Lloyd's Maritime and Commercial Law Quarterly
INJUNCTIVE ENFORCEMENT OF ARBITRATION AGREEMENTS AGAINST NON-PARTIES: TWO COMPLICATIONS
Myron Phua*
Qingdao Huiquan v Shanghai Dong He Xin
The High Court’s decision in Qingdao Huiquan Shipping Co v Shanghai Dong He Xin Industry Group
1 (“Qingdao”) is noteworthy for addressing the issue of when an anti-suit injunction would be available against a respondent who is not a party to a contract containing an arbitration agreement (a “non-party”) but who nevertheless attempts to enforce rights under that contract in another forum. Qingdao, applying several earlier authorities, holds that such a non-party can be subjected to an injunction on the same terms as if it were a party to the arbitration agreement.
Yet, whilst seemingly involving a straightforward application of the “conditional benefit” principle2 articulated in a line of cases since The Jay Bola,3 two features of Qingdao’s reasoning are innovative—and potentially controversial. The first is how the court labelled the issue of identifying if a non-party was seeking to enforce a contract containing an arbitration agreement as an exercise in “characterisation”. Similar terminology was employed in previous cases, but to denote categorically different ideas from that in Qingdao. The second is how the court, in explaining that the reason why a non-party can be enjoined on the same terms as if it were a party was that the “burden” of an arbitration agreement4 must accompany the “benefit” of enforcing the contract containing it, omitted to inquire if the non-party in question actually had such a “benefit”.5 Instead, the court appears to have regarded it sufficient that the non-party need only claim to be so entitled in order for an Angelic Grace injunction6 to lie. Both points merit discussion.
The facts
The applicant, Qingdao Huiquan Shipping Co (“QHSC”), were owners of a ship which it chartered under a trip time charter to another company, Safe Arrival Maritime Ltd (the “Charterers”), for the carriage of a cargo from Indonesia to China.7 The receivers of the cargo were Emori (China) Co Ltd (“Emori”).8 Subsequently, the Charterers defaulted on hire, and QHSC asserted a lien over the cargo.9 QHSC and Emori then settled pursuant to
* The Queen's College, Oxford.
1. [2018] EWHC 3009 (Comm); [2019] 1 Lloyd's Rep 520.
2. Sometimes called the “benefit and burden” principle. Both labels are used interchangeably in this Comment, as the courts appear to have done: eg, ibid, [36]; Aspen Underwriting Ltd v Credit Europe Bank NV (The Atlantik Confidence) [2018] EWCA Civ 2590; [2019] 1 Lloyd's Rep 221, [53], [56]. Cf H Beale et al (eds), Chitty on Contracts, 33rd edn (London, 2018), [19.080–19.081].
3. Schiffahrtsgesellschaft Detlev Von Appen GmbH v Wiener Allianz Versicherungs AG (The Jay Bola)
[1997] 2 Lloyd's Rep 279.
4. Put more precisely, the “negative aspect” thereof. See AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC [2013] UKSC 35; [2013] 1 WLR 1889, [1], [21].
5. Cf Dickson Valora Group (Holdings) Co Ltd v Fan Ji Qian [2019] HKCFI 482, [33], [46], discussed below.
6. See Aggeliki Charis Compania Maritima SA v Pagnan Spa (The Angelic Grace)
[1995] 1 Lloyd's Rep 87.
7. Qingdao [2018] EWHC 3009 (Comm), [3].
8. Ibid, [3].
9. Ibid, [3].
Case and comment
519