Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb & Ors (Rev 1)

The choice of England as the arbitral seat submits the parties to the English court’s curial jurisdiction. The court is necessarily an appropriate forum to restrain foreign proceedings brought in breach of the arbitration agreement. Forum conveniens does not arise.

The law governing an arbitration agreement is determined by asking successively whether there is an express choice, an implied choice, or a system with the closest and most real connection. Unless the parties expressly choose otherwise, the strong presumption is that they impliedly chose the curial law. Powerful countervailing factors are required to displace it.

Once a breach is established, an injunction should ordinarily issue unless there is strong reason to refuse relief. Commencement or contemplation of an arbitration is unnecessary because the agreement includes an independent promise not to litigate elsewhere.

Enka, a Turkish construction company, was engaged under a contract concerning a Russian power plant. The contract required disputes to be resolved by ICC arbitration seated in London. After paying for fire damage at the plant, Chubb Russia brought a subrogated claim against Enka and others in the Moscow Arbitrazh Court.

Enka sought a declaration and an anti-suit injunction under section 37 of the Senior Courts Act 1981. Andrew Baker J declined to determine the law and scope of the arbitration agreement. He dismissed the claim on forum non conveniens grounds and alternatively found delay, participation in the Russian proceedings and failure to commence arbitration sufficient reasons to refuse relief: [2019] EWHC 3568 (Comm).

The appeal concerned the curial court’s role, the law governing the arbitration agreement, whether the Moscow claim breached that agreement, and whether strong reason existed to refuse an injunction.

1. Appeal allowed unanimously. The English court, as the court of the chosen seat, was necessarily an appropriate court to grant anti-suit relief. Choice of seat constitutes submission to the curial law and curial jurisdiction. The power to restrain proceedings brought in breach of the arbitration agreement forms part of that jurisdiction. Forum conveniens therefore had no role: paras [42]–[66].

2. The curial court had to decide whether the foreign proceedings breached the arbitration agreement. If they did, it then had to decide whether discretionary relief should be granted. It was impermissible to begin that inquiry but cede questions concerning foreign law or the agreement’s scope to the foreign court. Concurrent jurisdiction elsewhere did not diminish the primary role accepted by choosing the seat: paras [53]–[65].

3. The governing law of an arbitration agreement is determined by a three-stage inquiry: express choice, implied choice, and, failing either, the system with the closest and most real connection. An express choice for the main contract may, on construction of the whole contract, amount to an express choice for the arbitration agreement. Otherwise, a strong presumption arises that the parties impliedly chose the curial law. Powerful countervailing factors are required to displace that presumption: paras [89]–[105].

4. The contract contained no express general choice of Russian law. Even if it had, its language did not expressly select Russian law for the arbitration agreement. English law governed that agreement because London was the seat and no powerful countervailing factor existed. The integrated pre-arbitration and arbitration procedure reinforced the broad English-law approach to the defined dispute: paras [106]–[109]. The Moscow claim was therefore brought and pursued in breach of clause 50.1: para [110].

5. The judge’s alternative exercise of discretion was legally flawed. Commencement or contemplation of arbitration was irrelevant because the agreement included an independent negative promise not to litigate elsewhere. Enka’s participation in Russia sought to enforce that promise, and it acted promptly once the Russian claim was accepted for determination. No strong reason justified refusal: paras [111]–[119].

6. An injunction was appropriate to restrain Chubb Russia from pursuing a Russian appeal. Enka was required to undertake that it would not rely on the existing Russian merits decision as creating an issue estoppel in any arbitration: para [120].

1. Court of Appeal (Civil Division): The appeal was allowed unanimously. The court held that English law governed the arbitration agreement and that the Moscow proceedings breached it. Anti-suit relief was granted subject to an undertaking concerning issue estoppel: [2020] EWCA Civ 574.
2. Commercial Court: Andrew Baker J dismissed Enka’s claim against Chubb Russia on forum non conveniens grounds. He alternatively considered delay, participation in the Russian proceedings and failure to commence arbitration sufficient reasons to refuse relief: [2019] EWHC 3568 (Comm).
3. Commercial Court: Carr J did not determine the interim injunction application substantively and ordered an expedited trial: [2019] EWHC 2729 (Comm).