Ingosstrakh -Investments v BNP Paribas SA

A non-party to an arbitration agreement may be restrained from pursuing foreign proceedings where there is a serious issue that it colluded with a contracting party to subvert the agreed arbitration or enforcement of its award. The mere overlap between foreign litigation and an associated company’s arbitration is insufficient.

Comity remains important, but carries reduced weight where the injunction protects a valid English arbitration agreement from collusive evasion. Delay is assessed evaluatively and does not bar relief where the claimant acted reasonably in addressing complex jurisdictional issues. Retrospective validation of alternative service on a foreign defendant requires strong grounds and an exceptional case.

The Bank sought to enforce an English-law guarantee containing an agreement for London arbitration. The guarantor disputed the guarantee’s validity in the arbitration. The appellant, a Russian shareholder under common ultimate control with the guarantor, commenced Russian proceedings seeking invalidation of the same guarantee.

Blair J dismissed the appellant’s jurisdictional challenge in [2011] EWHC 308 (Comm) and granted an interim anti-suit injunction in [2011] EWHC 3252 (Comm). Teare J subsequently validated service of the claim form on the appellant’s English solicitors under CPR 6.15(2) in [2012] EWHC 1023 (Comm).

The appeals concerned whether there was jurisdiction to restrain a non-party to the arbitration agreement, whether collusion and unconscionable conduct raised a serious issue to be tried, and whether delay, comity, forum, the service-out gateways and alternative service prevented or invalidated the relief.

1. The appeals were dismissed unanimously. The Bank had established a serious issue to be tried that the appellant and the guarantor had colluded in bringing the Russian proceedings to impede the arbitration and enforcement of any award. Common control, the importance and timing of the proceedings, and the improbability that the appellant acted independently were sufficient. Some acts taken by the guarantor in its own financial interests did not themselves establish collusion.

2. An arbitration agreement is distinct from the contract containing it. The guarantee’s validity therefore remained within the valid arbitration agreement, consistently with section 7 of the Arbitration Act 1996. A contracting party may readily be restrained from procuring determination elsewhere of an issue committed to arbitration.

   A non-party should not be restrained merely because its foreign claim overlaps with an associated company’s arbitration. A sufficient collateral ground existed here because the alleged collusion made the Russian proceedings a joint venture with the guarantor and participation in its breach. If proved, that conduct was vexatious and unconscionable.

3. The Russian court’s rejection of an abuse-of-rights allegation created no issue estoppel. It concerned a different issue under Russian law, the Bank had succeeded in the Russian judgment, and the finding was not fundamental to the result.

4. Blair J was entitled to conclude that delay did not bar relief. That question involved evaluation of primary facts and could be disturbed only for legal error, omission of a relevant factor, consideration of an irrelevant factor, or an unreasonable conclusion. Although the case approached the outer edge of acceptable delay, the complexity of the Bank’s claim and jurisdictional position justified the conclusion reached.

5. Comity did not preclude relief. An anti-suit injunction requires caution, but comity has reduced importance where the court protects a valid English arbitration agreement against an alleged collusive attempt to subvert it. The fact that the Russian courts had decided for the Bank further mitigated the comity concerns. England was the appropriate forum for deciding that claim.

6. The appellant fell within the necessary-or-proper-party gateway in paragraph 3.1(3) of Practice Direction 6B. Although the Bank mistakenly relied on a repealed service clause, service on the guarantor would in fact have been authorised through its arbitration solicitors. The Court therefore left the separate CPR 62.5 gateways undecided.

7. Blair J had found the merits threshold satisfied even if the higher probability standard for determinative interim relief applied. Teare J also committed no error in retrospectively validating alternative service. He correctly required stronger grounds and a more exceptional case for retrospective validation against a foreign defendant.

1. Court of Appeal (Civil Division): The appeals were dismissed unanimously. The jurisdictional ruling, interim anti-suit injunction and retrospective validation of service were upheld: [2012] EWCA Civ 644.
2. Commercial Court, Teare J: Service of the claim form on the appellant through Bryan Cave LLP was retrospectively validated under CPR 6.15(2): [2012] EWHC 1023 (Comm).
3. Commercial Court, Blair J: The appellant’s challenge to jurisdiction was dismissed: [2011] EWHC 308 (Comm). An interim anti-suit injunction restraining further participation in the Russian proceedings was granted: [2011] EWHC 3252 (Comm).