ANTI-ARBITRATION INJUNCTIONS: JURISDICTION AND THE NATURAL FORUM PRECONDITION
Shaun Elijah Tan†
Sabbagh v Khoury
Sabbagh v Khoury1
raises two interesting issues of law. First, does the English Court have jurisdiction to grant an anti-arbitration injunction to restrain a foreign arbitration?
Second, if the English Court has such jurisdiction, is it a pre-condition for the grant of an anti-arbitration injunction that England is the natural forum for the dispute?
Mr Hassib Sabbagh and Mr Said Toufic Khoury co-founded one of the largest engineering and construction businesses in the Middle East. Following Mr Sabbagh’s death, relations between his children broke down. As a result, Mr Sabbagh’s daughter, Ms Sana Hassib Sabbagh, brought proceedings in the English Commercial Court against various defendants, including her family members, members of the Khoury family, and the ultimate holding company of the engineering and construction business, CCG. One of the defendants, Wael, is domiciled in England and he was used as the anchor defendant to rope the others into the jurisdiction.
Before the English Court, the claimant, Ms Sana, made two allegations. First, that the defendants conspired to misappropriate assets belonging to the late Mr Sabbagh (“the Asset Misappropriation Claim”). Second, that the defendants conspired to deprive her of her entitlement to shareholding in CCG by unlawfully procuring the transfer of shares to the tenth defendant, a company incorporated in Lebanon (“the Share Deprivation Claim”). The defendants, except Wael, challenged the jurisdiction of the English Court. In addition to the jurisdictional challenge, the defendants also applied for a stay of the English proceedings under the Arbitration Act 1996, s.9.
Shortly afterwards, the defendants began arbitration proceedings in Lebanon on the basis of an arbitration agreement contained within CCG’s articles of association. In the Lebanese arbitration, the defendants sought a determination as to their entitlement to shares in CCG (“the Shares Claim”) and a determination of the balance of any monies owed by CCG (“the Assets Claim”) on Mr Sabbagh’s shareholder account. The claimant declined to participate in the arbitration on the ground that the claims advanced in the arbitration did not fall within the arbitration agreement.