Barclays Bank PLC v VEB.RF

An anti-suit injunction is generally granted where the applicant establishes, to a high degree of probability, an arbitration or exclusive jurisdiction agreement, unless strong reasons make relief inappropriate. Delay alone will rarely suffice, particularly where the applicant challenged jurisdiction at the first sensible opportunity. The court must consider the extent of progress in the foreign proceedings, including whether the merits have been engaged. Sanctions do not, without more, prevent a sanctioned party from obtaining substantive justice in England and Wales. Licensing arrangements and procedural stays can protect the party’s ability to participate fairly. An anti-enforcement injunction may also be granted where foreign proceedings were commenced in breach of contract and enforcement protection is practically useful.

Barclays applied without notice for an anti-suit injunction and an anti-enforcement injunction against VEB.RF. The parties’ 2005 agreement was in the form of the 1992 ISDA Master Agreement. It was governed by English law and contained an LCIA arbitration clause, together with an asymmetric provision permitting Barclays in specified circumstances to refer claims to the English courts.

After sanctions were imposed on VEB.RF, proceedings were commenced against Barclays in Russia. Barclays challenged the Russian court’s jurisdiction by reference to the arbitration agreement. The Russian court nevertheless directed that jurisdiction and the merits be considered at a forthcoming hearing. The issues were whether the arbitration agreement applied, whether strong reasons justified refusing an anti-suit injunction, whether sanctions prevented substantive justice in England, and whether anti-enforcement relief would be futile.

1. Anti-suit injunction. The court applied the bipartite test identified in The Angelic Grace [1995] 1 Lloyds Rep 87: the applicant must establish to a high degree of probability that an arbitration or exclusive jurisdiction agreement exists; if so, relief will generally follow unless strong reasons make it inappropriate.
2. The agreement was expressly governed by English law. Although the arbitration clause operated as a separate agreement, its governing law would almost invariably be the same as that of the substantive agreement. The court was therefore satisfied to the required standard that an English-law arbitration agreement existed and covered the dispute. The asymmetric provision did not invalidate the dispute resolution clause and, on its proper construction, did not apply to Barclays’ reference of the dispute to arbitration.
3. There were no strong reasons to refuse relief. Delay was not sufficient because Barclays challenged jurisdiction at the first sensible opportunity and pursued the English application as quickly as legally and commercially practicable. The Russian proceedings had made little substantive progress: there had been one short hearing, the jurisdiction challenge remained unresolved, and the merits had not been determined.
4. The sanctions regime did not prevent VEB.RF from obtaining substantive justice in England and Wales. General and specific licensing mechanisms enabled it to fund legal representation and incidental litigation expenses. If necessary, procedural stays or adjournments could prevent proceedings advancing while a specific licence application was determined.
5. An anti-enforcement injunction was appropriate. It was sought before any substantive Russian judgment had been made and would provide useful protection against enforcement in third countries. The court rejected futility as a reason to withhold relief, since the orders might protect Barclays if a Moscow judgment were nevertheless obtained.
6. Anti-suit and anti-enforcement injunctions were granted, subject to detailed drafting points.