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

The court may grant anti-suit relief in support of an English-seated arbitration where foreign proceedings threaten the arbitral process or enforcement of an award. The statutory jurisdiction under section 44 of the Arbitration Act 1996 may extend to a non-party whose conduct is sufficiently bound up with the arbitration agreement. At the jurisdiction stage, the claimant need show a good arguable case on the gateways and a serious issue to be tried on the merits. Service rules remain important, but CPR 6.15 permits retrospective validation or alternative service where there is good reason, including special circumstances connected with an arbitration and urgency. Service by an alternative method abroad is permissible where it is not illegal under the law of the place of service.

BNP Paribas sought anti-suit relief against two related Russian companies. The first defendant was party to an English-law guarantee and an English-seated LCIA arbitration. The second defendant, a non-party to the arbitration agreement, commenced Russian proceedings seeking invalidation of the guarantee under Russian company law.

The claimant applied for permission to serve the second defendant out of the jurisdiction. It mistakenly relied on a contractual process-agent clause that had been repealed. Proceedings were nevertheless served on both defendants, and both challenged jurisdiction and service. The central issues were whether the claims fell within the relevant jurisdictional gateways, whether there was a serious issue to be tried, and whether defective or alternative service could be validated.

1. Disposition. The defendants’ applications challenging jurisdiction and service were dismissed. The court accepted jurisdiction over both defendants and retrospectively validated service on the first defendant under CPR 6.15(2). The order permitting alternative service on the second defendant was upheld.
2. Jurisdiction under section 44. Section 44 of the Arbitration Act 1996 gives the court a statutory power which is not excluded merely because the dispute may involve an issue falling within the arbitration agreement. The arbitrator’s permission had been obtained. The jurisdictional gateway in CPR 62.5(1)(b) was available in relation to anti-suit relief supporting the arbitration, including against the second defendant if the allegation of collusive conduct could be made good.
3. Non-party conduct. A non-party may be amenable to anti-suit relief where its conduct is bound up with an arbitration agreement and is arguably unconscionable. Companies under common ownership and control may, depending on the evidence, act unconscionably by cooperating to impede an arbitration to which only one of them is party.
4. Merits threshold. The claimant showed a serious issue to be tried and, for gateway purposes, a good arguable case. The timing of the Russian proceedings, common control and evidence that the first defendant supported the second defendant’s case justified the inference that the Russian proceedings were brought to impede the arbitration. The contractual characterisation of the second defendant’s Russian claim was difficult and was not finally decided.
5. Delay and forum. The claimant’s delay did not disqualify the claim. Although promptness is important because of costs and comity, the circumstances, including the complexity of jurisdiction and service issues, provided a reasonable explanation. England was the proper place to determine the claims because it was the seat of the arbitration.
6. Service. CPR 6.15(2) applied to a foreign defendant. Convenience alone is insufficient, but the mistaken reliance on the repealed process clause, the arbitration context, the first defendant’s solicitors’ knowledge, absence of prejudice and avoidance of further expense constituted good reason for validating service. Under CPR 6.40, alternative service abroad need not be expressly permitted by foreign law if it is not illegal there. The Russian reservation to Article 10 of the Hague Convention did not make service by hand or post illegal.