Following a hearing that took place last week (17 and 18 April 2024), on 23 April 2024 the UK Supreme Court announced its decision in Unicredit Bank GmbH v RusChemAlliance LLC, dismissing RCA's appeal and maintaining the final anti-suit injunction in respect of proceedings brought by RCA in Russia (see our previous post here for the background to the appeal). After the Court of Appeal granted a final mandatory anti-suit injunction, RCA was granted permission to appeal to the Supreme Court on essentially the following questions: (i) whether the Paris seat of arbitration meant that the arbitration agreement was governed by French law; and (ii) whether England was the proper forum.
At the time of writing, the judgment is not available. However, this decision confirms that the English court may grant an anti-suit injunction where the arbitration agreement is governed by English law, despite the parties choosing a foreign seat. While not in a position to hand down its judgment in full, the Supreme Court gave its decision dismissing RCA's appeal in order to provide clarity prior to the upcoming Russian court hearing on 6 May 2024, the Russian court having adjourned to allow the Supreme Court to render its decision on RCA's appeal.
Comment
This decision confirms that parties may be able to obtain ASI relief from the English court to uphold an agreement to arbitrate, even where the parties have selected a seat outside of England and Wales. The English court will act if it is satisfied that the matter fits within a jurisdictional gateway - in this instance, by an arbitration agreement that it found was governed by English law - and that England is the proper place for the claim. The Supreme Court’s rationale for this latter point will be clarified in its judgment, as the ramifications of the parties' choice of a Paris seat was a point of considerable contention between the parties. We anticipate that the Supreme Court's judgment will also deal with the role of allegations of abuse of process that were raised by Unicredit.
For the time being at least, this decision may be helpful for parties with Russia-related contracts who are facing Russian proceedings that breach an agreed arbitration clause. The decision confirms that the English court will have the discretion to grant an ASI, provided that the parties have either chosen an English seat or the arbitration agreement is governed by English law.
Although the Supreme Court’s decision will likely have been based on the seminal decision of Enka v Chubb, the English law position looks set to change in light of the draft Arbitration Bill, which provides for the default law of the arbitration agreement to be the law of the seat where there is no express agreement between the parties. This may limit opportunities for parties to argue for an English governing law and to meet the jurisdictional gateway requirements for the English court to act. To avoid uncertainty, parties should ensure that the law of the arbitration agreement is expressly addressed in their contracts.
During the hearing, the Supreme Court explored the practical effect were it to maintain the final ASI, seeking submissions from the parties on this point. It remains to be seen how the parties and the Russian court respond to the decision.
For more information, please contact Hannah Ambrose, Partner, Vanessa Naish, Professional Support Consultant, Liz Kantor, Professional Support Lawyer, or your usual Herbert Smith Freehills contact.
The authors would like to thank Luke Hard for his contribution to this blog post.
