BNP Paribas SA v Open Joint Stock Company Russian Machines & Anor

The claimant, a French bank, sought anti-suit relief in support of LCIA arbitration seated in London and asked the English court to permit service out of the jurisdiction and to validate service already effected. Key legal principles applied were: the narrow statutory powers of the court under s.44 Arbitration Act 1996 in support of arbitration; the tests in the Civil Procedure Rules for service out of the jurisdiction (notably CPR 62.5 and PD 6B) and for alternative or retrospective service (CPR 6.15); and comity and promptness considerations in anti-suit relief. The court found that England was the proper place to determine the claims, that there was a serious issue to be tried (including a credible case of unconscionable or collusive conduct by related Russian companies designed to frustrate the arbitration), and that the claimant had a good arguable case under the relevant CPR gateways. Consequently the court dismissed the defendants’ jurisdiction and service challenges, validated retrospective service on the first defendant under CPR 6.15(2) and upheld the order permitting service on the second defendant (made previously by Hamblen J) subject to extension of the arbitration claim form’s validity. The court considered delay and comity but held that the delay did not disqualify the claimant from relief in the circumstances.

This is a first instance Commercial Court judgment concerning an application for anti-suit relief and a suite of interlocutory applications about jurisdiction and service in proceedings ancillary to an LCIA arbitration seated in London. The claimant (BNP Paribas S.A.) had a guarantee governed by English law which contained an LCIA arbitration clause. The first defendant (Russian Machines) was a party to the guarantee and arbitration; the second defendant (Ingosstrakh-Investments) was a related Russian company and had commenced court proceedings in Moscow seeking invalidation of the guarantee.

The issues before Blair J were:

• whether the English court had jurisdiction to entertain the anti-suit claims and to permit service out of the jurisdiction under CPR gateways (notably CPR 62.5(1)(b) and PD 6B gateways);
• whether service already effected on the defendants was valid or should be retrospectively validated (CPR 6.15(2));
• whether the Hamblen J order of 8 June 2011 permitting service on the second defendant should be set aside (including an allegation of material non-disclosure concerning Russia's reservation to Article 10 of the Hague Convention); and
• whether an interim anti-suit injunction should be granted to restrain the Russian proceedings pending determination.

The judge analysed (i) the appropriate CPR gateways for service of an arbitration claim form, (ii) the standard for permission to serve out ("good arguable case" and whether there is a serious issue to be tried), (iii) characterisation of the Russian proceedings and whether they were in substance contractual (and thus subject to the arbitration clause), and (iv) whether the conduct of the defendants amounted to vexatious, oppressive or unconscionable behaviour justifying intervention.

On reasoning: the court accepted that s.44 Arbitration Act 1996 and the court's equitable powers under s.37 Senior Courts Act 1981 could support anti-suit relief and that permission to serve out an arbitration claim could extend to associated non-parties in appropriate cases. The judge found that there was sufficient material to raise a serious issue to be tried that the Moscow proceedings had been brought, and were being pursued, in a manner that could be construed as collusive or unconscionable to frustrate the London arbitration and hinder enforcement. The judge therefore concluded that the CPR gateways were satisfied as to both defendants. On service, the court held that retrospective validation of service on the first defendant under CPR 6.15(2) was justified given the circumstances (including that a process clause had been inadvertently repealed) and that the order of 8 June 2011 permitting alternative service on the second defendant was properly made and should not be set aside; the alleged non-disclosure about the Hague Convention reservation was not material enough to vitiate the order. Delay was addressed and, although the claimant had not applied for immediate interlocutory relief at the earliest opportunity, the judge held the delay did not preclude relief in the particular factual and procedural context.

The judge therefore dismissed the defendants’ applications and indicated he would hear parties on consequential orders; limited interim injunctive relief had earlier been granted to preserve the status quo.

First instance: the defendants' applications challenging jurisdiction and service were dismissed. The court held that it had jurisdiction to entertain the anti-suit claims (including under CPR 62.5(1)(b) and PD 6B where appropriate), that there was a serious issue to be tried (notably a credible case of unconscionable/collusive conduct by related companies intended to frustrate the arbitration), and that retrospective validation of service on the first defendant under CPR 6.15(2) and the order permitting alternative service on the second defendant (Hamblen J, 8 June 2011) were properly made and should stand. The judge considered delay and comity but concluded delay did not bar relief in the circumstances and declined to set aside the 8 June order for non-disclosure.