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    05.02.2025

    A tale of international dispute resolution: how a UK anti-suit injunction safeguarded arbitration seated in Paris from parallel proceedings initiated in Russia


    In the increasingly complex world of cross-border litigation, the ongoing global judicial battle between a German bank and a Russian company serves as a powerful reminder of how the strategic use of a common law legal tool – the anti-suit injunction – can safeguard arbitration proceedings in the face of competing jurisdictional claims.

    A global legal battlefield 

    On 18 September 2024, the Supreme Court of the United Kingdom delivered a landmark ruling in UniCredit Bank GmbH v. RusChemAlliance LLC,1 illustrating the importance of adopting a global judicial strategy when dealing with international disputes.

    This case highlights the use of a procedural tool — the anti-suit injunction — which can prove crucial in preserving the integrity of arbitration, when one of the parties seeks to circumvent the jurisdiction of the arbitral tribunal by initiating parallel judicial proceedings before another jurisdiction.

    Paradoxically, it was this UK equitable remedy, which could not be ordered by French courts, that ensured the arbitration could proceed as planned in Paris, by blocking parallel litigation in Russia, that would have conflicted with the arbitration clause.

     

    What is an Anti-Suit Injunction?

    An “anti-suit injunction” is an order, given by courts in some common law jurisdictions2, to restrain a party from bringing foreign proceedings in breach of an arbitration agreement.

    The rationale behind such order is that, without it, the claimant will be deprived of its contractual right to have disputes settled by arbitration, in a situation in which damages would be an inadequate remedy3.

    Under English law, an anti-suit injunction may be granted against a foreign litigation if (a) the English forum has a sufficient interest in the matter, (b) the foreign proceeding causes sufficient prejudice to the applicant, and (c) the antisuit injunction would not unjustly deprive the claimant in the foreign court of a legitimate advantage4.

    Anti-suit injunctions are intended to preclude litigation from proceeding in the foreign court, but are ordered in personam and directed against a party to a litigation (not the foreign court).

    Failing to comply with the anti-suit injunction can amount to contempt of court, with serious legal consequences for the offending party. These can include fines, seizure of assets and even imprisonment5.

    Antisuit injunctions can therefore be powerful tools for compelling compliance with an arbitration agreement.

     

    Summary of the dispute 

    In 2021, RusChem, a Russian company entered into two contracts with German companies (together referred to as “the Contractor”) for the construction of LNG plants in Russia. Under these contracts RusChem agreed to pay, in stages, circa. €10 billion, including advance payments of around €2 billion. RusChem made the advance payments to the Contractor. 

    Performance of the Contractor’s obligations was guaranteed by bonds payable on demand, issued by UniCredit Bank GmbH, a German bank (hereafter referred to as “the Bank”). 

    Each of the contracts contained in these bonds provided that the bond is governed by English law and that all disputes are to be settled by arbitration in Paris, France, under the rules of the International Chamber of Commerce (“ICC”). 

    Following Russia’s invasion of Ukraine in February 2022, the European Union imposed sanctions on Russia and on designated Russian legal entities and individuals. Even though RusChem was not on the list of designated entities, in May 2022 the Contractor announced that, because of EU sanctions, it could not continue performing the contracts. 

    As a result, RusChem terminated said contracts and requested the return of the advance payments. However, the Contractor, relying again on the EU sanctions, responded that it could not return the advance payments. 

    In October 2022 and April 2023 RusChem made demands on the Bank for payment under the bonds. Like the Contractor, the Bank refused to pay, on the ground that payment was prohibited by EU sanctions6.

    On 5 August 2023, RusChem, relying on article 248.1 of the Russian Arbitrazh Procedural Code, which purports to grant exclusive jurisdiction on Russian “Arbitrazh Courts” over disputes between Russian and foreign persons arising from foreign sanctions, issued proceedings in Russia against the Bank, claiming payment of €448 million under the bonds.

    The Bank then applied to said Arbitrazh Court to dismiss RusChem’s claim, on the ground that the parties have agreed that all disputes arising out of the bonds are to be settled by arbitration in Paris under the rules of the ICC. 

    Simultaneously, the Bank brought the matter before the London Commercial Court, and applied without notice for an interim injunction prohibiting RusChem from continuing the Russian proceedings until further order of the court, which was granted on 24 August 2023. 

    A few days later, RusChem issued an application disputing the English court’s jurisdiction to hear UniCredit’s claim. 

    The First instance Judge held that the English court did not have jurisdiction to hear the claim; but he nevertheless continued the interim anti-suit injunction until the process of appeal from his order had been exhausted.

    This ruling was later overturned by the Court of Appeal which, on 29 January 2024, granted final relief including a mandatory injunction requiring RusChem to discontinue the Russian proceedings. 

    RusChem was granted permission to appeal from the decision of the Court of Appeal, but only on the jurisdiction issue. 

    On 23 April 2024, the UK Supreme Court unanimously dismissed the appeal, but the reasons for this dismissal were only formulated in the judgment issued on 18 September 2024.

     

    The Jurisdiction Debate

    A central issue in this case was the question of jurisdiction. RusChem disputed the competence of the UK courts, arguing that the arbitration clause specifying Paris as the seat of arbitration meant that the UK courts had no authority to issue an anti-suit injunction. 

    The Supreme Court first observed that, in this matter, arbitration proceedings had not yet been initiated or proposed, which could have otherwise led to a different solution.7

    According to RusChem, by choosing Paris as the seat of arbitration, the parties have chosen to be subject to the supervisory jurisdiction of the French courts, and it is therefore for the French courts to determine whether there was a breach of the arbitration agreements in the bonds and, if so, what relief to grant.8

    The UK Supreme Court was not convinced by RusChem’s position. On the contrary, it held that exercise of coercive powers to enforce an arbitration agreement “is not a supervisory function which ought therefore to be left to the courts of the seat 9.” Indeed, “The role of the courts of the seat of arbitration is to supervise the arbitration itself. They are not the only courts that can prevent a party breaking his contract to arbitrate 10.”

    This lead the UK Supreme Court to the conclusion that the mere fact that the parties have chosen to be subject to the supervisory jurisdiction of the French courts in relation to any arbitration which may in future be brought, “is not itself a reason why an English court cannot or should not uphold the parties’ bargain by restraining a breach of the arbitration agreement.11” 

    The Supreme Court was comforted in its opinion by observing that, in the matter at hand, the French courts would have been powerless to prevent RusChem from initiating legal proceedings in Russia: “[t]here is in fact no possibility that the French courts could be seized of the matter. Not only, as is agreed, do the French courts have no power to grant anti-suit injunctions, but uncontradicted evidence which was before the judge shows that the French courts would not have jurisdiction to determine a claim of any kind brought by UniCredit complaining of a breach by RusChem of the arbitration agreements in the bonds.”12

    In addition, the Supreme Court ascertained that there would be no breach of comity as regards the French court, as France too is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958). As such, French courts would have no objection to an English court taking steps to enforce the arbitration agreement in this case, even through the use of an anti-suit injunction by the English court.13

     

    Brexit may have increased UK courts’ will to grant anti-suit injunctions 

    The UniCredit v. RusChemAlliance decision is significant because, for the first time, the UK Supreme Court ruled that English courts could intervene to prevent actions in other jurisdictions that conflicted with an arbitration clause, even when the seat of the arbitration is located outside of England and Wales

    This ruling highlights the will of the UK courts to extend their power to grant anti-suit injunctions, especially as, since Brexit, they are no longer restricted by ECJ case law which still largely prohibits the use of such procedural tool between EU Member States, considering that: “It is incompatible with Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters for a court of a Member State to make an order to restrain a person from commencing or continuing proceedings before the courts of another Member State on the ground that such proceedings would be contrary to an arbitration agreement”14.

    Over time, the availability of anti-suit injunctions in presence of parallel litigation may prove to be a serious competitive advantage for UK courts in the hard-fought battle for attracting international disputes. Food for thought for EU jurisdictions?

     


    [1] UniCredit Bank GmbH v. RusChem Alliance LLC [2024] UKSC 30.

    [2] Most notably, the Courts of England and Wales (see e.g. Pena CopperMines Ltd. V. Rio Tinto Co.Ltd., (1911) 105 LT 846;  The Angelic Grace [1995] 1 Lloyd’s Rep. 87 (CA); Starlight Shipping Co. v Tai Ping Ins. Co. Ltd [2008] 1 Lloyd’s Rep. 230 (QB)) but also, although more sparingly, in the United States (see e.g., Paramedics Electro v.GE Medical Systems, 369 F. 3d 645 (2nd Cir. 2004); Karaha Bodas Co. v. Perusahaan Pertambangan, 335 F.3d 357 (5th Cir. 2003)) or in Singapore (see e.g. WSG Nimbus Pte Ltd. V. Board of Control for cricket in Sri Lanka [2002] 3 Sing. L.R. 603, 637).

    [3] Aggeliki Charis Cia Maritima SA v Pagnan SpA (The Angelic Grace) [1995] 1 Lloyd’s Rep 87, 96.

    [4] G. Born, International Arbitration: Law and Practice (2012), 64.

    [5] See e.g. Dell Emerging Markets (EMEA) Ltd v Systems Equipment Services SARL (2020) [2020] EWHC 1384 (Comm), the Court handed down sentences of between 9 and 18 months to the directors of one of Dell’s Lebanese distributors for procuring breaches of anti-suit injunctions.

    [6] Article 11 of Council Regulation (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine.

    [7] Ibid., §98.

    [8] Ibid., §94.

    [9] Ibid., §98.

    [10] Quoting from IPOC International Growth Fund Ltd v OAO CT-Mobile LV Finance Group [2007] CA (Bda) 2 Civ; [2007] Bda LR 43, a decision of the Court of Appeal for Bermuda. 

    [11] UniCredit Bank GmbH v. RusChem Alliance LLC [2024] UKSC 30, §100.

    [12] Ibid. § 101.

    [13] Ibid. § 80.

    [14] ECJ 10 February 2009 (C-185/07), Allianz SpA and Generali Assicurazioni Generali SpA v West Tankers Inc (“Front Comor”).

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