Anti-suit injunctions: English Court rules on withdrawal of Russian proceedings in favour of foreign-seated arbitration

Insight

12.03.2024

A recent Court of Appeal decision has clarified the use of anti-suit injunctions (ASI) in support of an arbitration that is seated abroad. In Unicredit Bank GmbH v RusChemAlliance LLC [2024] EWCA Civ 64, the Court granted a final ASI requiring RusChemAlliance LLC (RCA) to terminate proceedings brought in Russia in breach of an English-law governed arbitration agreement providing for an arbitration seated in Paris.

Background

We considered the background to this case, as well as the first instance High Court decision, in our earlier article.

RCA commenced proceedings in Russia seeking payment of €444 million from UniCredit pursuant to bonds governed by English law and containing ICC Paris-seated arbitration clauses. RCA invoked Article 248 of Russia’s Arbitrazh Procedural Code, which allows the Russian courts to denounce foreign arbitration agreements and exercise exclusive jurisdiction over disputes arising out of EU sanctions.

UniCredit, in response, sought to restrain the Russian proceedings by commencing ASI proceedings. The application was made in England – notwithstanding the fact that the arbitration was to be seated in Paris – because equivalent relief is not available under French law. England was, therefore, the only other available jurisdiction with a connection to the arbitration agreements.

The High Court at first instance refused to grant an ASI, holding that the English court did not have jurisdiction to restrain the Russian proceedings.

Court of Appeal’s decision

The Court of Appeal reversed Teare J’s decision at first instance and granted a final ASI in favour of UniCredit, requiring RCA to terminate the Russian proceedings.

In summary, the Court of Appeal considered the following factors:

1. Jurisdiction

The general rule is that where there is an express choice of governing law of the main contract (here, English law), the parties will usually be taken to have chosen that same law to govern the arbitration agreement, despite the choice of a foreign seat (Supreme Court’s decision in Enka v Chubb).

An exception to the general rule applies where the law of the chosen seat provides that the arbitration agreement itself will be governed by the law of the seat. RCA’s arguments that the exception applied in these circumstances failed. The Court held that there was no clear provision in French law providing that that where an arbitration is subject to French law (i.e., the law of the seat), the arbitration agreement will also be governed by French law.

Thus, the arbitration agreements in the bonds were governed by English law.

2. Appropriate forum

The appropriate forum is where the case “can be suitably tried for the interests of all parties and for the ends of justice.”

In the earlier decision in Deutsche Bank, the court had found that (i) the ends of justice was that parties adhered to their agreements to arbitrate, and (ii) although the French courts could not grant an ASI, they would not consider the granting of an ASI by the English courts to be an interference with their jurisdiction. These factors, alongside the apparent shortfalls of enforcing any arbitration award in Russia, meant the Court of Appeal had “no hesitation in concluding that England is the proper forum for this claim.”

3. Final anti-suit injunction

There were no “strong reasons” offered by RCA not to grant the relief sought. The Court considered that “the fact that the contract, including the agreement to arbitrate, is governed by English law, together with the policy of English law that those who agree to arbitrate should adhere to their bargain provides [the English courts with] a sufficient interest or connection in this case” to grant the ASI.

Comment

This is the first reported example of the English courts granting a final ASI to support foreign-seated arbitration in situations where the underlying contract does not explicitly grant jurisdiction to the courts. It emphasises the readiness of English courts to serve as the suitable venue for parties seeking urgent and effective relief to enforce their arbitration rights governed by English law.

This publication is a general summary of the law as at the date of publication. It should not replace legal advice tailored to your specific circumstances.