AES Ust-Kamenogorsk Hydropower Plant Llp v Ust-Kamenogorsk Hydropower Plant JSC

The High Court may use its general power under Senior Courts Act 1981 section 37 to protect a contractual right to English arbitration where no arbitration is pending or realistically contemplated. The limits governing court assistance to actual or prospective arbitral proceedings under Arbitration Act 1996 section 44 do not remove that power.

A foreign judgment given in proceedings contrary to an arbitration agreement will ordinarily be denied recognition under Civil Jurisdiction and Judgments Act 1982 section 32. Participation on the merits does not necessarily amount to submission where the party consistently maintains its jurisdictional objection and has no realistic procedural alternative.

Two Kazakhstan companies succeeded to a concession contract concerning hydroelectric facilities in Kazakhstan. The contract was governed by Kazakhstan law, but its broad agreement for ICC arbitration in London was governed by English law. Kazakhstan courts had treated the arbitration clause as invalid, partly because they mistakenly construed it as covering tariff disputes expressly reserved for expert determination.

Burton J declared that the owner could bring relevant contractual claims only by London arbitration and granted a final anti-suit injunction. No arbitration was pending or contemplated. The owner appealed, challenging the court's power, the gateways for service outside the jurisdiction, the refusal to recognise the Kazakhstan judgments and the finding that the operator had not submitted to the Kazakhstan court.

1. Appeal dismissed. The High Court had power under section 37 of the Senior Courts Act 1981 to protect the contractual right to arbitration, notwithstanding that no arbitration was pending or realistically contemplated. Section 44 of the Arbitration Act 1996 concerned powers exercised for the purposes of and in relation to arbitral proceedings. It therefore did not apply to the present circumstances and did not occupy the whole field or remove the independent section 37 power.

2. Section 1(c) of the 1996 Act principally restrains court intervention in the arbitral process. It does not prevent orders which support an arbitration agreement when no tribunal exists and there is no reason to constitute one. Requiring a party to commence a purposeless arbitration merely to obtain an initial jurisdictional ruling would create unnecessary cost and delay. The availability and form of declaratory or injunctive relief nevertheless remain matters of discretion, requiring care not to usurp an existing or prospective tribunal.

3. The claim fell within CPR 62.5(1)(c). It sought a remedy or decision affecting an arbitration agreement whose contemplated seat was England. An arbitration claim need not invariably arise under a provision of the 1996 Act. The operator could also, if necessary, rely at the inter partes stage upon the contractual service gateway based on the English governing law. The rule preventing retrospective reliance on a new cause of action did not extend inflexibly to a new gateway supporting the same unchanged claim.

4. Under sections 32 and 33 of the Civil Jurisdiction and Judgments Act 1982, the English court was not bound by the Kazakhstan courts' conclusions concerning the scope or validity of the arbitration agreement. Their construction was plainly mistaken because tariff disputes were excluded from arbitration. There was consequently no relevant Kazakhstan public-policy basis for invalidating the clause. Party autonomy and the English governing law favoured refusal of recognition.

5. The judge was entitled to find at least a good arguable case that the operator had not submitted to the Kazakhstan court. It consistently reserved and pursued its arbitration-based jurisdictional objection, including by seeking English relief, and the accepted evidence indicated that it had no realistic option but to address the merits before appealing. Even if its conduct amounted to submission, section 32(3) did not compel recognition of the foreign ruling on the arbitration agreement.

1. Court of Appeal (Civil Division): The owner's appeal was dismissed. The court upheld the jurisdiction to grant the declaration and final anti-suit injunction.

2. Commercial Court: Burton J rejected the owner's jurisdictional challenge, declined to recognise the Kazakhstan decisions and declared that relevant contractual claims could be brought only by ICC arbitration in London. He also granted a final anti-suit injunction.