Stranger Things: Restraining Conduct as a Third Party to a Contract

On February 18, 2025, Mrs. Justice Cockerill of the English Commercial Court delivered her judgment in Manta Penyez Shipping Inc and another v. Zuhoor Alsaeed Foodstuff Company [2025] EWHC 353 (Comm).  In so doing, she granted an anti-suit injunction restraining the Defendant (who had commenced no fewer than five sets of proceedings in Yemen and Djibouti) from commencing or continuing those proceedings – or indeed any other proceedings that were not the London-seated LMAA arbitration prescribed by a voyage charterparty (and which had already been commenced by one of the Claimants).

At first glance, the judgment seems nothing out of the ordinary: yet another example of the pro-arbitration leanings of English Courts, and the robust response that will be taken by English Judges to any parties that seek to side-step pre-existing arbitration agreements.  However the judgment stands as a rare example of an anti-suit injunction being granted to a party pursuant to contractual third-party rights under the Contracts (Rights of Third Parties) Act 1999 (the “Act”), and provides a useful commentary of the circumstances under which Claimants can rely on its terms to restrain foreign proceedings via injunctive relief.  The judgment also serves as a salutary reminder to all parties in the midst of contractual negotiations to consider whether or not they wish for the Act to apply, or to be excluded.

The Underlying Dispute

The Claimants are special purpose vehicles. Manta Penyez Shipping (“Penyez”) is the registered owner of the Liberia-flagged vessel “Manta Penyez”, although Uraz Shipping Inc (“Uraz”), is the registered owner of the Marshall Islands-flagged vessel “Manta Uraz”.  Zuhoor Alsaeed Foodstuff Company (“Zuhoor”, or the Defendant) is a Yemeni company specialising in the importing of essential food commodities.  At the heart of a dispute was a voyage charterparty (the “Charterparty”), involving the charter of Manta Penyez by Penyez (as owners) and Zuhoor (as Charterers) to carry around 30,000 metric tons of wheat from Russia to Yemen.  Clause 28 of the Charterparty contained a standard London Maritime Arbitrators Association (“LMAA”) arbitration clause. 

The cargo was loaded on May 17, 2024, but a payment dispute arose, halting the vessel in Djibouti. Aston Agro Industrial SA (“Aston”, or the company which issued the bills of lading) redirected the cargo, and Penyez agreed to deliver it to Djibouti in exchange for a letter of indemnity from Aston. Zuhoor (which claimed to have paid for the cargo) demanded the return of the freight, and issued five sets of proceedings in response:

1. Djibouti Arrest Proceedings: First, Zuhoor applied to the Djibouti Court of First Instance to arrest the Manta Penyez (effectively as surety for the sum of USD 7.6 million of cargo costs). Following Defenses filed by Aston/Penyez, the arrest (which had been granted initially) was lifted – subject to a guarantee being granted in favor of Zuhoor (the “Guarantee”) with two important provisions: (i) payment to Zuhoor in the event of a binding LMAA award; and (ii) for LMAA arbitration to commence within three months and to have concluded by 2024.  Neither Claimant was party to the Guarantee.
2. Djibouti Exequatur Proceedings: Zuhoor sought the recognition and enforcement in Djibouti of a Yemeni court order it had previously obtained requiring the Manta Penyez to discharge in Yemen.
3. Yemeni Arrest Proceedings: As soon as the Manta Uraz had berthed in Yemen, Zuhoor applied to the Yemeni Court for the arrest of that vessel also (in relation to the Charterparty dispute).
4. Yemeni Substantive Proceeding: Zuhoor commenced proceedings in Yemen under the Charterparty against Manta Uraz, claiming that it had, “abstained from the implementation of the contract.” Uraz filed a defense claiming (broadly) that Zuhoor was suing the wrong party in the wrong forum, and pointing it towards the London-seated LMAA arbitration that Penyez had, by that point, commenced.
5. Yemeni Sana’s CC Proceedings: The nature of these proceedings was unclear, but they were initiated by Zuhoor against either Manta Uraz and/or Penyez.

The English Court’s Initial Response

The Claimants acted with speed, obtaining interim anti-suit injunctions from Mrs. Justice Dias on November 21, 2024 (the “Dias Order”).  The Dias Order – which specifically identified the Yemeni Arrest Proceedings and the Yemeni Substantive Proceedings – restrained Zuhoor, “from commencing or prosecuting or continuing or taking any steps in or otherwise participating in proceedings (including ship arrest proceedings) in any court or tribunal in Yemen, or in any other court or tribunal other than London-seated arbitration against the First Claimant, against the Claimants or any of them in respect of any dispute arising out of or in connection with the charterparty.” The Claimants sought to make the Dias order final and obtained the following from Stephen Houseman KC (sitting as a Deputy High Court Judge): (i) a mandatory injunction compelling Zuhoor to procure the release of the Manta Uraz from arrest; and (ii) interim prohibitory injunctions as to the three Yemeni Proceedings not previously identified in the Dias Order (the “Houseman Order”). Zuhoor did not engage, leading the Claimants to seek a final anti-suit injunction on terms of the varied Houseman Order.

Cockerill J’s Judgment

The Judge confirmed the trite English law position: that an anti-suit injunction seeking to enforce an exclusive arbitration agreement will be granted if: (A) the Claimant can demonstrate with a high degree of probability the existence of an arbitration clause to which the Defendant is party and which covers the dispute; and (B) there are no exceptional circumstances militating against grant of relief.

In connection with (A), Cockerill J. considered the Claimants’ attempted reliance on Clause 1 of the Guarantee, which (in broad summary) required Zuhoor to: (i) secure the release of the Manta Penyez from arrest and refrain from detaining any vessel in related ownership or management; and (ii) withdraw all legal proceedings in Yemen related to the vessel or the Charterparty. However the obvious fact remained that neither Claimant was party to the Guarantee, and that they had instead sought to rely on Section 1 of the Act (which, notably, had not been excluded by the Guarantee’s terms). Section 1 of the Act provided as follows:

Section (1)(a): the contract expressly provides that they may; or

Section (1)(b): Subject to (2), the term purports to confer a benefit of him.

Section (2): Section (1)(b) however does not apply if, on proper construction of the contract, it looks as if the parties did not intend for the terms to be enforceable by a third party.

Section (3): The third party must be expressly identified by name or as a member of a class (or as answering a particular description).

Cockerill noted that there is a high hurdle for establishing the existence of an express contractual covenant not to sue (especially when exercised by a third party), but accepted that the hurdle was met on the facts at hand.

• First, 1 of the Guarantee self-evidently was intended to benefit Penyez (and any related party that may otherwise be sued by Zuhoor – i.e., Uraz) by protecting them against suit in Yemen or other jurisdictions related to the Yemeni proceedings.
• Second, there was nothing in the Guarantee to suggest the parties did not intend Cl. 1 to be enforceable by Penyez and/or Uraz.
• Third, Penyez and Uraz were expressly identified in the Guarantee – the former was named in the Preamble and Uraz was indirectly identified as a class (“Vessels or Owners or the Charterparty”).
• Fourth, section 1(5) of the Act expressly recognises that third parties enforcing a contract under the 1999 Act are entitled to injunctions as if they were contracting parties.
• Fifth (and importantly), the Guarantee did not exclude the Act.
• Finally, there was no doubt that the foreign proceedings squarely fell within Clause [?] 1 of the Guarantee.

Once this had been determined, the only thing to consider was (B) – i.e., whether there were any strong reasons militating against the injunction, to which Cockerill J. answered in the negative.  Among other reasons, there had been no delay on the Claimants’ part, and neither had submitted to the jurisdictions of Yemen or Djibouti.

Cockerill J. also accepted (although this was not determinative in her decision) that the Claimants could have applied for ASI on an alternative basis of the Charterparty and its arbitration clause, which provided for “any dispute arising out of” it to be referred to London-seated arbitration under the terms of the LMAA. The Judge accepted that this applied to Yemeni and Djiboutian proceedings, and noted that it was trite law that where a party seeks to obtain relief under or in relation to a contract from a non-contracting party in a non-contractual forum, that party ought to be restrained from doing so by an ASI (per The Sea Premium: 11 April 2001, unreported, among others).  The Judge noted that although Uraz was not a party to the Charterparty, there was no doubt that the Yemeni Substantive Proceedings commenced against it involved the seeking of relief that was under or in connection with the Charterparty – and that, in any event, Zuhoor’s conduct in going behind the Charterparty’s arbitration agreement was inequitable, oppressive and vexatious (as were the other proceedings, by which Zuhoor effectively attempted to be double-secured in respect of the Charterparty dispute).

Cockerill accordingly varied the Houseman Order on the terms applied for by the Claimants (i.e., so as to expressly identify proceedings in Djibouti), and granted the Claimants’ costs on an indemnity basis.