Quadra Commodities S.A. & Ors v International Bank of St-Petersburg (Joint Stock Company)

An undertaking given in support of an anti-suit injunction should be construed in light of its purpose. Where it was given to ensure that a claim pursued in foreign proceedings had a forum in arbitration, a proviso preserving arguments under the governing law did not limit the arbitral tribunal’s jurisdiction or fetter the arguments available to the opposing party. It preserved the relevant party’s ability to advance its own arguments on the merits. The tribunal remained responsible for deciding the effect of those arguments. A declaration that no breach had occurred was inappropriate where the issue had not been properly investigated, had not been pressed, and was academic or unsuitable for declaratory relief.

The claimants and the defendant were parties to ongoing London arbitrations concerning discharge agreements and LC issuance agreements. The defendant had previously brought proceedings in Russia under Article 61.2 of the Bankruptcy Law. Those proceedings were restrained by an anti-suit injunction granted by His Honour Judge Pelling QC on 30 September 2020, subject to an undertaking by the claimants.

The undertaking provided that the claimants would not contend in the arbitrations that the defendant was unable to pursue its Article 61.2 claims, while preserving the determination of the parties’ rights and obligations by reference to English law. The parties sought declarations concerning the meaning and effect of the undertaking, including whether it restricted arguments before the tribunal and whether the claimants had breached it.

1. The undertaking was to be construed according to the reason for which it had been given. That reason was to avoid the potential objection identified in Riverrock Securities Limited v International Bank of St-Petersburg (Joint Stock Company) [2020] EWHC 2483 (Comm): if the anti-suit injunction removed a claim available in Russia without providing a forum in England, that could militate against granting relief.

2. The undertaking therefore conferred jurisdiction on the arbitral tribunal to determine the defendant’s Article 61.2 counterclaim. The proviso preserved the claimants’ ability to argue that the validity and effect of the agreements, determined under English law, affected or defeated the counterclaim. It did not fetter the arguments available to the defendant, prescribe the tribunal’s approach, or make jurisdiction conditional on particular factual or legal circumstances.

3. The parties were free to advance whatever arguments they wished concerning the counterclaim. The tribunal would decide the effect of the English-law determination on the counterclaim and any relief sought. The claimants could not dispute the defendant’s entitlement to pursue the counterclaim in the arbitration.

4. The appropriate order stated that the defendant was entitled to pursue its Russian counterclaim under Article 61.2 and that the claimants agreed not to argue otherwise. The parties remained free to argue how the counterclaim should be considered and resolved. The revised paragraphs [1] and [2] identified arguments which the claimants could advance, but any inconsistency was to be resolved in favour of the simpler operative wording.

5. The court refused a declaration that the claimants had not breached the undertaking. Breach had not been argued substantively, the court had not reviewed all relevant material, and the issue was academic and unsuitable for declaratory relief.