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Home > Articles > 2014 archive

“Please Sir I Want Some More”

Sarah Lucy Cooper, barrister of Thomas More Chambers, examines the law on anti-suit injunctions and their role in financial remedies cases where one party seeks to pursue claims in another jurisdiction despite a final order having been made in this jurisdiction.







 



Sarah Lucy Cooper
, Barrister, Thomas More Chambers

The Court of Appeal's judgment in the long running case of Ahmed v Mustafa  (in which I was counsel for the Husband) will be of interest to financial remedies practitioners. 

To understand the significance of the case it is necessary to briefly explain the background.  Whilst the facts of the case may be unusual, it is submitted that the judgment may have implications for the growing number of UK financial remedies cases in which foreign jurisdictions come into play.

The parties had assets both in England and in the Turkish Republic of Northern Cyprus ("TRNC"). The parties had both been born in Cyprus prior to its division and intended to retire there after spending their married and working lives in England.

It may be helpful to explain that TRNC is the area in the north of Cyprus which declared independence in 1974. It is not recognised as a state by any other countries with the exception of Turkey. The island had been a part of the Ottoman Empire prior to in 1878 when the UK leased the whole of the island. This lease came to an end during the First World War when the UK annexed the island and in 1960 the island became independent.  The current legal system is therefore an interesting mix of Ottoman law, pre 1960 English law and modern Turkish law. According to serious commentators, whilst the procedural law is still largely based upon the common law, the substantive law is rather more Turkish. The overall effect is described as a "law mosaic".

On separation after a long marriage, the Wife chose to issue a divorce petition in England. The financial remedy proceedings were also commenced by the Wife in England and prior to the final hearing the Wife gave an undertaking not to bring any further proceedings in any other jurisdiction, in particular in TRNC until "final order".

The financial remedy proceedings were concluded after a long trial and an order was drawn up in the usual terms, expressing that the orders would effectively come into effect upon Decree Absolute. The final order provided for the usual recital about it resolving all claims in any jurisdiction in relation to the marriage.

The Wife delayed requesting Decree Absolute and in the meantime commenced a further set of proceedings in the TRNC in which she sought a more generous division of the assets in England and TRNC than that made by virtue of the English order.

The Husband's request that the Wife desist from advancing the proceedings in the TRNC was refused. Therefore the Husband applied to the trial judge for a permanent post-judgment anti-suit injunction against the Wife. This application was made in the context of other applications by both parties in relation to the enforcement of the final order and was granted by the Judge.

The Wife appealed against various orders, in relation to which she had limited success. However, in relation to her main complaint that she should be allowed to relitigate finances in the TRNC, the Court of Appeal dismissed her appeal.

The main issue in the case related to the jurisdiction to grant a permanent anti-suit injunction "ASI" in financial remedy cases after a final order has been made in the English courts.


The Law on Anti Suit Injunctions
The starting point as a matter of law is that set out in the House of Lords case of South Carolina Insurance Co v Assurantie Maatschappij "De Zeven Provincien" NV [1987] AC 24, namely that the power to grant injunctions under the Senior Courts Act 1981 s37(1) is limited to two situations:

(i) Where one party to an action can show that the other party has either invaded or threatened to invade a legal or equitable right of the former for the enforcement of which the latter is amenable to the jurisdiction of the court;

(ii) Where one party to an action has behaved or threatens to behave in a manner which is unconscionable to the prejudice of the other party

The Privy Council in Aerospatiale [1987] AC 871 set out the general law on anti-suit injunctions making it clear that the principle is that the English court will only restrain proceedings in a foreign court if "such pursuit would be oppressive or vexatious" in order to found the unconscionable behaviour.

In Ahmed v Mustafa the Husband at first instance and on appeal relied on Masri v Consolidated Contractors (No.3) [2008] EWCA Civ 625 in which a company which had been sued in England and was dissatisfied with the English judgment effectively sought to re-litigate it in another jurisdiction. In that case the Court of Appeal made it absolutely clear that such a course of action was entirely inappropriate and would form a basis for an anti-suit injunction. Lord Justice Collins stated, at paragraph 26:

"in my judgment the English court has power over persons properly subject to its in personam jurisdiction to make ancillary orders in protection of its jurisdiction and its processes, including the integrity of its judgments. That power is of course a discretionary one, to be exercised in accordance with the requirements of international comity."

And at paragraph 31:

"the judgment debtor's submission to the jurisdiction gave the English court power to make any incidental orders in the litigation..."

Lord Justice Collins further went on to clarify, at paragraph 95:

"the present case is not a case where the foreign court has given a judgment with which an English injunction will be inconsistent. It is simply a case in which the judgment debtors are seeking to re-litigate abroad the merits of a case which, after a long trial, they have lost in England. In my judgment it is classic case of vexation and oppression, and of conduct which is designed to interfere with the process of the English court in litigation to which the judgment debtors submitted."

As far as judicial comity is concerned, Collins LJ stated, at paragraph 82:

"I do not accept the judgment debtors' argument that there is a principle ...that the English court will not restrain re-litigation abroad of a claim which has already been the subject of an English judgment adverse to the person seeking to re-litigate abroad. It has been established since at least 1837 that the fact that the respondent is seeking to re-litigate in a foreign jurisdiction matters which are already res judicata between himself and the applicant by reason of an English judgment can be a sufficient ground for the grant of an anti-suit injunction."

These principles are set out in Dicey 15th Edition which states at Rule 38 (5):

"Subject to the provisions of the Brussels I Regulation and the Lugano Convention, an English Court may restrain a party over whom it has personal jurisdiction from the institution or continuance of proceedings."

Dicey paragraph 12-081 goes on to state:

"The court will also restrain proceedings which interfere with the "due process of the court" or with the court's jurisdiction to decide cases pending before it. …..It will also restrain a judgment debtor from taking steps overseas which are designed to undermine the conclusiveness of an English judgment or its enforcement, because the court has jurisdiction to make ancillary orders in connection with litigation of the merits and of which it may be said to have "full possession"."


Second Bite of the Cherry?
On appeal, a very interesting and novel point was raised by the Wife, namely that given the existence in the UK of the Matrimonial and Family Proceedings Act 1984, it could not be unconscionable for a litigant to seek a second bite of the cherry in an overseas court. Given that the English courts would have entertained an application under the MFPA 1984 Part III after a final order in the TRNC, how could it be fair not to allow the Wife to make an application in TRNC after a final order in England?

Research reveals that a number of both common and civil law jurisdictions have similar provisions to Part III 1984 MFPA, including but not limited to, Australia, Canada, Hong Kong, New Zealand and South Africa

As an example, Hong Kong has implemented Part 11A Matrimonial Proceedings and Property Ordinance (Cap. 192) ("MPPO"), under which an application can be made for financial relief, following a foreign award, including orders in relation to property.  Leave is required and certain jurisdictional requirements need to be made.

In Australia, provided the applicant to the family courts can satisfy jurisdiction fact (i.e. can establish that Australia is not a clearly inappropriate forum), the courts have a common law power of ex post facto variation of foreign orders and/or awards, which does not impact on the finality of the foreign order.

The Court of Appeal considered MFPA 1984 Part III carefully as well as the case of Agbaje v Agbaje [2010] UKSC 13 in which Lord Collins, delivering the judgment of the Court stated:

"There is nothing internationally objectionable in legislation which gives a court power to order financial provision notwithstanding a foreign decree of divorce, whether or not the foreign court has ordered financial provision, provided that the forum has an appropriate connection with the parties or their property."[para 52]

Ultimately though, the Court of Appeal rejected the Wife's argument in Ahmed.  McFarlane LJ considered that in family cases there could indeed be cases where it is

"…unconscionable to contemplate either party seeking to have the very same issues re-determined before a different court."[para 21]

On the facts of this case it was the Wife who had initiated the English proceedings, applied for financial remedy, given an undertaking to the English court not to pursue matters in TRNC pending a final order and had given no indication during the English hearing that she would issue fresh TRNC proceedings once the English case had concluded. In the circumstances of this case McFarlane LJ concluded that the trial judge was entitled to consider the wife's actions as vexatious and oppressive and:

"to send out a message to the courts of the TRNC to the effect that the English court took a serious and adverse view of the wife's conduct in seeking to re-open these matters."[para 24]

There is no English authority on the issue as to whether an ASI should be granted after a final financial order nor was it dealt with in any of the standard textbooks.

The nearest authority was the Australian case of Kemeny [1998] Fam CA 34 in which the Australian courts essentially upheld an ASI granted by the USA courts against a wife in very similar circumstances to Ahmed v Mustafa, namely a wife after a full hearing and appeal in the USA trying to relitigate the financial order in Australia.

In Kemeny:

(a) The USA courts were prepared to grant a post judgment ASI specifically preventing relitigation in connection with the distribution of assets distributed by the USA court. This USA order was made after a full final hearing and also appeals in a case where there were assets in Australia;

(b) The Australian courts were happy to uphold the spirit of the ASI despite the fact that Australia has similar provisions to MFPA 1984 Part III.

In Australia, its Court of Appeal made it clear that the fact that an order is capable of ex post facto variation does not reflect upon its finality for the purposes of the application of the doctrine of cause of action estoppel (paragraph 5.1.7 Kemeny).

The Australian court further distinguished between the power to vary an order ex post facto and orders sought which are oppressive and vexatious to the other side because it would be unfairly burdensome to re-argue and require that party to obtain and finance legal representation in re-litigation in another jurisdiction, which may amount to an abuse of process or harassment of that party. Not only did the Australian court consider the ASI a relevant consideration, its apparent approval or, at least, complete absence of criticism of the USA court's decision to grant the ASI, notwithstanding the Australian courts' powers of ex post facto variation, is fundamental to the decision of Kemeny.  Similarly, the USA court saw no difficulty and was clearly able and willing to grant an ASI regardless of the Australian courts' powers to vary a final order.

A Limping Marriage?

The state of the law in the TRNC was somewhat unclear as to what recognition, if any, would be given either to the Decree Absolute or to the financial order. The Wife alleged that the English Decree Absolute would not be recognised in the TRNC and that she would therefore be trapped in a "limping marriage" whereby she would still be considered married in the TRNC.

No satisfactory expert evidence as to the law in TRNC was available to the Court of Appeal in this respect. The High Court had decided way back in 2001 in Emin v Yeldag [2002] 1 FLR 956 that despite the TRNC not being recognised as a state, that the courts of the UK would indeed recognise and give effect to a divorce from the TRNC. Perhaps surprisingly, it appeared that this judgment was not widely known amongst lawyers and judges in the TRNC. It may be that this contributed to the uncertainty as to the recognition of English judgments in the TRNC.

In any event, this issue of the "limping marriage" was neatly sidestepped by the Court of Appeal who allowed the Wife to apply to vary the anti-suit injunction should she be able to produce cogent expert evidence as to the non recognition of Decree Absolute in TRNC.


Practice Points
In relation to drafting, of course the new precedent orders will be helpful as at 18(g) the standard recitals will include a recital stating that the final order is in full and final satisfaction of:

"All other claims of any other nature which one may have against the other as a result of their marriage/civil partnership howsoever arising either in England and Wales or in any other jurisdiction"

Clearly, with the benefit of hindsight the undertaking proffered by the Wife could also have been drafted more tightly such that it was until final order or Decree Absolute, whichever is the later. Anti-suit injunctions do not appear in the draft precedents so it will continue to be important to draft them very carefully to cover for all eventualities.

Conclusion

The conclusion to be drawn from Ahmed v Mustafa is that whether an award made by a foreign court is adequate and whether proceedings are vexatious and oppressive are two separate and distinct enquiries. The availability of any power of ex post facto variation does not automatically mean it is not vexatious and oppressive to seek such relief.  Of course, if there were in fact no possibility of further orders being made by an overseas court, then no post-judgment ASI would ever be needed.

Whether the overseas courts do or do not attach any weight to an English ASI, the English court is entitled to protect its own orders and to make its own enquiry as to whether the overseas proceedings would be vexatious and oppressive.

For further reading on the Legal System in the TRNC see the Ankara Bar Review "The Turkish Cypriot Legal System from a Historical Perspective" 2010/2011 by Professor Turgat Turhan.