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The continuing saga of English courts and anti-suit injunctions for foreign-seated arbitrations
The continuing saga of English courts and anti-suit injunctions for foreign-seated arbitrations
9 October 2023
Series
Blogs
9 October 2023
G v R [2023] EWHC 2365 (Comm) is another instalment in the developing jurisprudence concerning whether English courts can grant anti-suit injunctions (“ASIs”) to support foreign-seated arbitrations. This has arisen, in particular, in relation to Russia-related disputes. We take a short look at the judgment and the trends which are developing.
Background
G v R involved a German claimant seeking an ASI against a Russian defendant who had commenced proceedings in Russia. These concerned bonds which were expressly governed by English law and contained an arbitration agreement with Paris-seat (ICC rules – not yet commenced).
An interim ASI had previously been granted by Knowles J pending a full inter-partes hearing. At that hearing the application was, however, rejected by Teare J. This was for the following reasons.
Personal jurisdiction over the defendant and applicable law of the arbitration agreement
In order to grant an ASI the English court must first have personal jurisdiction over the defendant. If it is overseas, this means permission to serve out must be obtained; so a “gateway” under CPR6B 3.1 needs to be met. In this case, and the earlier SQD decision, the gateway relied upon by the claimant was CPR6B 3.1(6)(c); that the claim related to a contract governed by English law.
In this context that means establishing that the arbitration agreement was so governed; so Teare J considered that this was the first issue for him to decide.
Teare J found that the applicable law was French law. Applying the principles of Enka v Chubb [2020] UKSC 38 to determine this, he found that the interpretative rule [Enka at 170 (iv)] of “[w]here the law applicable to the arbitration agreement is not specified, a choice of governing law for the contract will generally apply to an arbitration agreement which forms part of the contract” was not to be applied in the present circumstances as they involved one of the situations in which the UKSC said it might be displaced in favour of the law of the seat. In particular where “any provision of the law of the seat… indicates that, where an arbitration is subject to that law, the arbitration agreement will also be treated as governed by that country’s law” [Enka at 170 (vi)(a)]. That applied because:
Accordingly, there was no basis for service out and the application was rejected on that ground. Notably, this conclusion differs from that reached by the first instance judge in SQD where, on similar facts, the judge’s provisional view was that English law applied to the arbitration agreement; albeit he acknowledged that there had not been evidence before him so as to establish that there was a provision of French law of the necessary character to displace that conclusion (see SQD at [17(ii)]).
England was not the proper forum as “substantial justice” was available in France
In case he was wrong on the above, Teare J went on to consider whether the English courts were the proper forum for the ASI application. Teare J also rejected the application on this ground.
Broadly speaking, this was for two reasons. First, he was not persuaded that, assuming the arbitration agreement was governed by English law, this was a particularly “powerful connecting factor” to England [31]. Secondly, the French courts were those which had been chosen to have supervisory jurisdiction over the arbitration. Many of the claimants arguments were based around the unavailability of an ASI in France, but this did not mean that substantial justice could not be obtained there; for example the arbitral tribunal might grant remedial measures (including an award of damages) and less “advantageous” remedies did not equate to substantial injustice. Whether Russian law facilitating the Russian court proceedings might be in breach of the New York Convention was also not relevant to that question [32-47]
Comment
In some ways, and despite the result, it seems that much remains up for grabs in this fast developing area of English jurisprudence.
First, as to the issue of the arbitration agreement being governed by English law so as to provide a ground for service out. In this respect the different conclusions reached in G v R and SQD on similar fact profiles (English law contract, French seat) is noticeable. Teare J’s judgment also illustrates that may be room for interpretation of paragraphs [70-72] of Enka. Whilst Teare J’s approach in that regard might be legitimate, there is an apparent friction with the result of the UKSC decision in Kabab-Ji (again, English law contract, French seat), that result being suggestive of a landing point of English law (although, in Kabab-Ji, the observations of [70-72] in Enka were not referred to – which may seem odd given that France was the seat in that case, and the UKSC was applying its own Enka principles).
Second, as to appropriate forum, Teare J’s judgment joins the first instance judgment in SQD in showing scepticism that the England courts should deploy its ASI powers to support foreign- seated arbitration agreements simply because ASIs are not available there. Even here, however, there may be room for further divergence of views. In particular, Teare J made reference to the fact that (in a judgment which does not currently appear to be publicly available) the Court of Appeal has overruled the first instance decision in SQD [45]. Although he did not regard that as binding (on the basis that it was an application attended by only one side) it may indicate the existence of a more receptive view at appellate levels.
A few days after publication of this blog post, the Court of Appeal's decision in the SQD proceedings was published (see [2023] EWCA Civ 1144), along with a further decision of the Commercial Court in which, on similar facts, an ASI was granted (see [2023] EWHC 2510). Click here for our ArbitrationLinks post on those rulings.