UniCredit Wins Appeal on Anti-Suit Injunction in Support of Foreign-Seated Arbitration

Latham & Watkins successfully represented UniCredit Bank GmbH (UniCredit) in its 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.

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.

RCA commenced its claim pursuant to Article 248 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 24 August 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 a final mandatory injunction, requiring RCA to withdraw the Russian proceedings, but continued the interim prohibitory injunction pending an appeal on jurisdiction.

Following an expedited appeal on January 25, 2024, UniCredit overturned the High Court’s decision. After a one-day hearing, the Court of Appeal: (i) held that the implied governing law of the arbitration agreements is English law, such that the English Courts had jurisdiction to grant relief; and (ii) proceeded to issue the final mandatory anti-suit injunction requiring RCA to immediately withdraw the proceedings in Russia.  The Court of Appeal issued the injunction on Monday January 29, 2024.

The proceedings concern important questions of fact and law, in which the Court of Appeal applied the Supreme Court’s guidance on the determination of the governing law of non-English-seated arbitration agreements under Enka v Chubb. 

This is the first reported example of the English Courts granting a final anti-suit injunction to support non-English-seated arbitration in circumstances where the underlying contract does not confer express jurisdiction on the Courts. It 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. 

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 Litigation & Trial partner Charles Claypoole, with associates Alex Cox, Ram Mashru, and Lara Nonninger. 

Advice was also provided on issues of French law by Paris Partner Fernando Mantilla-Serrano, with associate Matias Zambrano.