Commentary: Practical Options when Faced with an Injunction Against Arbitration

Abstract

SUPPOSE YOU are representing a Claimant in an arbitration before a Tribunal which, in your view, has been validly constituted in accordance with a valid arbitration agreement. The next thing you know, your client has been served with an injunction (possibly issued out of the national courts of a foreign State) enjoining your client from proceeding with the arbitration. A copy of the injunction also lands on the desk of the Tribunal, making it clear that the Tribunal, too, is invited in no uncertain terms to desist from proceeding. What choices does your client (and the Tribunal) now face, and what are the various consequences of the exercise of any of those choices? Before dealing with those questions directly and looking at the scenario now facing Counsel for US Power, Local Power, and also our Tribunal, it may be helpful to review some of the most likely grounds on which application may have been made to, and the appropriate restraining remedy granted by the particular national court. There may be ongoing proceedings between the same parties in relation to a similar or related dispute, and the national court in question may consider it undesirable for there to exist the potential for conflicting decisions to be given by it and by the Arbitral Tribunal. Accordingly, it decides it has exclusive jurisdiction, and that the Arbitral Tribunal has none. Closely linked is the situation where court proceedings have been commenced, and the Defendant in those court proceedings, being the Claimant in parallel arbitration proceedings, applies for a stay of the court proceedings, in particular where Article II of the New York. Convention on the Recognition and Enforcement of Foreign Arbitral Awards applies. Clearly the operation of Article II will depend upon the manner in which it has been incorporated into the domestic …