Clifford Chance

A blue moon: English Court grants rare final anti-suit injunction on the basis of third-party rights

In Manta Penyez Shipping Inc and another v Zuhoor Alsaeed Foodstuff Company, the Commercial Court granted final relief on the basis of third-party rights pursuant to the Contracts (Rights of Third Parties) Act 1999.

On 19 February 2025, the Commercial Court delivered its judgment in Manta Penyez Shipping Inc and another v Zuhoor Alsaeed Foodstuff Company [2025] EWHC 353 (Comm). The Commercial Court granted a final anti-suit injunction ("ASI") restraining the defendant from commencing or continuing foreign proceedings in any court or tribunal other than London-seated arbitration pursuant to a London Maritime Arbitrators Association ("LMAA") arbitration clause.

The case has an intricate factual background, involving five sets of legal proceedings commenced in Yemen and Djibouti, including two ship arrest proceedings.

Background

The claimants, Manta Penyez Shipping Inc ("Penyez") and Uraz Shipping Inc ("Uraz"), are special purpose vehicles and respective registered owners of vessels Manta Penyez and Manta Uraz. In May 2024, the Manta Penyez was chartered to the defendant for the shipment of wheat from Russia to Yemen. The voyage charterparty between Penyez and the defendant contained a standard LMAA arbitration clause.

The cargo was loaded and bills of lading were issued by Penyez to Aston Agro Industrial SA ("Seller"). During the voyage, the Seller exercised its right to redirect the cargo to Djibouti due to non-payment issues in respect of the cargo. The original bills of lading were handed back to Penyez, which agreed to deliver the cargo at Djibouti in exchange for a letter of indemnity in favour of Penyez issued by the Seller. The defendant maintained the position that it did make payment in respect of the cargo, leading to a dispute between Penyez and the defendant over the performance of the charterparty.

Penyez commenced arbitration proceedings pursuant to the arbitration clause in the charterparty.

The defendant commenced arrest proceedings in Djibouti in respect of the Manta Penyez, in which the Djibouti Court of Appeal ordered the release of the Manta Penyez subject to the provision of an international bank guarantee in favour of the defendant. The relevant terms of the guarantee are:

• Clause 2 contemplates payment to the defendant in the event of a binding LMAA award or judgment on appeal there from; and
• Clause 5(i) contemplates that the arbitration be commenced within three months and be concluded by 2027, at which time the guarantee expires.

The claimants were not party to the guarantee, which was given by an Emirati bank in favour of the defendant. As far as Penyez was aware, this signified the end of the matter in the Djibouti courts. The defendant, however, appealed to the Supreme Court of Djibouti on the basis that the guarantee should have been obtained from a bank in Djibouti. Those proceedings were not served on Penyez and it was not otherwise informed of the appeal.

Separately, the defendant commenced three sets of Yemeni proceedings, including arrest proceedings in respect of the Manta Uraz.

English Court Proceedings

The claimants applied to the English court for a mandatory injunction compelling the defendant to procure the release of the Manta Uraz from arrest, as well as interim prohibitory injunctions as to the Yemeni proceedings. As the claimants were unaware of the continuing Djibouti proceedings, these were not expressly included in the claimants' application.

In December 2024, the High Court granted an interim ASI directed at the proceedings in Yemen (including the arrest of Manta Uraz) or any other court or arbitral tribunal, other than a London-seated LMAA arbitration.

Commercial Court Decision

The Claimants then applied to the Commercial Court to make the interim relief final, and to vary the terms of the Order so as to specifically include the two sets of Djibouti Proceedings in its order. Mrs Justice Cockerill granted the application.

The claimants relied upon clause 1 of the guarantee, which provides:

“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 Court agreed that as a matter of construction and/or implication, the clause must be construed as precluding the defendant from initiating fresh proceedings. It would be nonsensical for the clause to require the defendant to withdraw legal proceedings but to permit then immediately recommencing them.

The Court also considered whether the claimants were entitled to rely upon the guarantee, in circumstances where neither are a named party. The claimants relied upon section 1(1) of the Contracts (Rights of Third Parties) Act 1999 ("the Act"), which, subject to certain requirements set out in section 1, permits a third party to enforce a term of the contract if (a) the contract expressly provides that they may or (b) the term purports to confer a benefit on them. Subsection (b) does not apply if on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party.

Cockerill J found that section 1 of the Act was satisfied for a number of reasons:

1. the guarantee "self-evidently" had the purpose of benefitting the claimants by protecting them against suit in Yemen or other jurisdiction related to the Yemeni proceedings;
2. both claimants were expressly identified in the guarantee, satisfying the requirement of section 1(3) of the Act that the third party must be expressly identified in the contract by name, as a member of a class or as answering a particular description. Penyez was expressly named in the guarantee, defined as “Owners”, and Uraz was a member of a class of parties covered by the guarantee. Notably, the Court referred to the decision of the Supreme Court in Secretary of State for the Home Department v Public Commercial Services Union [2024] UKSC 41, that where a contractual term purports to confer a benefit on a third party under section 1(1)(b) of the Act, there exists a “strong presumption” that the term is enforceable by that third party if the requirements of section 1(3) are met; and
3. the guarantee did not, as is common, exclude the operation of the Act.

The Court found there to be no strong reasons mitigating against the grant of an ASI, and made the final relief sought by the claimants pursuant to the Act.

Finally, Cockerill J opined that the defendant's behaviour in going behind the arbitration agreement in the charterparty and commencing the foreign proceedings was vexatious and oppressive, and would have provided a feasible alternative basis to grant the ASI.

Comment

As alluded to by Cockerill J, this case provides a rare example (set against a complex background) of an ASI being granted on the basis of third-party rights arising from the Act. The rarity of such occurrence is due in part to the fact that many contracts expressly exclude the operation of the Act, which was not so in the present case. The judgment provides a clear indication of when a third party can rely on the Act to enforce contractual rights, including to obtain final injunctive relief. It also reinforces the general intolerance of the English courts to attempts to go behind an arbitration agreement and their willingness to grant ASIs in support of arbitration.