Anti-Suit Injunctions From The English Court For Foreign Seated Arbitrations?

• Published date: 15 February 2024
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Contracts and Commercial Law, Arbitration & Dispute Resolution, Trials & Appeals & Compensation
• Law Firm: Travers Smith LLP
• Author: Adam Short

A case summary of UniCredit Bank AG -v- RusChemAlliance LLC

Introduction

On 2 February 2024, the Court of Appeal handed down its written judgment in UniCredit Bank AG -v- RusChemAlliance LLC [2024] EWCA Civ 64, in which it issued a final anti-suit injunction ("ASI") restraining RusChemAlliance LLC ("RCA") from pursuing court proceedings in Russia in breach of a foreign seated arbitration agreement.

This is the first time that the English court has ordered on a contested basis that England is the proper place in which to bring and decide a claim for an ASI to enforce an arbitration agreement that has a foreign seat (in this case, Paris). The judgment is consistent with two 2023 judgments: Deutsche Bank AG -v- RCA [2023] EWCA Civ 1144 and Commerzbank AG -v- RCA [2023] EWHC 2510 (Comm). But, the Deutsche Bank and Commerzbank judgments were for interim injunctions and were not contested. Therefore, the reasoning and analysis in the UniCredit judgment will have greater force and relevance for future applications of this type.

1. Factual Background and the High Court decision

RCA (a Russian company) entered into two EPC contracts for the construction of LNG and GPP facilities in Russia. The two contracts required the contractor to provide on demand bonds guaranteeing performance of its obligations. Some of those bonds were provided by UniCredit Bank AG ("UniCredit"). Those bonds each provided for English law and ICC arbitration in Paris. However, the contract did not expressly provide for any governing law of the arbitration clause itself.

Following Russia's invasion of Ukraine, the European Union imposed sanctions on Russia and on specified Russian entities and persons (though this did not include RCA). However, following clarification from the German Federal Office for Economic Affairs and Export Control (who advised the contractor that it could not continue to perform the EPC contracts), the contractor halted performance. RCA therefore sought to terminate the contracts on the basis that the contractor had materially breached its obligations and made demands on UniCredit for payment under the on demand bonds. UniCredit rejected payment on the basis of the EU sanctions.

Instead of commencing arbitration, RCA issued proceedings against UniCredit before the Russian courts. RCA asserted that the Russian courts are competent to determine the dispute because the arbitration clause contained in the performance bonds is unenforceable as a matter of Russian law. The...