Supreme Court gives reasons for anti-suit injunction in UniCredit

As we previously reported, in April 2024 the Supreme Court delivered its judgment in this key case on the availability of anti-suit injunctions from the English courts to protect arbitral proceedings outside England and Wales. Reasons were reserved, but were published by the Supreme Court on 18 September 2024.

The facts of the case are in our previous report, but in brief, UniCredit sought an anti-suit injunction to restrain RusChemAlliance from bringing proceedings in the Russian courts in breach of an agreement to arbitrate disputes in Paris, contained in an English law-governed agreement.

Governing law of arbitration agreement

RusChemAlliance argued that as the parties had agreed Paris as the seat of the arbitration, the arbitration agreement contained within the contract, which by its nature is severable, was governed by French law. It claimed that the French courts would adopt this approach. This mattered because the English Supreme Court in Enka v Chubb [2020] UKSC 38 had indicated that the general rule that a choice of law to govern a contract will apply to an arbitration agreement incorporated in the contract might be displaced where the law of the seat of arbitration provides that the arbitration agreement will be treated as governed by that country's law.

The Supreme Court has now made clear its position on this: the fact that the law of the seat of the arbitration would treat the arbitration agreement as governed by a law other than that of the main contract does not displace the approach in English law that the arbitration clause is governed by the same law as the rest of the agreement. To do otherwise would introduce uncertainty and complexity, requiring the English courts to consider evidence of foreign law before determining the law of the arbitration agreement. It also failed to reflect the ordinary expectations of commercial parties entering into agreements containing arbitration clauses.

Proper Place to bring the Claim

RusChemAlliance's second line of defence was that UniCredit had not satisfied a further requirement of showing that England was the proper place to bring the claim for an injunction. The Supreme Court's reasons for rejecting this were that the test of most appropriate forum has no application where the parties have contractually agreed upon the forum, as they had here by agreeing to refer any dispute to arbitration.

The role of the courts of Paris, as the seat of arbitration, is to supervise the arbitration itself, but that does not extend to preventing a party from breaking its contract to arbitrate. There was no dispute that the Paris courts had no power to issue anti-suit injunctions in any event, so finding them to be the appropriate forum would be a nonsense. UniCredit could have asked for the appointment of an emergency arbitrator and then sought an order from the arbitrator for RusChemAlliance to stay the Russian proceedings. However, the Supreme Court agreed with the Court of Appeal that this remedy was illusory, as there would be no practical means of enforcing it: "an order made by an arbitrator has no coercive force". The Court did not determine whether RusChemAlliance's assertion that the proper forum for relief was an arbitral tribunal, when it was arguing in Russian proceedings that the arbitration agreement was unenforceable, was an abuse of process, but did characterise it as "unattractive".

What this means for you

For any parties to agreements with Paris-seated arbitration clauses this represents a robust confirmation that the English courts can and will issue anti-suit injunctions to protect such arbitral proceedings. The acknowledgement from England's highest court of the relative powerlessness of interim relief granted by tribunals is welcome.

However, it is important to note that the Arbitration Bill currently making its way through Parliament will implement changes to the Arbitration Act 1996 recommended by the Law Commission (see more here). This includes a provision to overturn the rule in Enka v Chubb, so that where parties do not expressly specify a governing law for the arbitration agreement, it will be the law of the seat. It will therefore become more important to consider what governing law the parties wish to apply to their arbitration agreement, particularly where anti-suit relief may be required.