Anti-Suit Injunctions: No Arbitration Proceedings Necessary

The Court of Appeal has held that the court has jurisdiction to grant a final anti-suit injunction restraining a party from commencing or continuing foreign court proceedings in breach of an arbitration agreement, even where there is no actual, proposed or intended arbitration. In doing so, the court took a pragmatic approach which might otherwise have required the claimant to commence arbitration proceedings for the sole purpose of protecting the parties' agreement to arbitrate.

Background

In AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC, the defendant ("D") appealed against a first instance decision that the court had jurisdiction to make a final anti-suit injunction in respect of proceedings brought by D in Kazakhstan, in breach of an arbitration clause. The underlying dispute concerned a concession contract to operate hydroelectric facilities in Kazakhstan between a US company ("C") and the state of Kazakhstan. The concession contract contained an arbitration agreement governed by English law which specified that arbitration was to be conducted in London. However, D commenced proceedings in the courts of Kazakhstan and their Supreme Court ultimately held that the arbitration agreement was contrary to Kazakhstan public policy and therefore void. C issued a claim in the English commercial court, seeking declaratory relief and an anti-suit injunction under section 44 of the Arbitration Act 1996 (the "AA") and/or section 37 of the Senior Courts Act 1981 (the "SCA") to restrain the Kazakhstan proceedings. The court had to decide which of these statutory provisions was applicable in this case where no arbitration proceedings had yet been started. Under section 44 of the AA, in cases of urgency and where there is no arbitral tribunal in existence, the court has the power to grant interim injunctive relief. Section 44 is meant to support the arbitration process when it is already in motion. Under section 37 of the SCA however, the court's power to grant an interim or final anti-suit injunction where foreign court proceedings have been brought in breach of an arbitration agreement is not limited. At first instance, the English commercial court granted a final anti-suit injunction and declaration in favour of C. In doing so, Burton J held that the court could not intervene under section 44 of the AA (as there was no actual or intended arbitration to which it could apply) but accepted that the court had...