From Security to Sword
Enforcing Negative Covenants in Bank Guarantees via Anti-Suit Injunctions

While Anti-Suit Injunctions are traditionally sought by contracting parties to an exclusive English jurisdiction or arbitration agreement, the protection can extend much further. This article examines how the Contracts (Rights of Third Parties) Act 1999 allows shipowners to enforce negative covenants in ancillary security documents—such as Bank Guarantees—to restrain foreign proceedings. The recent Commercial Court decision in Manta Penyez v Zuhoor [2025] EWHC 353 (Comm) serves as an illustrative example of utilising this statutory route, alongside the “vexatious and oppressive” jurisdiction, to protect associated vessels from multi-jurisdictional attacks.

Three routes to ASI

There are three routes to an Anti-Suit Injunction (“ASI”).

First, the contractual route, where parties have exclusively agreed to submit to the English jurisdiction or arbitration, but one of them, in breach of the agreement, commences proceedings in another jurisdiction. In such cases, the court will order an ASI as a matter of course unless there are exceptional circumstances militating against the ASI, as long as the application is made promptly and the existence of the agreement is proved to a high degree of probability: The Angelic Grace [1995] 1 Lloyd’s Rep 87 and The SVS Cochrane [2021] EWHC 33 (Comm). This is essentially a specific enforcement of the agreement by the injunction.

Second, an extension to the contractual route by the Contracts (Rights of Third Parties) Act 1999 route (“1999 Act route”), where parties to a contract agreed the exclusive English jurisdiction or arbitration, but one of them sues a related third-party in a foreign jurisdiction. If the contract intended to confer a benefit on the third-party, s 1 of the 1999 Act allows him to enforce it. This includes enforcement by an ASI against the foreign proceedings.

Third, the “vexatious and oppressive” route. This is a non-contractual route, where there is no contract between the parties nor is the applicant entitled to the 1999 Act route. However, the foreign proceedings against him or some related persons are vexatious or oppressive. It is harder to define the boundaries of this route compared to the other two routes. This route has an inherent flexibility and discretion, and requires a broader and multifactorial analysis: JP Morgan International Finance Ltd v Werealize.Com Ltd; Karonis and others v JP Morgan International Finance Ltd [2025] EWHC 1842 (Comm).

Manta Penyez case: The 1999 Act and “Vexatious and Oppressive” Routes

Background Facts: The case of Manta Penyez Shipping Inc & Uraz Shipping Inc v Zuhoor Alsaeed Foodstuff Company [2025] EWHC 353 (Comm) neatly illustrates both the 1999 Act route and the vexatious and oppressive route in a complex admiralty environment.

In this case, Manta Penyez Shipping, the owners of the vessel, The “MANTA PENYEZ”, chartered her to Zuhoor for a voyage carrying wheat. The charterparty included a standard LMAA arbitration clause. The bill of lading was issued to the seller of the cargo, Aston. While en route, Aston instructed the vessel not to deliver the cargo to Zuhoor, while Zuhoor demanded delivery of the cargo. The vessel complied with Aston’s instructions in exchange for a letter of indemnity (“LOI”).

Zuhoor commenced proceedings in Yemen in respect of delivery of the cargo, and subsequently arrested the vessel in Djibouti. The Djibouti Court of First Instance ordered the vessel to be released in exchange for an international bank guarantee. Zuhoor, being unhappy with the order as they wanted instead a Djibouti bank guarantee, appealed to the Djibouti Court of Appeal, which upheld the order and declared “valid the bank guarantee”.

Pursuant to the LOI, Aston procured a guarantee issued by an international bank. The guarantee secured any award that an arbitral tribunal may make in favour of Zuhoor. It was given in consideration of Zuhoor:

i)            procuring the release of the vessel;

ii)           refraining from re-arresting or otherwise detaining the Vessel or any other vessel in the same or associated ownership, beneficial ownership, management, and

iii)         withdrawing all legal proceedings in Yemen.

Though Manta Penyez Shipping was not a party to the guarantee, it was plainly for the benefit of Manta Penyez Shipping and their group.

The vessel was released upon the guarantee. However, Zuhoor appealed the Court of Appeal order to the Djibouti Supreme Court, while Manta Penyez Shipping had already commenced LMAA arbitration. While the appeal and the arbitration were underway, Zuhoor arrested in Yemen an associated vessel, The “MANTA URAZ”, owned by Uraz Shipping, a company in the same group as Manta Penyez Shipping, and sought to proceed against The “MANTA URAZ” with the substantive claim.

ASI Application in London Court: That led Manta Penyez Shipping and Uraz Shipping to apply to the Commercial Court in London for an ASI to prevent the foreign proceedings. Dias J granted an interim ASI ex parte upon informal notice only, and Houseman KC made further interim orders, followed by Cockerill J who made them final.

The primary ground of granting the ASI was that the guarantee was for the benefit of the Manta Penyez Shipping and its associated companies, including Uraz Shipping. Accordingly, by s 1 of the 1999 Act, they may seek to enforce the terms of the guarantee. The requirement in the guarantee that Zuhoor withdrew the Yemeni proceedings, whether by construction or implication, contained a negative covenant not to commence new proceedings in Yemen including for the arrest of any relevant vessels. Accordingly, the court enforced the guarantee by way of the ASI.

This is not a typical ASI enforcing an exclusive English jurisdiction or arbitration agreement. Instead, the Court enforced, by the ASI, the negative covenants in the guarantee: to withdraw Yemeni proceedings, not to commence fresh ones, and refrain from re-arresting the vessel or associated vessels.

The secondary ground for granting the ASI was that the foreign proceedings were vexatious and oppressive as they were a collateral attack on the English arbitration agreement between Zuhoor and Manta Penyez Shipping.

The court ordered costs on indemnity basis, as is usual in contractual ASI cases (Louis Dreyfus Company Suisse SA v JSC International Bank of St. Petersburg [2021] EWHC 1039 (Comm)).

Conclusion

The Manta Penyez case – the primary ground – demonstrates the robust and wide application of the contractual route, in a broader sense including the 1999 Act route, for ASI application in cases beyond the typical exclusive jurisdiction clause context. It also illustrates, separately, the use of the “vexatious and oppressive” route to prevent a collateral attack on English arbitration.

For the shipowners, the takeaway is that negative covenants in a bank guarantee can be enforced to restrain foreign proceedings, even where there is no exclusive jurisdiction clause to enforce, and even if the shipowner is not a party to the guarantee (via the 1999 Act route).