Anti-Suit Injunction Upheld In Support of Arbitration Agreement
By Alison Bond
In UniCredit Bank GmbH -v- RusChemAlliance LLC [2024] UKSC 30, the United Kingdom Supreme Court found that the English courts had jurisdiction to decide whether an arbitration agreement was governed by English law despite the seat of the arbitration being Paris, France. Moreover, although the seat of the arbitration was Paris, the English court had jurisdiction to grant an anti-suit injunction to prevent a breach of the arbitration agreement.
Background to the dispute
The dispute arose out of certain bond contracts involving UniCredit Bank GmbH (“Unicredit”) and RusChemAllianceLLC (“RusChem”), which certain German contractors said they could not perform owing to sanctions imposed on Russia by the European Union due to Russia’s invasion of the Ukraine in February 2022.[1] The underlying bonds are governed by English law and include a clause that disputes arising under them be resolved by an International Chamber of Commerce arbitration seated in Paris.
RusChem brought proceedings against UniCredit before the Russian courts. UniCredit responded by applying to the English courts for injunctive and declaratory relief on the basis that RusChem had commenced the Russian proceedings in breach of the parties’ arbitration agreements.[2]
The court at first instance found that the English courts did not have jurisdiction to hear the claim but continued the interim anti-suit injunction pending the appeal process.[3]
The Court of Appeal allowed UniCredit’s appeal[4] and granted a final injunction.[5] It concluded that the English court had jurisdiction over the claim because the underlying arbitration agreement was governed by English law and that England and Wales was the proper place to bring the claim.[6]
The only issue on appeal to the Supreme Court was whether the English court had jurisdiction over UniCredit’s claim.
The decision of the Supreme Court
The Supreme Court’s decision on whether the English Court had jurisdiction over UniCredit’s claim depended on whether it agreed with the Court of Appeal that the arbitration agreements for the bonds were governed by English law and that England and Wales was the proper place to bring the claim.
- The Governing Law Issue
On the governing law issue, the Supreme Court considered its decision in Enka Insaat ve Sanayi AS -v- OOO Insurance Company Chubb [2020] UKSC 38 (“Enka”). In Enka, the Supreme Court held that a choice of law to govern the contract should generally be construed as applying to an arbitration agreement set out (or incorporated by reference) in a clause of the contract even where the parties have chosen a country with a different system of the law as the seat of the arbitration”.[7]
Applying the Enka principles, the Supreme Court concluded in the UniCredit Bank GmbH -v- RusChemAlliance case that the arbitration agreements were governed by English law despite the seat of the arbitration being Paris. The Supreme Court stated that “an intention that the arbitration agreement should be governed by whatever law a court of the seat would regard as the law which is to govern it would not be a reasonable intention to attribute to the contracting parties (without express words to that effect).”[8]
- The Proper Place Issue
As to whether England was the proper place for the claim to be brought, the Supreme Court decided that the principle established by the House of Lords in Spiliada Maritime Corpn v Cansulex Ltd [1987] 1 AC 460, 476 (“Spiliada”), the leading case on the doctrine of forum non conveniens, was not applicable.[9] According to the Court, the Spiliada test was “designed to deal with a different situation”.[10] The Court was not concerned whether England was the forum conveniens but rather whether to enforce the parties’ arbitration agreement.[11]
The Court concluded that there was no basis for UniCredit’s contractual rights not to be upheld and grant an anti-suit injunction.[12] The Court noted that the French courts do not have power to grant anti-suit injunctions and so France was not a forum in which such a claim could be brought. In any event, the Court said “there is no reason which can be said to make it inappropriate for an English court to restrain a breach of the arbitration agreements by granting an injunction. In particular, the fact that any arbitration brought would have its seat in France does not amount to such a reason.”[13]
As a result, the Court upheld the decision by the Court of Appeal to grant the anti-suit injunction.
Key takeaways
The Supreme Court’s decision appears to have merely reinforced the principles in Enka. This decision (and the decision in Enka) may ultimately be of limited value in the longer term given that there are proposed changes to the UK Arbitration Act 1996 providing that unless the parties expressly agree otherwise, the arbitration agreement is governed by the law of the seat. The revisions to the Arbitration Act are under review by the UK Parliament and so only time will tell if the clarity provided by the Supreme Court is short lived.
Alison Bond is a Partner in the Litigation group of McCarthy Tétrault in Toronto, Ontario and is a member of the firm’s international arbitration group. Ms. Bond is a member of the Law Society of Ontario and The Law Society of England and Wales.
