Donohue v. Armco Inc. et al., (2001) 294 N.R. 356 (HL)

• Case Date: December 13, 2001
• Jurisdiction: Canada (Federal)
• Citations: (2001), 294 N.R. 356 (HL)

Donohue v. Armco Inc. (2001), 294 N.R. 356 (HL)

MLB headnote and full text

Donohue (respondent) v. Armco Inc. and others (appellants)

([2001] UKHL 64)

Indexed As: Donohue v. Armco Inc. et al.

House of Lords

London, England

Lord Bingham of Cornhill, Lord Mackay of Clashfern, Lord Nicholls of Birkenhead, Lord Hobhouse of Woodborough and Lord Scott of Foscote

December 13, 2001.

Summary:

Armco et al. and Donohue et al. entered into agreements facilitating the sale of a business to Donohue et al. The agreements provided that disputes were to be settled in English courts and under English law. Subsequently, Armco et al. sued Donohue et al. in New York, alleging fraud. Donohue applied in England for an anti-suit injunction (i.e., to restrain the New York proceedings). The judge at first instance declined to grant the injunction, but this decision was reversed on appeal, with the Court of Appeal granting the injunction. Armco et al. appealed.

The House of Lords allowed the appeal and set aside the injunction.

Conflict of Laws - Topic 7286

Contracts - Jurisdiction - Choice of forum by parties - [See all Conflict of Laws - Topic 9303 ].

Conflict of Laws - Topic 9303

Practice - Injunctions - To enjoin foreign proceedings - Armco et al. and Donohue et al. entered into agreements facilitating the sale of a business to Donohue et al. - The agreements provided that disputes were to be settled in English courts and under English law - Subsequently, Armco et al. sued Donohue et al. in New York, alleging fraud - Donohue applied in Eng­land for an anti-suit injunction (i.e., to restrain the New York proceedings) - The judge at first instance declined to grant the injunction, but this decision was reversed on appeal, with the Court of Appeal grant­ing the injunction - Armco et al. appealed - The House of Lords allowed the appeal, hold­ing that the interests of justice would be best served by a single composite trial in the only forum in which a single com­pos­ite trial could be procured (i.e., New York), and accordingly the court found strong reasons for not giving effect to the exclus­ive jurisdiction clause in favour of Donohue - See paragraphs 1 to 76.

Conflict of Laws - Topic 9303

Practice - Injunctions - To enjoin foreign proceedings - The House of Lords, per Lord Bingham of Cornhill, stated that "if contracting parties agree to give a particu­lar court exclusive jurisdiction to rule on claims between those parties, and a claim falling within the scope of the agreement is made in proceedings in a forum other than that which the parties have agreed, the English court will ordinarily exercise its discretion (whether by granting a stay of proceedings in England, or by restraining the prosecution of proceedings in the non-contractual forum abroad, or by such other procedural order as is appropriate in the circumstances) to secure compliance with the contractual bargain, unless the party suing in the non-contractual forum (the burden being on him) can show strong reasons for suing in that forum. I use the word "ordinarily" to recognise that where an exercise of discretion is called for there can be no absolute or inflexible rule gov­erning that exercise, and also that a party may lose his claim to equitable relief by dilatoriness or other unconscionable con­duct. But the general rule is clear: where parties have bound themselves by an ex­clusive jurisdiction clause effect should ordinarily be given to that obligation in the absence of strong reasons for departing from it. Whether a party can show strong reasons, sufficient to displace the other party's prima facie entitlement to enforce the contractual bargain, will depend on all the facts and circumstances of the particu­lar case" - See paragraph 24.

Conflict of Laws - Topic 9303

Practice - Injunctions - To enjoin foreign proceedings - The House of Lords, per Lord Bingham of Cornhill, discussed when a court might exercise its discretion not to apply an exclusive jurisdiction clause in a contract and hence decline to stay proceed­ings or grant an anti-suit injunction - See paragraphs 25 to 28.

Cases Noticed:

Siskina (Owners of cargo lately laden on board) v. Distos Compania Naviera S.A., [1979] A.C. 210, refd to. [para. 19].

Castanho v. Brown & Root (U.K.) Ltd., [1981] A.C. 557 (H.L.), refd to. [para. 19].

British Airways Board v. Laker Airways Ltd., [1985] A.C. 58 (H.L.), refd to. [para. 19].

South Carolina Insurance Co. v. Assurantie Maatschappij De Zeven Provincien N.V., [1987] A.C. 24; 195 N.R. 295 (H.L.), refd to. [para. 19].

Société Nationale Industrielle Aérospatiale v. Lee Kui Jak, [1987] A.C. 871 (P.C.), refd to. [paras. 19, 45, 53].

Airbus Industrie GIE v. Patel, [1999] 1 A.C. 119; 225 N.R. 173 (H.L.), refd to. [paras. 19, 45].

Mercedes Benz AG v. Leiduck, [1996] A.C. 284; 195 N.R. 161 (P.C.), refd to. [para. 19].

Channel Tunnel Group Ltd. v. Balfour Beatty Construction Ltd., [1993] A.C. 334; 152 N.R. 177 (H.L.), refd to. [para. 21].

Holland v. Leslie, [1894] 2 Q.B. 346, refd to. [para. 21].

Beck v. Value Capital Ltd. (No. 2), [1975] 1 W.L.R. 6, affd. [1976] 1 W.L.R. 572 (C.A.), refd to. [para. 21].

Johnson v. Taylor Brothers & Co., [1920] A.C. 144, refd to. [para. 21].

Ship Eleftheria (Owners of cargo lately laden on board) v. Ship Eleftheria (Owners), [1969] 2 W.W.R. 1073; [1969] 2 All E.R. 641; [1970] P. 94, refd to. [para. 24].

Mackender v. Feldia AG, [1967] 2 Q.B. 590 (C.A.), refd to. [para. 25].

Unterweser Reederei GmbH v. Zapata Off-Shore Co.; Ship Chaparral, Re, [1968] 2 Lloyd's Rep. 158, refd to. [paras. 25, 53].

D.S.V. Silo-Und Verwaltungsgesellschaft mbH v. Ship Sennar (Owners), [1985] 1 W.L.R. 490; 61 N.R. 149 (H.L.), refd to. [paras. 25, 53].

British Aerospace Plc v. Dee Howard Co., [1993] 1 Lloyd's Rep. 368, refd to. [para. 25].

Continental Bank NA v. Aeakos Compania Naviera S.A. et al., [1994] 1 W.L.R. 588, refd to. [para. 25].

Aggeliki Charis Compania Maritima S.A. v. Pagnan S.p.A.; Ship Angelic Grace, Re, [1995] 1 Lloyd's Rep. 87, refd to. [paras. 25, 53].

Akai Pty. Ltd. v. People's Insurance Co., [1998] 1 Lloyd's Rep. 90, refd to. [para. 25].

M/S Bremen v. Zapata Off-Shore Co. (1972), 497 U.S. 1, refd to. [para. 25].

Auto Haus Frohlich Ltd. and Frohlich v. Volkswagen Canada Inc., [1986] 1 W.W.R. 380; 65 A.R. 271 (C.A.), refd to. [para. 25].

FAI General Insurance Co. v. Ocean Mar­ine Mutual Protection and Indemnity Association (1997), 41 N.S.W.L.R. 559, refd to. [para. 25].

Kidd v. van Heeren, [1998] 1 N.Z.L.R. 324, refd to. [para. 25].

Ship Fehmarn (Owners of cargo lately laden on board) v. Fehmarn (Owners), [1958] 1 W.L.R. 159, refd to. [paras. 26, 53].

Evans Marshall and Co. v. Bertola S.A. et al., [1973] 1 W.L.R. 349 (C.A.), refd to. [para. 27].

Aratra Potato Co. v. Egyptian Navigation Co.; Ship El Amria, Re, [1981] 2 Lloyd's Rep. 119 (C.A.), refd to. [paras. 27, 53].

Halifax Overseas Freighters Ltd. v. Rasno Export; Technoprominpoit and Polskie Linie Oceaniczne P.P.W.; Ship Pine Hill, Re, [1958] 2 Lloyd's Rep. 146 (Q.B.), refd to. [para. 27].

Taunton-Collins v. Cromie, [1964] 1 W.L.R. 633 (C.A.), refd to. [para. 27].

Citi-March Ltd. v. Neptune Orient Lines Ltd., [1996] 1 W.L.R. 1367, refd to. [para. 27].

Mahavir Minerals Ltd. v. Cho Yang Ship­ping Co.; Ship M C Pearl, Re, [1997] 1 Lloyd's Rep. 566, refd to. [para. 27].

Bouygues Offshore S.A. v. Caspian Ship­ping Co., [1998] 2 Lloyd's Rep. 461, refd to. [para. 27].

Crédit Suisse First Boston (Europe) Ltd. v. MLC (Bermuda) Ltd., [1999] 1 All E.R. (Comm.) 237, refd to. [para. 28].

Spiliada Maritime Corp. v. Cansulex, [1987] A.C. 460; 71 N.R. 372 (H.L.), refd to. [para. 45].

Counsel:

Lord Grabiner, Q.C., and Daniel Toledano, for the appellants;

Peter Leaver, Q.C., Robert Howe and Camilla Bingham, for the respondents.

Agents:

Freshfields, for the appellants;

Simmons & Simmons, for the respondents.

This appeal was heard on October 15, 16 and 17, 2001, before Lord Bingham of Cornhill, Lord Mackay of Clashfern, Lord Nicholls of Birkenhead, Lord Hobhouse of Woodborough and Lord Scott of Foscote of the House of Lords. The decision of the House was given on December 13, 2001, when the following speeches were delivered:

Lord Bingham of Cornhill - see para­graphs 1 to 39;

Lord Mackay of Clashfern - see para­graph 40;

Lord Nicholls of Birkenhead - see para­graph 41;

Lord Hobhouse of Woodborough - see paragraphs 42 to 50;

Lord Scott of Foscote - see paragraphs 51 to 76.