UniCredit Bank GmbH v RusChemAlliance LLC

A general choice of law governing a contract ordinarily governs an arbitration clause contained in it, even where the arbitration has a foreign seat. The law of the seat cannot displace that choice merely because its own rules would treat the arbitration agreement as governed by that law.

Where English law governs the arbitration agreement, the English court may restrain foreign proceedings brought in breach of it although England is not the seat. The forum non conveniens test is not apt. England is presumptively a proper place for the enforcement claim unless the foreign seat makes intervention inappropriate, and a strong reason is required for refusing relief. Court proceedings which enforce an arbitration agreement or support arbitration are compatible with the agreement. The power to grant an anti-suit injunction derives from the court’s general equitable jurisdiction, rather than its supervisory jurisdiction over the arbitration.

Seven on-demand bonds issued by the respondent bank contained English governing-law clauses and agreements requiring disputes to be resolved by ICC arbitration in Paris. The appellant sought payment in Russian court proceedings. The respondent commenced English proceedings for declaratory and injunctive relief, alleging breach of the arbitration agreements.

The Commercial Court held that the English court lacked jurisdiction: [2023] EWHC 2365 (Comm). The Court of Appeal reversed that decision and granted a final mandatory anti-suit injunction: [2024] EWCA Civ 64; [2024] 1 Lloyd’s Rep 350.

The sole issue before the Supreme Court was whether the English court had jurisdiction. This required determination of whether English law governed the arbitration agreements and whether England and Wales was the proper place to bring the enforcement claim.

The appeal was dismissed unanimously. Lord Leggatt gave the judgment, with which Lord Reed, Lord Sales, Lord Burrows and Lady Rose agreed. The final mandatory anti-suit injunction granted by the Court of Appeal remained in force.

1. The arbitration agreements were governed by English law. Under Enka Insaat ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38 and Kabab-Ji SAL v Kout Food Group [2021] UKSC 48, a general contractual choice of law ordinarily applies to an arbitration clause forming part of the contract. A different seat does not, without more, displace that choice. The bonds’ wide English governing-law clauses therefore included their arbitration clauses.

2. Whether the parties’ choice is described as express or implied has no legal consequence. The sole question is whether, on the proper construction of the contractual documents, the parties agreed upon the law governing the arbitration agreement.

3. The suggestion in Enka Insaat ve Sanayi AS v OOO Insurance Company Chubb that the content of the curial law might support an inference that the law of the seat was chosen had been obiter. It should in future be disregarded. The reasoning in Carpatsky Petroleum Corpn v PJSC Ukrnafta [2020] EWHC 769 (Comm), which inferred a choice of Swedish law on that basis, was wrong. A provision of the law of the seat cannot support an inference capable of displacing the ordinary governing-law principles.

4. The forum non conveniens test in Spiliada Maritime Corpn v Cansulex Ltd [1987] 1 AC 460 was not apt. The substantive dispute belonged in arbitration, and the English court was concerned only with enforcing the contractual bargain. Where jurisdiction is established and English law governs the contractual right, service out should in principle be permitted unless the foreign seat makes it inappropriate to grant relief. Consistently with the policy reflected in section 2(3) of the Arbitration Act 1996, a strong reason is required for refusing to restrain the breach.

5. Proceedings brought to enforce an arbitration agreement or support the arbitral process are compatible with that agreement. This principle accords with article II(3) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 and articles 9 and 17J of the UNCITRAL Model Law on International Commercial Arbitration 1985. An anti-suit injunction enforcing the negative promise not to litigate derives from section 37 of the Senior Courts Act 1981. It is not an exercise of supervisory jurisdiction over the arbitration and may be granted although the seat is abroad.

6. The French courts were not an available forum for the respondent’s enforcement claim. Arbitration was also incapable of providing an effective remedy: an arbitrator’s order would have no coercive force and could not be enforced in France or Russia. The foreign seat therefore provided no reason for the English court to refrain from enforcing the English-law arbitration agreements.

1. United Kingdom Supreme Court: The appeal was dismissed unanimously. The Court of Appeal’s final mandatory anti-suit injunction remained in force: [2024] UKSC 30 .
2. Court of Appeal: The respondent’s appeal was allowed. The court held that English law governed the arbitration agreements, that England and Wales was the proper place for the claim, and granted final injunctive relief: [2024] EWCA Civ 64 ; [2024] 1 Lloyd’s Rep 350.
3. Commercial Court: Sir Nigel Teare held that the English court lacked jurisdiction, but continued the interim anti-suit injunction during the appeal process: [2023] EWHC 2365 (Comm) .