Unicredit Bank GmbH v Ruschemalliance LLC

Where a contract expressly chooses English law but provides for arbitration at a foreign seat, that choice generally extends to the arbitration agreement. The rule is displaced only where an established feature of the law of the seat sufficiently indicates that the arbitration agreement is governed by that law.

The English court may enforce an English-law arbitration agreement by anti-suit injunction despite the foreign seat. It will generally restrain foreign proceedings brought in breach unless strong reasons require otherwise. The court must act cautiously and respect the supervisory court, but an injunction is appropriate where that court cannot grant equivalent relief, would not regard the injunction as interference, and arbitration cannot provide effective protection.

UniCredit issued on-demand bonds governed by English law. Each bond required disputes to be resolved by ICC arbitration seated in Paris. RusChemAlliance nevertheless sought payment in a Russian court, maintaining that Russian legislation made the arbitration agreement inoperable.

Sir Nigel Teare held in [2023] EWHC 2365 (Comm) that the arbitration agreement was governed by French law and that England was not the appropriate forum. He therefore declined jurisdiction to grant final anti-suit relief.

UniCredit appealed. The central questions were whether English law governed the arbitration agreement, whether England and Wales was the proper place for the claim, and whether a final injunction should require termination of the Russian proceedings.

1. Appeal allowed. The arbitration agreements were governed by English law. The court declared that it had jurisdiction and granted a mandatory final anti-suit injunction requiring RusChemAlliance to terminate the Russian proceedings.

2. Where the main contract expressly chooses English law and contains an arbitration agreement with a foreign seat but no separate choice of law, the parties generally choose English law for the arbitration agreement. The choice of a foreign seat alone does not displace that rule. The rule promotes certainty, consistency and legal coherence and should not lightly be displaced.

3. A sufficiently clear rule established by the case law of the seat may, in principle, displace the general rule. French law did not do so. Its rule assessed the existence and effectiveness of an arbitration agreement by reference to the parties’ common intention; it did not provide that choosing Paris necessarily subjected the agreement to French law. Choosing a neutral seat could reinforce another factor pointing to the law of the seat, but could not independently displace the general rule.

4. England and Wales was the proper place for the claim. The French courts could not grant an anti-suit injunction, while arbitral relief would be delayed and unenforceable in Russia. Without English relief, the bank faced a real risk of a Russian injunction preventing arbitration and an enforceable Russian judgment. The suggested availability of substantial justice in France was therefore illusory.

5. Foreign-seated arbitration creates no objection in principle to an English anti-suit injunction where personal jurisdiction arises under an English-law agreement. Caution remains necessary because the courts of the seat supervise the arbitration. An objection from the supervisory court may constitute a strong reason to refuse relief, but the French court would not regard this injunction as an interference.

6. RusChemAlliance was admittedly pursuing proceedings in breach of the arbitration agreement and identified no strong reason against relief. The possible merits of its sanctions argument belonged in arbitration and could not justify its breach. A stay pending a possible Supreme Court appeal was refused because the immediate enforcement risk to the bank substantially outweighed any prejudice to RusChemAlliance.

1. Court of Appeal (Civil Division): In [2024] EWCA Civ 64, unanimously allowed the appeal, declared that the English court had jurisdiction, granted a mandatory final anti-suit injunction and refused a stay pending any further appeal.
2. Commercial Court: In [2023] EWHC 2365 (Comm), Sir Nigel Teare held that the arbitration agreement was governed by French law and that England was not the appropriate forum. He declined final relief but maintained the interim injunction pending an application for permission to appeal.
3. High Court: Mr Justice Robin Knowles had earlier granted an interim anti-suit injunction without notice.