Barclays Bank PLC v VEB.RF

An asymmetric jurisdiction and arbitration clause may permit one party to require an arbitration to be discontinued and the dispute to proceed in court, even where an existing anti-suit injunction appears to restrict the other party’s access to the courts. The notice is not invalid merely because court proceedings cannot immediately be commenced. The proper approach is to construe the injunction in its contractual and procedural context, and any practical difficulty may be addressed by variation of the order.

Contractual non-oral modification provisions can apply to waiver as well as variation. Informal waiver requires compliance with the agreed formalities unless a clear estoppel is established by an unequivocal representation, additional reliance and inequitable detriment.

Barclays Bank PLC and VEB.RF were parties to an agreement containing an asymmetric jurisdiction and arbitration clause. VEB.RF commenced proceedings in Moscow and later commenced LCIA arbitration. Barclays served notice under clause 13(b)(ii), requiring the dispute to be heard by the English courts and the arbitration to be discontinued.

VEB.RF contended that the notice was invalid because a final anti-suit injunction prevented it from commencing English proceedings, and that Barclays had waived or was estopped from relying on the option. The court determined the substantive jurisdiction issue under section 32(2) of the Arbitration Act 1996 and considered an application to vary the injunction.

1. Notice valid. The notice complied with the contractual requirements and operated to require discontinuance of the arbitration. It did not require VEB.RF to commence court proceedings within any specified period. The possibility that VEB.RF might have needed a variation of the anti-suit injunction did not make performance impossible.
2. The contractual principle against requiring the impossible did not assist VEB.RF. There was no relevant impossibility because an application could have been made to vary the injunction, and such variation would probably have been consented to or granted. The point was therefore unarguable or close to unarguable.
3. In any event, an injunction enforceable by coercive means is construed principally by its language, but also in context, including its historical context and objective. Ambiguities are generally construed in the respondent’s favour. The injunction was directed against proceedings brought in breach of the arbitration or jurisdiction agreement, not proceedings brought pursuant to it. A construction depriving a party of proportionate access to the courts would engage Article 6 of the European Convention on Human Rights.
4. No waiver or estoppel. Waiver by election required a choice between mutually exclusive courses of action. Pure or unilateral waiver required sufficiently unequivocal abandonment of the right. Waiver by estoppel required a representation, reliance and inequity. Barclays was not required to choose between arbitration and court proceedings until the contractual notice period following VEB.RF’s request for arbitration, and its earlier conduct was not unequivocal.
5. Clause 9(b), requiring amendments, modifications and waivers to be in writing and executed by both parties, applied to waiver. An estoppel overcoming that requirement would require an unequivocal representation that the informal waiver was valid despite non-compliance, together with something more than the alleged waiver itself. No such evidence existed.
6. Declarations were granted in broadly the proposed terms. The anti-suit injunction was varied for pragmatic reasons so that any English proceedings could be commenced without concern that they breached the order.