Tag Archive for: anti-suit injunction

The New Zealand Supreme Court’s judgment in Kea Investments Ltd v Wikeley on anti-enforcement relief

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In Kea Investments Ltd v Wikeley [2026] NZSC 97, the New Zealand Supreme Court recently delivered its reasons for reinstating world-wide anti-enforcement orders in relation to a fraudulently obtained default judgment from Kentucky. The judgment, given by Kós J, contains a useful analysis of the principles on anti-suit and anti-enforcement injunctions and offers guidance on the interrelationship between fraud and comity.

The background to the case is set out in previous posts (here, here and here). In summary, Kea Investments Ltd (Kea), a British Virgin Islands company, alleged that the default judgment obtained by Wikeley Family Trustee Ltd (WFTL), a New Zealand company, was based on fabricated claims intended to defraud Kea. The New Zealand High Court found that the defendants had perpetrated a tortious conspiracy. The Court of Appeal upheld the findings of fraud but allowed an appeal against the grant of the injunction, concluding that an injunction could only be granted as a step of last resort, which required Kea to pursue its right of appeal against the Kentucky judgment.

It was not in issue before the Supreme Court that the claim in the Kentucky court formed part of a conspiracy to defraud Kea (at [102]). It was also not in issue that New Zealand was the proper jurisdiction to deal with the claim of fraud (at [102]). In these circumstances, the Court found that comity did not stand in the way of anti-enforcement relief.

 

Relevant principles

The Court considered that the in personam nature of anti-suit and anti-enforcement injunctions remains “fundamental”, even though “the jurisdictional conflict” that arises “may indirectly impinge on the freedoms of the foreign jurisdiction” (at [105]).  The Court also confirmed that the grant of such an injunction “tends to depend on there being something wrongful”, which could be “unconscionable (or vexatious or oppressive) litigation in the foreign state”, such as a fraudulent proceeding, or “the disregard of a right in contract not to be sued in the foreign state” (at [107]).

Turning to anti-enforcement injunctions more specifically, the Court did not think it was helpful to say that they “should only be granted in ‘exceptional circumstances’”, although it would be “a rare case that the conditions for their grant will be met” (at [108], adopting the language of Males LJ in SAS Institute Inc v World Programming Ltd [2020] EWCA Civ 599, [2020] 1 CLC 816). Citing Adrian Briggs (Civil Jurisdiction and Judgments (8th ed, Routledge, Oxford, 2025) at 463), the Court noted that the enforcement of a judgment that has been wrongfully obtained “aggravates the original wrong” (at [108]).  However, an applicant would have to be able to explain why there had been no earlier application for an anti-suit injunction; and where the anti-enforcement injunction seeks to prevent enforcement in the country in which the judgment was given, “comity may demand particular restraint” (at [109]).

The Court described comity as “the need for domestic courts to respect the legitimate exercise of jurisdiction by the courts of a foreign state” (at [10], [113], citing Maria Hook and Jack Wass The Conflict of Laws in New Zealand (LexisNexis, Wellington, 2020) at [1.29]). It accepted that “comity is a consideration necessitating caution in making anti-suit or anti-enforcement injunctions that cut across the authority of a foreign court acting within its legitimate jurisdiction” (at [116]). However, comity had “a measure of elasticity”; it did not “entail blind deference” (at [116]).

Crucially, the Court considered that fraud “reframes ordinary comity considerations” (at [117]). First, fraud is a “paradigm” case of vexatious and oppressive conduct that justifies an injunction if the fraudster is in the court’s jurisdiction (Ellerman Lines Ltd v Read [1928] 2 KB 144 (CA)) (at [117], [118]-[128]). Second, there is “a mutual interest in both courts to act quickly and effectively to restrain such conduct”. In fact, the Court went so far as to say that “[r]espect by the foreign court for the domestic court’s anti-fraud orders may reasonably be expected” (at [117], [128]-[130]).

Finally, there was no requirement that an applicant exhausts local remedies in the foreign court before applying for an injunction (at [134]). In this sense, anti-suit or anti-enforcement injunctions are not a “measure of last resort”, as the Court of Appeal had considered. The Court accepted counsel’s submission that “the idea that the New Zealand courts should wait and see whether the Kentucky courts do the ‘correct’ thing is ‘not only invidious but the reverse of comity’” (at [134]).

 

This case

Kea was “that rare case” where direct evidence of fraud justified the grant of anti-enforcement relief (at [120]). According to the Supreme Court, the fraud “[set] out to make a fool of both jurisdictions” (at [127]):

One court exerts jurisdiction upon a wholly false premise— both as to jurisdiction and obligations; the other—despite being the proper forum to address the fraud—is then counselled to act with restraint out of a need for comity for the first court.

The courts that were invoked in this case had “a mutual interest in stifling cross-border fraud of this kind”, and their international cooperation was consistent with a commitment to the rule of law (at [128]). From this perspective, the High Court’s anti-enforcement orders “enhance, rather than erode, comity” (at [128]). Expert evidence of US law confirmed that an injunction to stop the continued perpetration of a fraud would be consistent with US notions of comity (at [129]).

The fact that WFTL had been placed in protective interim liquidation also reframed the comity considerations in the case (at [131]). WFTL was controlled by the liquidators, who were subject to the High Court’s personal jurisdiction. An order “requiring them to seek discharge of the default judgment … ought to be within the remedies that Court ought to be able to exercise” (at [132]). The liquidators recognised “that they cannot take any responsible or lawful action other than to have the default judgment discharged” (at [131]) but the orders were still necessary to allow the liquidators to fulfil their duties (at [132], [136]). In these circumstances, the injunctions were “consistent with protecting the Court’s processes and officers” (at [133]).

The Court concluded that the anti-enforcement orders were not only justified but also necessary (at [136]): “If not in this case, then when? If not by the New Zealand High Court, then by whom?” The level of fraud in this case was such that “even requiring a party to apply for a stay or dismissal in the foreign court would be unjust” (at [135], citing Thomas Raphael The Anti-Suit Injunction (2nd ed, Oxford University Press, Oxford, 2019) at [5.45]). The proceedings in the Kentucky courts were “a core operative element of the fraud” (at [135]). If the High Court had not made the interim orders in this case, “control of WFTL, and with it the default judgment … would by now have passed well beyond the New Zealand jurisdiction” (at [135]); the “status quo for both jurisdictions would soon have shifted as part of this swirling, evolving fraudulent enterprise” (at [136]).

 

Comment

The existence of the fraud was not in issue, and neither was the High Court’s conclusion that it had jurisdiction – and that it was the appropriate forum – to determine the claim for fraudulent conspiracy. But the Supreme Court made it clear that the High Court’s approach to jurisdiction, at a time when the existence of fraud was “a strongly arguable possibility”, was “entirely correct” (at [103]). The alleged fraudster was in New Zealand, which made it appropriate for the New Zealand court to become involved, culminating in the grant of anti-enforcement relief once the question of fraud had been finally determined.

Why is it appropriate for a New Zealand court to decide on the right- or wrongfulness of proceedings in a foreign court (see here)? Should such decisions not fall exclusively within the foreign court’s jurisdiction? The Kentucky court in this case had taken the position, at first instance, that the default judgment should stand.

The Supreme Court acknowledged that anti-suit and anti-enforcement injunctions “cut across the authority of a foreign court acting within its legitimate jurisdiction” (at [116]). But in the case of fraudulent proceedings, the fraudster’s jurisdiction, too, is connected to the fraud and has a responsibility to stop it. In fact, comity here requires cooperation to stop the fraud, and within this framing of cooperation, questions about the courts’ relative jurisdictional authority do not arise. If anything, it is the foreign court, the court that entertained the fraudulent proceedings, that may be thought to be interfering with comity if it denies the importance of combatting fraud (see [117]).

While the Court of Appeal had been sceptical of the legitimacy of anti-suit and anti-enforcement injunctions, the Supreme Court recognised them as valid and established tools of the conflict of laws. It pointed to the history of anti-suit and anti-enforcement injunctions as originating in the courts of equity, which granted injunctions to restrain proceedings in the common law courts, to explain why they are “very much a creature of the Anglo-American common law” (at [104], referring to Martin Davies and others Nygh’s Conflict of Laws in Australia (11th ed, LexisNexis, Sydney, 2026) at [9.2]). At the same time, the Supreme Court’s thoughtful analysis of the relationship between fraud and comity may inspire New Zealand courts to tread carefully in future cases. If anti-suit and anti-enforcement injunctions “cut across the authority of a foreign court acting within its legitimate jurisdiction”, there needs to be a convincing reason on the facts of a particular case why they are not, in fact, an undue interference with comity.

 

Report on the 2025 Journal of Equity Conference – Equity, Trusts and Private International Law

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On 21 August 2025, the UNSW School of Private and Commercial Law, the Journal of Equity and Allens jointly hosted the 2025 Journal of Equity Conference. This year’s one-day Conference focused on important questions at the intersection of equity, trusts and private international law. It featured four papers delivered by judges and scholars, each of which was followed by ample time for insightful questions and discussion among over 30 judges, lawyers and scholars attending the office of Allens in (rainy) Sydney.

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Anti-Suit Injunctions and Dispute Resolution Clauses

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By Adeline Chong, Singapore Management University

  1. Introduction

In two decisions decided within a fortnight of each other, the Singapore Court of Appeal considered anti-suit injunctions pursued to restrain proceedings allegedly brought in breach of arbitration agreements. The first case, Asiana Airlines, Inc v Gate Gourmet Korea Co, Ltd (‘Asiana Airlines’)[1] dealt with whether A could rely on an arbitration agreement between A and B to restrain B’s proceedings against C, a third party. The second case, COSCO Shipping Specialized Carriers Co, Ltd v PT OKI Pulp & Paper Mills (‘COSCO Shipping’)[2] considered whether an arbitration agreement covered a tortious claim. To put it in another way, Asiana Airlines mainly concerned the ‘party scope’ of an arbitration agreement while COSCO Shipping concerned the ‘subject matter’ scope of an arbitration agreement.[3] Where the anti-suit application is to restrain foreign proceedings brought in breach of an arbitration or choice of court agreement, ordinarily it would be granted unless ‘strong cause’ is shown by the respondent.[4] This provides an easier path for the anti-suit claimant compared to the alternative requirement of establishing that the foreign proceedings are vexatious or oppressive in nature. Read more

Toothless vs. Shark-Teeth: How Anti-Suit Injunctions and Anti-Anti-Suit Orders Collide in the UniCredit Saga

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by Faidon Varesis, University of Cambridge

Background

The dispute in the UniCredit v. RusChem saga arose from bonds issued by UniCredit to guarantee performance under contracts for Russian construction projects, where RusChem, after terminating the contracts due to EU sanctions, initiated Russian proceedings for payment in breach of an English-law governed arbitration agreement that mandates resolution in Paris under ICC rules.

UniCredit sought an anti-suit injunction in the UK to stop these Russian proceedings, arguing that the arbitration clause must be enforced under English law. Teare J at first instance held that the English court lacked jurisdiction—finding that the arbitration agreements were governed by French substantive rules and that England was not the appropriate forum—whereas the Court of Appeal reversed this decision by granting a final anti-suit injunction requiring RCA to terminate its Russian proceedings.

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New Zealand Court of Appeal allows appeal against anti-enforcement injunction

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Introduction

The New Zealand Court of Appeal has allowed an appeal against a permanent anti-suit and anti-enforcement injunction in relation to a default judgment from Kentucky, which the plaintiff alleged had been obtained by fraud: Wikeley v Kea Investments Ltd [2024] NZCA 609. The Court upheld the findings of fraud. It also did not rule out the possibility of an injunction being an appropriate remedy in the future. However, the Court concluded that an injunction could only be granted as a step of last resort, which required the plaintiff to pursue its right of appeal against the Kentucky judgment.

The background to the case is set out in a previous post on this blog (see also here). In summary, the case involved allegations of “a massive worldwide fraud” perpetrated by the defendants — a New Zealand company (Wikeley Family Trustee Ltd), an Australian resident with a long business history in New Zealand (Mr Kenneth Wikeley), and a New Zealand citizen (Mr Eric Watson) — against the plaintiff, Kea Investments Ltd (Kea), a British Virgin Islands company owned by a New Zealand businessman. Kea alleged that the US default judgment obtained by WFTL was based on fabricated claims intended to defraud Kea. Kea claimed tortious conspiracy and sought a world-wide anti-enforcement injunction, which was granted by the High Court, first on an interim and then on a permanent basis. Wikeley, the sole director and shareholder of WFTL, appealed to the Court of Appeal.

The Court of Appeal allowed the appeal against the grant of the injunction. At the same time, it upheld the High Court’s declarations that the Kentucky default judgment was obtained by fraud and that it was not entitled to recognition or enforcement in New Zealand. It also upheld the High Court’s damages award (for legal costs incurred in overseas proceedings in defence of the tortious conspiracy). Read more

An anti-suit injunction in support of an arbitration agreement in light of the EU Sanction against Russia

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By Poomintr Sooksripaisarnkit, Lecturer in Maritime Law, Australian Maritime College, College of Sciences and Engineering, University of Tasmania

On 24th September 2024, Mimmie Chan J handed down the judgment of the Court of First Instance of the High Court of the Hong Kong Special Administrative Region in Bank A v Bank B [2024] HKCFI 2529. In this case, the Plaintiff (Bank A) with its base of operation in Germany was under the supervision of the German Federal Financial Supervisory Authority (BaFin). Its majority shareholder was the Defendant (Bank B) who held 99.39% shares. In turn, the Defendant was a Russian bank whose majority shareholder was the Government of the Russian Federation.

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No role for anti-suit injunctions under the TTPA to enforce exclusive jurisdiction agreements

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Australian and New Zealand courts have developed a practice of managing trans-Tasman proceedings in a way that recognises the close relationship between the countries, and that aids in the effective and efficient resolution of cross-border disputes. This has been the case especially since the implementation of the Agreement on Trans-Tasman Court Proceedings and Regulatory Enforcement, which was entered into for the purposes of setting up an integrated scheme of civil jurisdiction and judgments.  A key feature of the scheme is that it seeks to “streamline the process for resolving civil proceedings with a trans-Tasman element in order to reduce costs and improve efficiency” (Trans-Tasman Proceedings Act 2010 (TTPA), s 3(1)(a)). There have been many examples of Australian and New Zealand courts working to achieve this goal.

Despite the closeness of the trans-Tasman relationship, one question that had remained uncertain was whether the TTPA regime allows for the grant of an anti-suit injunction to stop or prevent proceedings that have been brought in breach of an exclusive jurisdiction agreement. The enforcement of exclusive jurisdiction agreements is explicitly protected in the regime, which adopted the approach of the Hague Convention on Choice of Court Agreements in anticipation of Australia and New Zealand signing up to the Convention. Section 28 of the Trans-Tasman Proceedings Act 2010 (NZ) and s 22 of the Trans-Tasman Proceedings Act 2010 (Cth) provide that a court must not restrain a person from commencing or continuing a civil proceeding across the Tasman “on the grounds that [the other court] is not the appropriate forum for the proceeding”. In the secondary literature, different opinions have been expressed whether this provision extends to injunctions on the grounds that the other court is not the appropriate forum due to the existence of an exclusive jurisdiction agreement: see Mary Keyes “Jurisdiction Clauses in New Zealand Law” (2019) 50 VUWLR 631 at 633-4; Maria Hook and Jack Wass The Conflict of Laws in New Zealand (LexisNexis, 2020) at [2.445].

The New Zealand High Court has now decided that, in its view, there is no place for anti-suit injunctions under the TTPA regime: A-Ward Ltd v Raw Metal Corp Pty Ltd [2024] NZHC 736 at [4]. Justice O’Gorman reasoned that the TTPA involves New Zealand and Australian courts applying “mirror provisions to determine forum disputes, based on confidence in each other’s judicial institutions” (at [4]), and that anti-suit injunctions can have “no role to play where countries have agreed on judicial cooperation in the allocation and exercise of jurisdiction” (at [17]).

A-Ward Ltd, a New Zealand company, sought an interim anti-suit injunction to stop proceedings brought against it by Raw Metal Corp Pty Ltd, an Australian company, in the Federal Court of Australia. The dispute related to the supply of shipping container tilters from A-Ward to Raw Metal. A-Ward’s terms and conditions had included an exclusive jurisdiction clause selecting the courts of New Zealand, as well as a New Zealand choice of law clause. In its Australian proceedings, Raw Metal sought damages for misleading and deceptive conduct in breach of the Competition and Consumer Act 2010 (Cth) (CCA). A-Ward brought proceedings in New Zealand seeking damages for breach of its trade terms, including the jurisdiction clause, as well as an anti-suit injunction.

O’Gorman J’s starting point was to identify the different common law tests that courts had applied when determining an application to the court to stay its own proceedings, based on the existence (or not) of an exclusive jurisdiction clause. While Spiliada principles applied in the absence of such a clause, The Eleftheria provided the relevant test to determine the enforceability of an exclusive jurisdiction clause: at [16]. The alternative to a stay was to seek an anti-suit injunction, which, however, was a controversial tool, because of its potential to “interfere unduly with a foreign court controlling its own processes” (at [17]).

Having set out the competing views in the secondary literature, the Court concluded that anti-suit injunctions were not available to enforce jurisdiction agreements otherwise falling within the scope of the TTPA, based on the following reason (at [34]):

  1. The term “appropriate forum” in ss 28 (NZ) and s 22 (Aus) of the respective Acts could not, “as a matter of reasonable interpretation”, be restricted to questions of appropriate forum in the absence of an exclusive jurisdiction agreement. This was not how the term had been used in the common law (see The Eleftheria).
  2. The structure of the TTPA regime reinforced this point, because it is on an application under s 22 (NZ)/ s 17 (Aus), for a stay of proceedings on the basis that the other court is the more appropriate forum, that a court must give effect to an exclusive jurisdiction agreement under s 25 (NZ)/ s 20 (Aus).
  3. Sections 25 (NZ) and 20 (Aus) already provided strong protection to exclusive choice of court agreements, and introducing additional protection by way of anti-suit relief “would only create uncertainty, inefficiency, and the risk of inconsistency, all of which the TTPA regime was designed to avoid”.
  4. The availability of anti-suit relief would “rest on the assumption that the courts in each jurisdiction might reach a different result, giving a parochial advantage”. This, however, would be “inconsistent with the entire basis for the TTPA regime – that the courts apply the same codified tests and place confidence in each other’s judicial institutions”.
  5. Australian case law (Great Southern Loans v Locator Group [2005] NSWSC 438), to the effect that anti-suit injunctions continue to be available domestically as between Australian courts, was distinguishable because there was no express provision for exclusive choice of court agreements, which is what “makes a potentially conflicting common law test unpalatable”.
  6. Retaining anti-suit injunctions to enforce exclusive jurisdiction agreements would be inconsistent with the concern underpinning s 28 (NZ)/ s 22 (Aus) about “someone trying to circumvent the trans-Tasman regime as a whole”.
  7. The availability of anti-suit relief would defeat the purpose of the scheme to prevent duplication of proceedings.
  8. More generally, anti-suit injunctions “have no role to play where countries have agreed on judicial cooperation in the allocation and exercise of jurisdiction”.

The Court further concluded that, even if the TTPA did not exclude the power to order an anti-suit injunction, there was no basis for doing so in this case in relation to Raw Metal’s claim under the CCA (at [35]). There was “nothing invalid or unconscionable about Australia’s policy choice” to prevent parties from contracting out of their obligations under the CCA, even though New Zealand law (in the form of the Fair Trading Act 1986) might now follow a different policy. The TTPA regime included exceptions to the enforcement of exclusive jurisdiction agreements. Here, A-Ward seemed to have anticipated that, from the perspective of the Australian court, enforcement of the New Zealand jurisdiction clause would have fallen within one of these exceptions, and the High Court of Australia’s observations in Karpik v Carnival plc [2023] HCA 39 at [40] seemed to be consistent with this. The “entirely orthodox position” seemed to be that the Federal Court in Australia “would regard itself as having jurisdiction to determine the CCA claim, unconstrained by the choice of law and court” (at [35]).

Time will tell whether Australian courts will agree with the High Court’s emphatic rejection of anti-suit relief under the TTPA as being inconsistent with the cooperative purpose of the scheme. The parallel debate within the context of the Hague Choice of Court Convention – which does not specifically exclude anti-suit injunctions – may be instructive here: Mukarrum Ahmed “Exclusive choice of court agreements: some issues on the Hague Convention on choice of court agreements and its relationship with the Brussels I recast especially anti-suit injunctions, concurrent proceedings and the implications of BREXIT” (2017) 13 Journal of Private International Law 386. Despite O’Gorman J’s powerful reasoning, her judgment may not be the last word on this important issue.

From a New Zealand perspective, the judgment is also of interest because of its restrained approach to the availability of anti-suit relief more generally. Even assuming that the Australian proceedings were, in fact, in breach of the New Zealand jurisdiction clause, O’Gorman J would not have been prepared to grant an injunction as a matter of course. In this respect, the judgment may be seen as a departure from previous case law. In Maritime Mutual Insurance Association (NZ) Ltd v Silica Sandport Inc [2023] NZHC 793, for example, the Court granted an anti-suit injunction to compel compliance with an arbitration agreement, without inquiring into the foreign court’s perspective and its reasons for taking jurisdiction. O’Gorman J’s more nuanced approach is to be welcomed (for criticism of Maritime Mutual, see here on The Conflict of Laws in New Zealand blog).

A more challenging aspect of the judgment is the choice of law analysis, and the Court’s focus on the potential concurrent or cumulative application of foreign and domestic statutes (at [28]-[31], [35]). The Court said that, to determine whether a foreign statute is applicable, the New Zealand court can ask whether the statute applies on its own terms (following Chief Executive of the Department of Corrections v Fujitsu New Zealand Ltd [2023] NZHC 3598, which I criticised here on The Conflict of Laws in New Zealand blog, also published as [2024] NZLJ 22). It is not entirely clear how this point was relevant to the issue of the anti-suit injunction. The Judge’s reasoning seemed to be that, from the New Zealand court’s perspective, the Australian court’s application of the CCA was appropriate as a matter of statutory interpretation and/or choice of law, which meant that the proceedings were not unconscionable or unjust (at [35]).

The jurisdictional hurdles of s 26 of the Trans-Tasman Proceedings Act 2010 (Cth), in the context of interim anti-enforcement relief in aid of New Zealand proceedings

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The New Zealand High Court recently granted a permanent anti-enforcement injunction in relation to a default judgment from Kentucky in Kea Investments Ltd v Wikeley Family Trustee Limited [2023] NZHC 3260. The plaintiff, a British Virgin Islands company, claimed that the defendants had committed a tortious conspiracy against it because the Kentucky default judgment was based on fabricated claims intended to defraud it. The defendants were a New Zealand company, Wikeley Family Trustee Ltd (WFTL), and persons associated with the company.

In an undefended judgment, the High Court granted the injunction, awarded damages for the costs incurred in the foreign proceedings (referring to cases such as Union Discount Co Ltd v Zoller [2001] EWCA Civ 1755, [2002] 1 WLR 1517 by analogy), and issued a declaration that the Kentucky judgment would not be recognised or enforceable in New Zealand. As noted previously on this blog (see here), the case is an interesting example of “the fraud exception to the principles of comity” (Kea Investments Ltd v Wikeley (No 2) [2023] QSC 215 at [192]).

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Anti-Suit Injunction Issued in China: Comity, Pragmatism and Rule of Law

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1 Anti-suit Injunctions issued in Huawei v Conversant and Xiaomi v Intel Digital

Chinese courts have issued two anti-suit injunctions recently in cross-border patent cases. The first is the Supreme Court’s ruling in Huawei v Conversant, (2019) Zui Gao Fa Zhi Min Zhong 732, 733 and 734 No 1. (here) Huawei, a Chinese telecom giant brought an action on 25 Jan 2018 in Jiangsu Nanjing Intermediate Court requiring determination of FRAND royalty for all Chinese patents held by Conversant that is essential to 2G, 3G and 4G standard (standard essential patent or ‘SEP’). Conversant brought another action in Düsseldorf, Germany on 20 April 2018 claiming Huawei infringed its German patents of the same patent family. On 16 Sept 2019, the Chinese court ordered a relatively low rate pursuant to Chinese standard and Conversant appealed to the Supreme Court on 18 Nov 2019. On 27 Aug 2020, the German Court held Huawei liable and approved the FRAND fee proposed by Conversant, which is 18.3 times of the rate determined by the Chinese court. Pursuant to Huawei’s application, the Chinese Supreme Court restrained Conversant from applying the German court to enforce the German judgment. The reasons include: the enforcement of the Düsseldorf judgment would have a negative impact on the case pending in Chinese court; an injunction is necessary to prevent irreparable harm to Huawei; the damage to Conversant by granting the injunction is significantly smaller than the damage to Huawei if not granting injunction; injunction will not harm public interest or international comity.

On 9 June 2020, Chinese company Xiaomi brought the proceedings in the Wuhan Intermediate Court requesting the determination of the global FRAND rate for SEPs held by the US company, Inter Digital. On 29 July, Intel Digital sued Xiaomi in Delhi High Court in India for infringement of Indian patents of the same patent family and asking for injunction. The Wuhan Intermediate Court ordered Inter Digital to stop the injunction application in India and prohibited Intel Digital from applying injunctions, applying for the determination of FRAND rate or enforcing junctions already received in any countries. (Xiaomi v Intel Digital (2020) E 01 Zhi Min Chu 169 No 1) The court provides reasons as follows: Inter Digital intentionally brought a conflicting action in India to hamper the Chinese proceedings; the Indian proceedings may lead to judgments irreconcilable to the Chinese one; an anti-suit injunction is necessary to prevent irreparable harm to Xiaomi’s interests; an anti-suit injunction will not harm Intel Digital’s legitimate interests or public interests.

2 Innovative Judicial ‘Law Making’ to Transplant Foreign Law

These two cases are interesting in that they open the door for the courts to ‘make law’ by providing Chinese legislation innovative interpretation. Chinese law does not explicitly permit the courts to issue anti-suit or anti-arbitration injunctions. Article 100 of the Civil Procedure Law of China permits Chinese courts to order or prohibit the respondent to do, or from doing, certain actions, if the respondent’s behaviour may lead to the difficulty to enforce the judgment or cause other damages to the other party. But this act preservation provision was generally used only in the preservation of property, injunction of infringing actions, or other circumstances where the respondent’s action may directly cause substantive harm to the applicant’s personal or proprietary rights. It was never applied as the equivalent to anti-suit injunctions. The ‘Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law in Cases Involving the Review of Act Preservation in Intellectual Property Disputes’ (No. 21 [2018] of the Supreme People’s Court) enforced from 1 Jan 2019 did not mention the court’s competence to issue anti-suit injunction. These two judgments provide innovative interpretation to Art 100 by extending act preservation measures to cover anti-suit injunction.

It is important to note that anti-suit injunction is a controversial instrument used to combat the conflict of jurisdiction and forum shopping. It is not issued frequently or lightly. Instead, there is a high threshold to cross. In England, for example, an anti-suit injunction can be ordered only if the foreign proceedings are vexatious or oppressive and England is the natural forum, (Airbus Industrie GIE v Patel [1999] AC 119) or the foreign proceedings would breach a valid exclusive jurisdiction or arbitration clause between the parties. (The “Angelic Grace”, [1995] 1 Lloyd’s Rep. 87) In both cases, neither courts justify China is a natural forum. Such justification may be more difficult in disputes concerning foreign patent due to the territoriality of patent.  Furthermore, foreign proceedings are not oppressive just because they award higher rate to the parent holder, which is not properly handled either by the Chinese judgments. In the US, anti-suit injunction requires the parties and issues in foreign proceedings are ‘the same’ as the local ones. (E. & J. Gallo Winery v. Andina Licores SA, 446 F. 3d 984 (Court of Appeals, 9th Circuit 2006)) This barrier is difficult to lift in disputes concerning infringement of national patents in the same family. In FRAND cases, the court usually relies on the ‘contractual umbrella over the patent’ to avoid the difficulty brought by the territoriality of patent. (Huawei v Samsung, Case No. 3:16-cv-02787-WHO) Even if a contractual approach is adopted, the court still needs to ascertain the foreign litigation may frustrate a local policy, would be vexatious or oppressive, would threaten the U.S. court’s in rem jurisdiction, or would prejudice other equitable considerations. (Zapata Off-Shore Company v. Unterweser Reederei GMBH, 428 F.2d 888 (United States Court of Appeals, Fifth Circuit, 1970))

The Chinese judgments show clear sign of borrowing the common law tests. In particular, the Huawei v Conversant judgment has high similarity with Huawei v Samsung judgment rendered by the California Northern District Court. The problem is the enjoined Düsseldorf judgment awarded FRAND rate instead of an unconditional injunction like the Shenzhen judgment. While enforcing a permanent injunction in the biggest market of Samsung may lead to a forced settlement which would make the US proceedings unnecessary or redundant, enforcing the court determined FRAND rate covering only one state may not have the same effect on the Chinese proceedings. In particular, due to different standards to calculate the FRAND rate, a higher rate covering the German market is not oppressive and would not result in a forced settlement for Chinese FRAND rate. The Wuhan judgment focuses on the vexatious foreign proceedings brought in bad faith and abuse of process. The Wuhan court considers the Indian proceedings was brought to frustrate the pending proceedings before the Wuhan court. The judgment seems to follow the English trait. However, the court did not fully explain how an action purely covering Indian patents and concerning Indian market would affect the Chinese proceedings based on contract. It is also unclear whether Chinese court could award a global FRAND rate as the English court will do. Although in contrast to many other judgments, these two judgments show reasonable quality and laudable efforts of reasoning, reading in details may suggest the courts have learnt more in form instead of substance. The judicial transplant of very unfamiliar common law instruments into Chinese practice seems a little awkward and immature.

3 Comity, Pragmatism and Rule of Law

Anti-suit injunction is a controversial instrument in that it may infringe foreign judicial sovereignty and comity. Even if it is technically directed to the respondent not a foreign court, it makes judgment on the appropriateness of foreign proceedings, which, in normal circumstances, should be judged by the foreign court. No matter how indirect the interference is, an interference is there. Such an approach is fundamentally incompatible with Chinese jurisprudence and diplomatic policy, which emphasise on the principle of sovereign equality and non-interference. China usually considers parallel proceedings tolerable which concern the judicial sovereignty of two countries and each could continue jurisdiction pursuant to their domestic law. (Art 533 of Civil Procedural Law Judicial Interpretation by SPC) Adopting anti-suit injunction to tackle foreign parallel proceedings or related proceedings directly contradicts this provision.

Since Chinese courts would not deviate from the central government’s policy, the two judgments may be a sign to show China is gradually adjusting its international policy from self-restraint to zealous competition, at least in the high-tech area. This is consistent with China’s strategic plan to develop its high-tech industry and a series of reform is adopted to improve IP adjudication. It may imply consideration of diffused reciprocity, i.e. since some foreign courts may issue anti-suit injunction to obstruct Chinese proceedings, Chinese courts should have the same power. It may also reflects China’s increased confidence on its institutions led by its economic power. The transplant of anti-suit injunction cannot be deemed as admiring foreign law, but a pragmatic approach to use any tools available to achieve their aims. Since anti-suit injunctions may interfere a state’s sovereignty, a foreign state may issue ‘anti-anti-suit injunction’ to block it. While injunction wars occur in high-tech cases, the final trump card should be a country’s economic power. Since China is the biggest market for many telecom products, it would be the last market that most companies would give up, which would provide Chinese courts a privilege.

Finally, since anti-suit injunction is not included explicitly in Chinese law, there is no consistent test applying to it. The two judgments have applied different tests following the practice from different common law countries. It is also noted that the lack of relevant training in exercise discretion in issuing anti-suit injunctions or applying precedents leads to uncertainty and some discrepancy. Issuing anti-suit injunction is serious in that it may affect comity and international relation. It thus cannot be adopted randomly or flexibly by mirroring one or two foreign judgments. If China indeed wants to adopt anti-suit injunction, a test guidance should be provided. Anti-suit injunction needs to be issued under the rule of law.