effect of a claim under the TPA on whether a court issues an anti-suit injunction or stays its proceedings.  

Applying CSR v Cigna Insurance, the fact that a TPA claim may be heard in an Australian court but not in a foreign court may be a factor weighing against awarding a stay and weighing in favour of issuing an anti-suit or anti-anti-suit injunction.  So much was recognised in Pan Australian Shipping Pty Ltd v The Ship “Comandate” [2006] FCA 881, where Rares J concluded that a TPA claim was an important consideration when a court was considering jurisdictional issues.

More recently, Australian courts have stayed proceedings and refused to award anti-suit or anti-anti-suit injunctions even though a TPA claim has been raised (see Armacel Pty Ltd v Smurfit Stone Container Corporation [2008] FCA 592, Bella Products Pty Ltd v Creative Designs International Ltd [2009] FCA 868 and Nicola v Ideal Image Development Corporation Inc (2009) 261 ALR 1).  However, in all these cases the courts emphasised that the TPA claims were going to be pursued in the foreign proceedings and the parties agreed to do so.  In Armacel, for example, Jacobson J stressed that the essential question in deciding whether to award a stay was whether Armacel was able to obtain relief under the TPA in the United States proceedings; if not, a stay may not have been granted.

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Application to the Qantas proceedings

It might be tempting to conclude that in light of the recent cases Qantas will be unable to maintain an anti-anti-suit injunction against Rolls-Royce if the dispute is subject to an exclusive jurisdiction clause or the Federal Court is otherwise a “clearly inappropriate forum” for the dispute, so long as Rolls-Royce gives an undertaking not to oppose the courts of another jurisdiction considering any TPA claim.  But a potential issue that has not adequately been addressed by past cases is whether s 86(4) of the TPA would allow a foreign court to hear a TPA claim.  

Section 86(4) confers on the Federal Court exclusive jurisdiction in relation to certain civil proceedings arising under the Act, including proceedings for damages for misleading or deceptive conduct, subject to provisions that confer such jurisdiction on other Australian courts.  A possible construction of s 86(4) would prevent foreign courts from dealing with certain TPA claims (see Allstate Life Insurance v ANZ Banking Group Ltd (1996) 64 FCR 1 at 40).  If such a construction was adopted, the Federal Court would be more likely to refuse to award a stay and maintain the anti-anti-suit injunction to protect its proceedings.

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The benefits of arbitration

The uncertainties over the effect of a TPA claim on jurisdictional issues do not apply where the dispute in question is covered by an arbitration agreement.  Since Comandate Marine Corp v Pan Australia Shipping Ltd (2006) 157 FCR 45, it has been clear that TPA claims (other than a claim directed to the arbitration agreement itself) are no bar to a court awarding a mandatory stay under s 7 of the International Arbitration Act 1974 (Cth).  

That does not mean that TPA claims can be avoided altogether by an arbitration agreement; Comandate Marine suggested an arbitrator would be bound to consider TPA claims even if foreign law governs the dispute.  But where there is the potential for any TPA claims to arise in a contract (eg, where one of the parties to the contract is from Australia), parties who desire certainty as to the forum in which their disputes will be heard would benefit from an appropriately drafted arbitration agreement to ensure an Australian court would stay any proceedings commenced.  

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Lessons to take away

Despite the recent trend of decisions awarding stays even when TPA claims are raised, the following points should be kept in mind whenever a party is seeking or resisting a stay of proceedings or an anti-suit or anti-anti-suit injunction:

  1. A party wishing to stay Australian proceedings may have to give an undertaking to not oppose any TPA claim being dealt with in the foreign proceedings.  
  2. A party seeking or opposing a stay or anti-suit injunction should seek advice as to the potential effect of s 86(4) of the TPA on whether a foreign court would be able to consider a TPA claim or, more generally, whether the law governing the foreign court permits the court to hear a TPA claim.
  3. A court is very likely to award a stay of proceedings where the dispute is covered by an appropriately drafted arbitration agreement.
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