LLC Eurochem North-West-2 v Tecnimont SpA

An anti-suit injunction will ordinarily restrain proceedings brought in breach of an English jurisdiction or arbitration agreement where the agreement is binding and applicable, unless strong reasons justify refusing relief. Applications for interim relief supporting an arbitration seated in England and Wales should generally be made to the courts of the seat. The exception is narrow: the applicant must show that, for practical reasons, the application can only sensibly be made elsewhere, and the proceedings must not be a disguised attempt to outflank the arbitration agreement. Questions concerning the lawfulness of performance abroad can generally be resolved by the English courts or the arbitral tribunal applying English law and expert evidence of foreign law.

Eurochem obtained a without-notice anti-suit injunction restraining Tecnimont SpA and LLC MT Russia from commencing or pursuing foreign proceedings concerning payment under on-demand bonds. The bonds and construction contracts were governed by English law. The contracts provided for ICC arbitration seated in London, while the bonds contained exclusive English jurisdiction clauses binding Eurochem and the issuing banks.

The defendants sought discharge of the injunction on the merits, alleging material non-disclosure, and permission to bring proceedings in France or Italy to restrain the banks from honouring the bonds because payment might contravene EU sanctions regulations. The court determined the Merits Issue, Disclosure Issue and Derogation Issue.

1. The injunction continued. The defendants were not parties to the contracts constituted by the bonds, so the bonds’ exclusive jurisdiction clauses did not contractually bind them. The arbitration agreements in the construction contracts did bind the parties and covered disputes concerning enforceability of the bonds.
2. Where a binding and applicable jurisdiction or arbitration agreement is established to a high degree of probability, the court ordinarily restrains proceedings brought in breach of it unless the defendant shows strong reasons for refusing relief. The ICC Rules’ permission to seek interim relief from state courts was only the starting point.
3. Following and explaining U&M Mining Zambia Ltd v Konkola Copper Mines plc, Orient Express Lines (Singapore) PTE Limited v Peninsular Shipping Services Limited and Evergreen Marine (Singapore) Ltd v Fast Shipping and Transportation Co Ltd, applications supporting an arbitration seated in England and Wales should generally be made to the English courts. The exception applies only where, for practical reasons, the application can only sensibly be made elsewhere, and the proceedings are not a disguised attempt to outflank the arbitration agreement.
4. The defendants failed to establish that exception. The governing law of the bonds and contracts was English law. Any issue whether payment would be unlawful at the place of performance could be determined in England, applying the principle in Ralli Brothers v Campania Naviera Sota Y Aznar and expert evidence of French or Italian law. Permitting foreign proceedings to obtain relief unavailable under the parties’ English-law arbitration agreement would improperly outflank that agreement.
5. The alleged non-disclosure did not justify discharge. The sanctions issue had been fairly disclosed. Article 11 of the relevant regulations had not been raised by the defendants in their comprehensive response or before the emergency arbitrator. The alleged assignment of the bonds was immaterial because it had no effect absent an event of default. Applying Brinks Mat Ltd v Elcombe, Konamaneni v Rolls Royce Industrial Power (India) Ltd and Union Fenosa Gas SA v Egypt, the injunction was not set aside.
6. Permission to commence proceedings in France or Italy was refused. Such proceedings would create additional cost and delay, distract from the arbitration and be vexatious. Further applications concerning compliance with the bonds could be made to the English courts or the arbitral tribunal.

The judgment records that Butcher J granted the anti-suit injunction without notice on 9 August 2022. Directions were given on 23 August 2022, with the injunction continuing pending this substantive return-date hearing. The present court continued the injunction and refused permission for proceedings in France or Italy.