In an important decision, the English Court of Appeal has
reversed a decision of the first instance Judge and granted an
anti-suit injunction in restraint of proceedings brought in Russia
in breach of a clause that submitted disputes to ICC arbitration,
"seated" in London.
The facts of the matter are complex but, in brief: the Turkish
construction company Enka was contracted to perform certain works
in the construction of a power plant in Berezovskaya, in Siberia,
Russia. After the power plant had been completed and was
operational, there was a fire. The owners of the power plant
claimed under their insurance policy with Chubb, for about USD400
million. Chubb then brought a subrogated claim against Enka (and
others), in tort, in the Russian court, claiming that they were
(jointly and severally) responsible for the fire.
Enka sought an anti-suit injunction against Chubb to enforce the
ICC/London arbitration clause in its contract. Chubb said (amongst
other things) that, because its claim was in tort, it was not bound
by the arbitration clause in the contract between its insured and
Enka.
At first instance, the Judge refused Enka the anti-suit injunction,
saying (amongst other things) that the Russian court was the
correct one to decide whether the arbitration clause applied, or
not. He also criticised Enka for delay in making the application
for an anti-suit injunction (which Enka said was while it tried to
forestall what it considered to be an unmeritorious threatened
claim through the commercial route).
Following a virtual hearing before the Court of Appeal (which
highlighted, for the author, some useful lessons to be learned
about how advocacy is affected by not being physically in a
courtroom), the Court of Appeal reversed the first-instance
Judge's decision.
The full judgment is available here: https://www.bailii.org/ew/cases/EWCA/Civ/2020/574.html
but, in summary, following a review of the authorities, the Court
robustly rejected the first instance Judge's view that it was
for the Russian court to decide whether it had jurisdiction (a
forum conveniens approach, for all those Latin scholars out there),
summarised (at paragraph 105) the principles for identifying the
law of an arbitration agreement where it has not been expressly
chosen by the parties, and disagreed with the Judge that there had
been undue delay on the part of Enka. The Court of Appeal Judges
rejected the first instance Judge's view that choice of London
as the seat of arbitration under the rules of an international
arbitral body such as the ICC was simply one of convenience: the
courts of the seat have an important role to play in supporting
arbitration "seated" within their jurisdiction.
It should be noted that, during the period between the first
instance decision and consideration by the Court of Appeal, the
Russian proceedings continued on the merits, despite Enka's
continued objection to the Russian court's jurisdiction. This
resulted in the Russian court rejecting Chubb's claim against
Enka. That means that the injunction granted by the Court of Appeal
restrains Chubb from appealing the Russian judgment in respect of
its finding in favour of Enka. The Court of Appeal refused
Chubb's application for leave to appeal to the UK's Supreme
Court.
During periods of uncertainty such as the current COVID-19 crisis
and the discussions around BREXIT, this judgment is to be welcomed
as re-affirming the English Courts' commitment to supporting
party autonomy when they have chosen to resolve their disputes
through arbitration seated in the UK, and granting anti-suit (or,
in this case, "anti-appeal") injunctions, where
appropriate. It is also an example of the English Courts'
commitment to adapt to the current circumstances and embrace new
technologies in order to continue to serve the international and
domestic industries that have trusted them with resolving their
disputes, in a timely and efficient way.
Kevin Cooper of MFB Solicitors was part of the team advising Enka
in relation to its successful appeal.
Originally published May 5, 2020.
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