Background
Trafigura agreed to sell gasoil and gasoline to Société Nationale de Raffinage (SONARA), Cameroon’s majority state-owned refinery. Their English-law sale contract required half of each cargo’s price to be paid through an irrevocable letter of credit without deduction, set-off, or counterclaim. It also assigned disputes to the exclusive jurisdiction of the High Court in London, while permitting arrest, attachment, and other conservatory, interlocutory, or interim actions in any court.
SONARA rejected the gasoline cargo on quality grounds after conflicting test results. It then commenced proceedings in Limbe, Cameroon, seeking to stop the issuing bank from paying Trafigura under the letter of credit. Trafigura obtained an interim English anti-suit injunction, but SONARA maintained the Limbe proceedings even after the confirming bank paid Trafigura approximately €6.49 million. SONARA later filed a request to discontinue the Cameroonian case and accepted that its substantive quality claim belonged in the English High Court.
The Court’s Holding
Mr Justice Michael Green granted Trafigura final anti-suit relief. The court concluded to the required high degree of probability that SONARA’s commencement and continuation of the Limbe proceedings breached the sale contract’s exclusive English-jurisdiction clause.
The contractual exception for arrest, attachment, and other conservatory, interlocutory, or interim actions did not permit SONARA to invoke a foreign court to obstruct the agreed letter-of-credit payment mechanism. Read in context, the exception concerned protective measures supporting a dispute to be resolved in the agreed forum; it did not authorize proceedings that interfered with the contract’s allocation of payment risk and its “pay now, argue later” structure.
Final relief remained justified although payment had occurred and SONARA said it would discontinue the Limbe case. The proceedings had not yet been terminated, and the court was concerned by SONARA’s prolonged refusal to withdraw them and by evidence that it had sought substantive argument in Cameroon while the interim injunction remained in force.
Key Takeaways
- An English court will ordinarily restrain foreign proceedings brought in breach of an exclusive English-jurisdiction agreement unless the respondent establishes a strong reason not to do so.
- A clause allowing foreign conservatory or interim measures does not necessarily cover proceedings intended to suspend payment under an irrevocable letter of credit.
- A stated intention to discontinue foreign proceedings may not defeat final anti-suit relief when discontinuance is incomplete and the parties’ conduct shows that an injunction remains necessary.
Why It Matters
The judgment reinforces the autonomy of documentary credits and the commercial allocation of risk embodied in a “pay now, argue later” arrangement. A buyer generally cannot use proceedings outside the contractually selected forum to prevent payment merely because it disputes performance of the underlying sale contract.
It also shows that courts construe exceptions to exclusive-jurisdiction clauses in their contractual setting. Language preserving access to interim relief abroad may protect assets or secure a future judgment, but it does not automatically permit foreign litigation that undermines the parties’ substantive bargain.