Five months after its decision in UniCredit Bank GmbH v RusChemAlliance LLC, confirming the grant of an anti-suit injunction (ASI), the Supreme Court recently handed down its written judgment ([2024] UKSC 30). The decision emphasises the willingness of the English courts to uphold parties’ contractual bargains as to the forum in which any dispute is to be resolved.
By way of a brief overview, in 2021 the Russian company RusChemAlliance (RCA) entered into contracts with two German companies in relation to the construction of gas processing plants in Russia. RCA made advance payments of €2bn, and the German companies’ obligations were guaranteed by on-demand bonds which were issued by, among others, UniCredit. The bonds stated that any dispute would be referred to arbitration in Paris and were governed by English law.
After the subsequent imposition of sanctions on Russia, the German companies asserted that they were unable to perform the contracts, which were then terminated by RCA. RCA sought the return of the advance payments, but the German companies and UniCredit asserted that EU sanctions prevented them from doing so.
Following RCA’s commencement of proceedings in Russia against UniCredit, UniCredit applied to the English court for an ASI to restrain RCA from pursuing proceedings in Russia. RCA asserted that the English court did not have jurisdiction to hear the claim. This was upheld by the High Court but overturned on appeal, the Court of Appeal finding jurisdiction because: (i) the arbitration agreements in the bonds were governed by English law; and (ii) England and Wales was the proper place in which to bring the claim. RCA appealed to the Supreme Court.
The first issue before the Supreme Court was whether UniCredit could serve the claim on RCA, being a party out of the jurisdiction, in reliance upon the relevant contract gateway. That gateway applies where a claim is made in respect of a contract governed by the law of England and Wales. UniCredit’s position was that the arbitration agreements in the bonds were governed by English law. RCA disagreed, asserting that the arbitration agreements were distinct from the contract in which they were contained, and that no governing law had been stated for the arbitration agreement. As Paris was the seat of the arbitration, French law should govern the arbitration agreement, meaning that the English law contract gateway could not be used. However, applying English law on contractual interpretation – England being the forum in which the ASI was sought – and applying its own decision in Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38, the Supreme Court held that English and not French law applied. The English governing law clause was widely drafted, and the choice of a Paris seat did not support another construction of the arbitration clause.
As to the second issue, the Supreme Court determined that whether to exercise jurisdiction over a foreign defendant to grant an ASI when the seat was not England was not a question of forum non conveniens but rather of whether the parties’ agreement should be enforced. A strong reason was needed for the court not to exercise its jurisdiction to restrain a breach of that agreement.
RCA’s primary argument was that France was the proper place to bring the claim, the parties having agreed to a French seat. This was rejected: the court’s power derived from its equitable jurisdiction under section 37 of the Senior Courts Act 1981, rather than any jurisdiction under the Arbitration Act 1996, and did not emanate from or need supervisory jurisdiction. RCA’s alternative argument was that the proper place was in arbitration under the bonds. This too was rejected, including as: (i) substantial justice could not be obtained given the lack of coercive force of any award or order made by the tribunal (in contrast to an ASI from the court backed up by penal consequences including fines and imprisonment); and (ii) the French courts could not issue an ASI. The English courts were therefore the proper forum in which to hear the ASI application.
One of the reasons why this case – and other related cases – have attracted such attention is that they form part of a series of jurisdictional battles between Russian and non-Russian parties. At the core of these disputes is the interplay between contractually agreed jurisdiction clauses (often arbitration clauses) and a relatively recent Russian law introduced in 2020, Article 248 of the Arbitrazh Procedure Code. This enables Russian courts to assert exclusive jurisdiction over disputes involving Russian parties arising from foreign sanctions and issue ASIs in support.
Against that background, the Supreme Court’s decision reflects the strong desire of the English courts to uphold contractually agreed jurisdiction agreements (whether in the context of Article 248 or otherwise). In the RCA case, the court was prepared to grant an ASI, even where there is a non-English seat. Had the recent bill to reform the Arbitration Act been enacted, this may not have happened. The default position would have been that the law of the seat was the law governing the arbitration agreement (that is, French law).
The court’s desire to uphold jurisdiction agreements has not been confined to the issue of ASIs. Recent cases have also seen anti-anti-suit injunctions (AASI), seeking to prohibit overseas ASI applications, and anti-enforcement actions, seeking to prohibit the enforcement of judgments obtained in breach of jurisdiction clauses. AASIs have even been issued where there was no jurisdiction agreement and the claimant was resident or domiciled overseas, in cases where England was the natural forum for the dispute.
The judgment also recognises the possibility of the English court granting an ASI against an English defendant solely based on its domicile, even where the relevant arbitration agreement provides for an overseas seat and governing law. This – and the remainder of the RCA judgment – underscores the strong willingness of the English courts to uphold parties’ contractual bargains.
Jon Felce is a partner at Cooke, Young and Keidan LLP, London
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