UK Supreme Court Upholds Anti-Suit Injunction in Support of Foreign-Seated Arbitration

Latham & Watkins represented UniCredit Bank GmbH (UniCredit) at all stages in its successful application for a final mandatory anti-suit injunction to restrain proceedings commenced by RusChemAlliance LLC (RCA) in Russia in breach of the parties’ arbitration agreements.

The proceedings culminated in a landmark decision by the Supreme Court handed down on April 23, 2024, upholding the Court of Appeal’s judgment in favor of UniCredit.

On August 4, 2023, RCA brought proceedings in the St. Petersburg Arbitrazh (commercial) Court demanding payment of €448 million under seven bonds issued by UniCredit. The bonds are governed by English law and provide for ICC arbitration seated in Paris (the Bonds).

RCA commenced its claim pursuant to Article 248.1 of the Russia’s Arbitrazh Procedure Code, which empowers the Russian Courts to disregard foreign arbitration agreements and exercise exclusive jurisdiction over disputes arising out of EU sanctions.

Notable features of the case include the fact that anti-suit injunctions are not available under French law, such that equivalent relief could not be obtained before the courts of the seat, and that the Russian Courts were acting contrary to their mandatory obligation under Article II(3) of the New York Convention to stay domestic court proceedings commenced in breach of exclusive arbitration agreements.

On August 24, 2023, UniCredit successfully obtained an ex parte interim injunction restraining RCA from pursuing the Russian proceedings. At the subsequent contested hearing on September 22, 2023, the High Court held that it lacked jurisdiction to grant final mandatory relief but continued the interim prohibitory injunction pending an appeal on jurisdiction. On January 25, 2024, the Court of Appeal overturned the High Court’s decision and accepted jurisdiction to grant a final mandatory anti-suit injunction requiring RCA to withdraw the Russian proceedings. The Court of Appeal accepted jurisdiction on the basis that the parties’ choice of Paris seat was insufficient to displace the presumption that the arbitration agreements were governed by English law by virtue of the parties’ express choice of English law to govern the Bonds.

RCA obtained permission to appeal to the Supreme Court on two questions of jurisdiction: (i) whether the parties’ choice of Paris seat resulted in the arbitration agreements being governed by French law; and (ii) whether England was the proper forum for UniCredit’s claim. RCA was refused permission to appeal the Court of Appeal’s decision to grant a final mandatory anti-suit injunction.

RCA’s appeal was expedited and heard at a one-and-a-half-day hearing on January 17 and 18, 2024. On January 23, 2024, the Supreme Court handed down its decision dismissing RCA’s appeal and upholding the Court of Appeal’s finding on jurisdiction. A reasoned judgment is expected in due course.

These proceedings concern important questions of fact and law, including the test for the determination of the governing law of non-English-seated arbitration agreements as set out in the UK Supreme Court’s decision in Enka v Chubb.

These proceedings are the first reported example of the English Courts granting final mandatory anti-suit injunctive relief to support non-English-seated arbitration in circumstances where the underlying contract does not confer express jurisdiction on the English Courts.

The decision highlights the importance of the English Courts as a forum before which parties can obtain urgent and effective relief to uphold their English law-governed arbitration rights. This role is particularly important given the prevalence of English law in contracts entered into with Russian parties that have been affected by EU and other sanctions regimes.

The decision demonstrates the Latham Litigation & Trial Department’s status as the premier combined arbitration and sanctions practice in London, and is one of a number of high-value and business-critical disputes involving international sanctions that the team is currently advising on.

The Latham team was led by London partner, Charles Claypoole, with assistance from associates Alex Cox, Ram Mashru, and Michelle Taylor.