5 months after its determination in UniCredit Financial institution GmbH v RusChemAlliance LLC, confirming the grant of an anti-suit injunction (ASI), the Supreme Court docket just lately handed down its written judgment ([2024] UKSC 30). The choice emphasises the willingness of the English courts to uphold events’ contractual bargains as to the discussion board during which any dispute is to be resolved.
By means of a short overview, in 2021 the Russian firm RusChemAlliance (RCA) entered into contracts with two German firms in relation to the development of gasoline processing vegetation in Russia. RCA made advance funds of €2bn, and the German firms’ obligations had been assured by on-demand bonds which had been issued by, amongst others, UniCredit. The bonds said that any dispute could be referred to arbitration in Paris and had been ruled by English legislation.
After the following imposition of sanctions on Russia, the German firms asserted that they had been unable to carry out the contracts, which had been then terminated by RCA. RCA sought the return of the advance funds, however the German firms and UniCredit asserted that EU sanctions prevented them from doing so.
Following RCA’s graduation of proceedings in Russia in opposition to UniCredit, UniCredit utilized to the English court docket for an ASI to restrain RCA from pursuing proceedings in Russia. RCA asserted that the English court docket didn’t have jurisdiction to listen to the declare. This was upheld by the Excessive Court docket however overturned on attraction, the Court docket of Attraction discovering jurisdiction as a result of: (i) the arbitration agreements within the bonds had been ruled by English legislation; and (ii) England and Wales was the correct place during which to deliver the declare. RCA appealed to the Supreme Court docket.
The primary difficulty earlier than the Supreme Court docket was whether or not UniCredit may serve the declare on RCA, being a celebration out of the jurisdiction, in reliance upon the related contract gateway. That gateway applies the place a declare is made in respect of a contract ruled by the legislation of England and Wales. UniCredit’s place was that the arbitration agreements within the bonds had been ruled by English legislation. RCA disagreed, asserting that the arbitration agreements had been distinct from the contract during which they had been contained, and that no governing legislation had been said for the arbitration settlement. As Paris was the seat of the arbitration, French legislation ought to govern the arbitration settlement, that means that the English legislation contract gateway couldn’t be used. Nonetheless, making use of English legislation on contractual interpretation – England being the discussion board during which the ASI was sought – and making use of its personal determination in Enka Insaat Ve Sanayi AS v OOO Insurance coverage Firm Chubb [2020] UKSC 38, the Supreme Court docket held that English and never French legislation utilized. The English governing legislation clause was broadly drafted, and the selection of a Paris seat didn’t assist one other building of the arbitration clause.
As to the second difficulty, the Supreme Court docket decided that whether or not to train jurisdiction over a international defendant to grant an ASI when the seat was not England was not a query of discussion board non conveniens however relatively of whether or not the events’ settlement ought to be enforced. A powerful purpose was wanted for the court docket to not train its jurisdiction to restrain a breach of that settlement.
RCA’s major argument was that France was the correct place to deliver the declare, the events having agreed to a French seat. This was rejected: the court docket’s energy derived from its equitable jurisdiction below part 37 of the Senior Courts Act 1981, relatively than any jurisdiction below the Arbitration Act 1996, and didn’t emanate from or want supervisory jurisdiction. RCA’s different argument was that the correct place was in arbitration below the bonds. This too was rejected, together with as: (i) substantial justice couldn’t be obtained given the shortage of coercive drive of any award or order made by the tribunal (in distinction to an ASI from the court docket backed up by penal penalties together with fines and imprisonment); and (ii) the French courts couldn’t difficulty an ASI. The English courts had been due to this fact the correct discussion board during which to listen to the ASI software.
One of many the reason why this case – and different associated circumstances – have attracted such consideration is that they type a part of a sequence of jurisdictional battles between Russian and non-Russian events. On the core of those disputes is the interaction between contractually agreed jurisdiction clauses (usually arbitration clauses) and a comparatively current Russian legislation launched in 2020, Article 248 of the Arbitrazh Process Code. This permits Russian courts to say unique jurisdiction over disputes involving Russian events arising from international sanctions and difficulty ASIs in assist.
Towards that background, the Supreme Court docket’s determination displays the sturdy need of the English courts to uphold contractually agreed jurisdiction agreements (whether or not within the context of Article 248 or in any other case). Within the RCA case, the court docket was ready to grant an ASI, even the place there’s a non-English seat. Had the current invoice to reform the Arbitration Act been enacted, this may occasionally not have occurred. The default place would have been that the legislation of the seat was the legislation governing the arbitration settlement (that’s, French legislation).
The court docket’s need to uphold jurisdiction agreements has not been confined to the difficulty of ASIs. Latest circumstances have additionally seen anti-anti-suit injunctions (AASI), searching for to ban abroad ASI purposes, and anti-enforcement actions, searching for to ban the enforcement of judgments obtained in breach of jurisdiction clauses. AASIs have even been issued the place there was no jurisdiction settlement and the claimant was resident or domiciled abroad, in circumstances the place England was the pure discussion board for the dispute.
The judgment additionally recognises the opportunity of the English court docket granting an ASI in opposition to an English defendant solely based mostly on its domicile, even the place the related arbitration settlement offers for an abroad seat and governing legislation. This – and the rest of the RCA judgment – underscores the sturdy willingness of the English courts to uphold events’ contractual bargains.
Jon Felce is a companion at Cooke, Younger and Keidan LLP, London
