Airbus Canada Limited Partnership v Joint Stock Company Ilyushin Finance Co

Where parties choose London as the seat of an arbitration and incorporate LCIA rules providing that the arbitration agreement is governed by the law of the seat, that choice may amount to an express choice of English law for the arbitration agreement, despite a different governing law for the substantive contract.

Final anti-suit relief is appropriate where foreign proceedings breach the arbitration agreement unless strong reasons justify refusal. Sanctions-related difficulties in accessing an English arbitration do not constitute such a reason where licensing arrangements permit participation. Damages are generally inadequate. Comity and practical utility may support relief, including mandatory discontinuance and anti-enforcement orders.

The claimant sought final anti-suit declaratory and injunctive relief, together with mandatory orders, after the defendant commenced proceedings in Russia concerning termination of an aircraft supply agreement and repayment of advance payments.

The agreement was governed by New York law and required disputes to be resolved by LCIA arbitration seated in London. The defendant relied on sanctions and Article 248 of the Arbitrazh Procedure Code of the Russian Federation to justify the Russian proceedings, despite the arbitration clause.

The issues were whether the arbitration agreement was governed by English law, whether the Russian proceedings breached it, and whether strong discretionary reasons, including sanctions, comity or lack of practical utility, justified refusing relief.

1. Applicable law. The parties had expressly chosen English law to govern the arbitration agreement. They selected London as the seat and incorporated the LCIA Rules, including Rule 16.4, which provides that the law applicable to the arbitration agreement is ordinarily the law of the seat. The New York governing-law clause for the substantive contract did not alter that conclusion.
2. Breach. The Russian proceedings concerned termination of the aircraft purchase agreement and the consequences of termination. They therefore plainly fell within the clause requiring arbitration of disputes arising out of or in connection with the agreement.
3. Strong reasons. No strong reason justified refusing final anti-suit relief. Sanctions did not prevent access to an LCIA arbitration because general and specific licensing mechanisms enabled payment of arbitration and legal costs. Seeking to litigate in a forum said to disregard part of the contract’s governing law was not a legitimate reason to breach the arbitration agreement.
4. Discretion. Damages were inadequate, following the approach in Angelic Grace. There was no appreciable delay or substantive step in the Russian proceedings giving rise to a material comity objection. The relief retained practical utility, including because an arbitral award could be enforced internationally and an English order could assist if a Russian judgment were later obtained and enforcement pursued elsewhere.
5. Orders. The court granted final anti-suit relief. It also made a mandatory order requiring discontinuance of the Russian proceedings, including the anti-anti-suit proceedings, and an anti-enforcement injunction because there was a real risk of a Russian judgment and subsequent enforcement attempts.