In September 2024, the UK Supreme Court explained the reasoning behind its judgment to uphold the decision of the Court of Appeal of England & Wales in UniCredit Bank GmbH v RusChemAlliance [2024] EWCA Civ 64 to grant an anti-suit injunction against RusChemAlliance LLC ("RCA"), a Russian entity, preventing RCA from issuing proceedings in Russia in breach of an arbitration clause, notwithstanding the fact that the arbitration clause provided for arbitration seated in Paris rather than in England & Wales.

Background

The case arises out of the sanctions regime applied following Russia's invasion of Ukraine in 2022. Prior to the sanctions' application, RCA had contracted with – and made an advance payment of EUR 2 billion to - a contractor to build gas plants in Russia. As security for the contractor's obligations, RCA obtained from Unicredit Bank GmbH ("UniCredit") bonds worth EUR 420 million (the "Bonds"). The Bonds contained an arbitration clause providing for disputes to be resolved under English law and by way of ICC arbitration seated in Paris.

Following the imposition of EU sanctions on Russia in 2022, the contractor indicated to RCA that it would neither be able to perform under the contract nor return the advance payment. RCA issued proceedings against UniCredit in Russia, seeking payment under the Bonds. It did so pursuant to a law introduced in Russia in 2020 which purports to give the Russian state courts exclusive jurisdiction over disputes involving Russian sanctioned persons and entities, including foreign entities under their control. Whilst RCA is not itself subject to sanctions, it is ultimately controlled by Gazprom, a sanctioned entity.

In response to the Russian proceedings, UniCredit issued proceedings in the English Commercial Court, seeking an anti-suit injunction ("ASI") restraining RCA from continuing the Russian proceedings, on the basis that those proceedings were brought in breach of the arbitration clause under the Bonds.

The Commercial Court refused to grant a final ASI, primarily on the basis that: the seat of the arbitration was Paris; French law therefore applied to the arbitration agreement; and ASI is not a remedy that is available under French law. The Court also held that, even if English law applied to the arbitration agreement, England was not the appropriate forum for seeking an ASI as the arbitration was seated in Paris, not in England.

Upon appeal by UniCredit, the Court of Appeal overturned the Commercial Court's decision and granted the ASI, on two key bases:

  1. The Court of Appeal disagreed with the Commercial Court as to the governing law of the arbitration agreement. Applying the Supreme Court's decision in Enka v Chubb [2020] UKSC 38, the Court of Appeal held that, since the arbitration agreement did not specify a law applicable to it, the governing law for the Bonds (being English law) should be considered the governing law of the arbitration agreement, notwithstanding that the seat of any arbitration would be Paris.
  2. The Court of Appeal also disagreed with the Commercial Court as to whether the English courts were forum conveniens for seeking an ASI. In particular, the Court of Appeal considered England to be forum conveniens on the basis that, whilst French law recognises ASIs, French courts will not issue them, leaving England as the most appropriate forum in which to seek such a remedy.

Supreme Court decision

RCA then appealed the Court of Appeal's decision to the UK Supreme Court. The Supreme Court upheld the ASI issued by the Court of Appeal, on the basis that the English Courts have jurisdiction to issue ASIs where English law governs the arbitration agreement, even if the seat of arbitration is elsewhere.

Following an initial oral judgment, the Supreme Court delivered its written reasons on 18 September 2024. The Supreme Court's reasons can be summarised as follows:

  • When considering whether to grant an ASI where the seat of arbitration is abroad, the proper approach is not to focus on the issue of forum non conveniens, but rather on ensuring that the parties are held to their bargain, and that task can properly be undertaken "by any court before whom they have been or can properly be brought";
  • Like the Court of Appeal, the Supreme Court noted the lack of power of the French courts to grant ASIs, such that the English court could issue an ASI in this case without any breach of judicial comity or usurpation of the French courts; and
  • In the present case, refusing the ASI would have left UniCredit without a proper remedy. Any order made by an arbitrator would not have the requisite coercive force, and ASIs are not available from the French courts.

Conclusion

The Supreme Court's decision and reasoning bring helpful clarity in relation to the English courts' power to grant ASIs in relation to foreign-seated arbitrations, confirming that such jurisdiction exists provided English law applies to the agreement to arbitrate. The decision builds upon the principle established in Enka v Chubb [2020] UKSC 38, that where an agreement to arbitrate does not specify a law applicable to it, the law of the relevant contract applies to the arbitration agreement.

The decision also affirms the English courts' breadth of powers – and willingness – to intervene in support of arbitration and to ensure that parties who agree to arbitrate their disputes are held to that bargain.

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Jared Oyston

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