Premier Cruises Ltd v DLA Piper Rus Ltd & Anor

An arbitration agreement does not ordinarily have retroactive effect. Wide wording, including disputes arising “in connection with” a contract, is insufficient by itself. Under Russian law, retroactivity must be clearly expressed in the arbitration agreement or elsewhere in the contract containing it.

Where the relevant relationship and alleged breach pre-date the arbitration agreement, the court must identify the matter in dispute and construe the agreement using the applicable staged approach. A case-management stay cannot be used to send claims against a non-party to the arbitration agreement to a foreign tribunal, particularly where mandatory jurisdictional provisions apply and no real, temporary or compelling basis for a stay exists.

Premier Cruises Limited claimed more than €12 million in contract and tort damages against DLA Piper Rus Ltd and DLA Piper UK LLP arising from legal advice and representation concerning the termination of a shipbuilding contract and subsequent arbitration.

DLA Russia sought a stay under section 9 of the Arbitration Act 1996, relying on an arbitration clause in an engagement letter signed on 26 May 2015. PCL’s claim against DLA Russia principally concerned advice and work performed before that date. DLA UK accepted that it was not party to the arbitration agreement but sought a case-management stay pending a possible Russian arbitration.

The central issues were whether the arbitration agreement operated retrospectively and whether the proceedings against DLA UK should nevertheless be stayed.

1. Section 9 application. DLA Russia’s application was dismissed. The relevant “matter” was PCL’s pleaded claim concerning advice given and work performed before 26 May 2015. It was therefore necessary to decide whether that claim fell within the arbitration agreement.
2. Russian-law construction. The court accepted that Russian law applies a staged approach under Article 431 of the RF CC: first the literal meaning; if unclear, the contractual context; and, only if still necessary, wider evidence including negotiations and subsequent conduct. The same principles apply to arbitration clauses.
3. Retroactivity. Under Article 425 of the RF CC, an arbitration agreement has no retroactive effect by default. Wide wording such as disputes arising “in connection with” the engagement does not displace that presumption. Clear expression of the parties’ intention to apply the clause retroactively is required, either in the clause itself or elsewhere in the contract.
4. Application. The engagement letter was expressed in forward-looking terms. It became effective when signed, defined future services and contemplated future requests for advice. Neither the arbitration clause nor the surrounding terms clearly extended to the parties’ prior relationship. The claim against DLA Russia was outside its scope.
5. DLA UK. The case-management stay was also dismissed. DLA UK was not party to the arbitration agreement, and the claim against it was not a matter in respect of which “the parties” had entered into an arbitration agreement. The proposed stay was effectively jurisdictional and potentially of indefinite duration. The arbitration exception in the Recast Regulation did not assist.
6. Even if a discretion to stay existed, this was not a rare and compelling case warranting a stay. Both applications were dismissed. Costs and consequential matters were reserved.

First-instance decision. The judgment records no prior appellate decision in the same proceedings.