Court grants final anti-suit injunction where multiple foreign proceedings breached charterparty and guarantee provisions

Court grants final anti-suit injunction where multiple foreign proceedings breached charterparty and guarantee provisions

Manta Penyez Shipping Inc & another -v- Zuhoor Alsaeed Foodstuff Company (Manta Penyez) [2025] EWHC 353 (Comm)

The Court has granted a final anti-suit injunction (ASI) where cargo interests commenced five sets of foreign proceedings notwithstanding an LMAA arbitration provision in the underlying voyage charterparty and a bank guarantee that obliged them to withdraw foreign legal proceedings, including ship arrest proceedings.

General principles for ASI

The English Court has discretionary power to grant an ASI in support of English arbitration proceedings. In the scenario of a contractual basis to enforce an exclusive London arbitration agreement, an ASI will readily be granted where (1)   

"the claimant can demonstrate with a high degree of probability the existence of an arbitration clause to which the defendant is a party and which covers the dispute”

and (2)

"there are no exceptional circumstances which militate against the grant of relief, such as the failure to act promptly”.

The background facts

The two claimants were special purpose vehicles. Penyez was the registered owner of the Liberia-flagged vessel Manta Penyez. Uraz was the registered owner of the Marshall Islands-flagged vessel Manta Uraz. Penyez and Uraz were part of the Manta Group companies, as was the company that managed and operated the vessels. 

Pursuant to a voyage charterparty dated 10 May 2024, Penyez chartered the Manta Penyez to the defendant, Zuhoor Alsaeed Foodstuff Co (Zuhoor) for a voyage to carry a cargo of wheat from Russia to Yemen. The charterparty provided for LMAA arbitration. 

The cargo was loaded onboard the vessel on 17 May 2024, and bills of lading were issued by Penyez to Aston Agro Industrial SA (Aston), but neither the cargo nor the vessel ever arrived at the discharge port. Instead, while the vessel was en route to Yemen, Aston and the head seller of the cargo instructed Penyez not to go to Yemen because Aston had not been paid.

During the whole of June 2024, the vessel waited at Djibouti until Aston exercised their right to redirect the cargo, to Djibouti instead of Yemen. The original bills of lading were handed back to Penyez and cancelled, and new bills issued, and Penyez agreed to deliver the cargo at Djibouti in exchange for a letter of indemnity (LOI) issued by Aston in favour of Penyez.

However, Zuhoor maintained that they had paid their contracting counterparty, OG, for the cargo but OG may not have paid Aston. Zuhoor claimed against Penyez for misdelivery of the cargo and the return of the freight that had been paid. 

The dispute resulted in five sets of foreign proceedings, as follows:

Djibouti arrest proceedings

Zuhoor arrested the Manta Penyez in Djibouti. Penyez called on Aston under the LOI to get the arrest lifted by defending the claim and providing security. The vessel was subsequently released upon provision of an Emirati bank guarantee for US$ 8.9 million on behalf of Aston in favour of Zuhoor. The order for the vessel’s release was upheld on appeal, notwithstanding that Zuhoor argued that it should have a Djibouti bank guarantee. At the time of this ASI decision, an appeal to the Djibouti Supreme Court remained pending.

The bank guarantee provided for payment to Zuhoor in the event of a binding LMAA award or judgment on appeal therefrom, reflecting the LMAA arbitration provision in the charterparty. The Owners had in fact commenced arbitration before the guarantee was issued on 11 September 2024. 

Djibouti exequatur proceedings

Prior to the arrest of the Manta Penyez, Zuhoor had sought a mandatory injunction from the Yemeni Court for the cargo to be discharged in Yemen. The injunction granted was time-limited but nonetheless Zuhoor sought to have it recognised and enforced in Djibouti after its expiry date. At the time of this ASI decision, the exequatur proceedings in Djibouti remain pending.

Yemeni arrest proceedings

The Manta Uraz, as a sister vessel, was arrested by Zuhoor in respect of the claim against Penyez under the charterparty and has remained under arrest in Hodeidah for about four months. Uraz (as registered owner of this vessel) has appealed against the arrest on the grounds that there is a bank guarantee in place and there is an extant arbitration. The outcome of the appeal is pending.

Yemeni substantive proceedings

Zuhoor commenced substantive proceedings in Yemen against Uraz as though it were a contracting party, notwithstanding that the Owners under the charterparty were Penyez.

Yemeni Sanaa proceedings

Details of these proceedings were unclear but appeared to be against Penyez or Uraz or both.

Preliminary English Court proceedings

On 21 November 2024, the English Court granted an interim ASI on an ex parte basis. The ASI was directed at proceedings in Yemen or any other court or arbitral tribunal, other than a London-seated LMAA arbitration. The Yemeni arrest and substantive proceedings were specifically mentioned.

On 3 December 2024, the Court granted a mandatory injunction compelling Zuhoor to procure the release of the Manta Uraz from arrest, as well as interim prohibitory injunctions as to the three Yemeni proceedings, namely the substantive proceedings, the arrest proceedings, and the Sana’a proceedings.

The claimant vessel owners subsequently sought, among other things, a final ASI. Zuhoor had adequate notice of the hearing but chose not to attend or participate. The Court thought it appropriate to continue in Zuhoor’s absence, rather than postpone the hearing.

The Commercial Court decision

Clause 1 of the bank guarantee stated as follows:

"In consideration of Zuhoor (i) immediately procuring the release of the Vessel [i.e. the MANTA PENYEZ] and Zuhoor and/or assignees and/or associates and/or subrogees refraining from re-arresting or otherwise detaining the Vessel or any other vessel in the same or associated ownership, beneficial ownership, management, and (ii) immediately withdrawing or procuring the setting aside of all legal proceedings, actions, judgments, and/or orders in Yemen in relation to or against the Vessel or Owners [i.e. Penyez] or the Charterparty..."

The claimants relied primarily on this clause as the contractual basis for a final ASI. They argued, and the Court agreed, that while clause 1 only expressly obliged Zuhoor to withdraw legal proceedings, as a matter of construction and/or implication, the clause had to be construed as also precluding Zuhoor from initiating fresh proceedings. Otherwise, Zuhoor could withdraw legal proceedings but then automatically recommence them.

The parties to the guarantee were: (i) the Emirati bank; (ii) Aston; and (iii) Zuhoor. However, Penyez/Uraz could rely on s.1 Contracts (Rights of Third Parties) Act 1999 (Third Parties Rights Act), which gave them the right as a third party to enforce a contractual claim in certain circumstances, including where the contractual term was intended to confer a benefit on that third party or where the contract expressly identified them by name or as a member of an identified class or by description.

In this case, on its true construction, clause 1 of the guarantee self-evidently had the purpose of benefitting Penyez (as well as any related party that may otherwise be sued by Zuhoor, such as Uraz) by protecting them against suit in Yemen or other jurisdictions related to the Yemeni proceedings.

Furthermore, Penyez were expressly named in the guarantee, where they were defined as “Owners” and Uraz were a member of a class of parties covered by the guarantee.

The Court noted that the guarantee did not exclude the operation of the Third Parties Rights Act. Furthermore, that the Act specifically provided that third parties enforcing a contract under the Act were entitled to injunctions as if they were contracting parties.

The Court added that the Yemeni and Djibouti court proceedings clearly breached clause 1 of the guarantee. Furthermore, there were no strong reasons not to grant the final ASI. Among other considerations, there had been no delay in seeking the ASI and the claimants had not voluntarily submitted to the jurisdiction of the foreign courts.

Although it did not need to, the Court briefly considered an alternative basis relied on by the claimants for a final ASI. It agreed with the claimants that, on the authorities, where the respondent seeks to obtain relief under or in relation to a contract from a non-contracting party in a non-contractual forum, the respondent should be restrained from doing so by an ASI. 

Uraz was not a party to the charterparty or its arbitration clause. Nonetheless, the Yemeni substantive proceedings involved the seeking of relief in connection with or under the charterparty. The claims in those proceedings related to the cargo shipped and the freight paid under the charterparty.

The Court found that Zuhoor’s behaviour in going behind the arbitration agreement in the charterparty by commencing those (and other) proceedings against Uraz was vexatious and oppressive. It amounted to a collateral attack on the arbitration between Zuhoor and Penyez in that it involved Zuhoor seeking further substantive relief from Uraz in relation to the same dispute that was already the subject of arbitration, with the possibility of double recovery if the Yemeni substantive proceedings continued.

The Court granted the final ASI and awarded costs on an indemnity basis.

Comment

The decision is useful for reiterating the principles applicable to the granting of a ASI in circumstances of an agreed London arbitration clause, as well as for providing a reminder of the circumstances in which a third party can rely on the Third Parties Rights Act to enforce certain contractual rights.