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The Court of Appeal’s judgment overturning SQD, mentioned in our previous posts (here and here), has now been published and a further first instance decision has seen another anti-suit injunction (ASI) granted against a Russian defendant in support of a Paris seated arbitration. We take a short look at these latest rulings in this developing area of law concerning a rising number of Russia-related disputes.
Background
Deutsche Bank v Ruschemalliance LLC [2023] EWCA Civ 1144 is the Court of Appeal (CA) ruling concerning the earlier SQD decision in which Bright J refused to grant an ASI to restrain proceedings brought in Russia despite an ICC arbitration agreement (Paris seat) in the relevant, English law governed, contract (see here). The CA allowed the appeal and granted the ASI.
Similarly In Commerzbank v Ruschemalliance LLC [2023] EWHC 2510, a claimant bank also sought an interim ASI (ex parte) to restrain the Russian defendant from pursuing proceedings in Russia in breach of an arbitration agreement in an English law governed contract which provided for ICC arbitration in Paris. The High Court (Bryan J) granted the ASI.
The essential reasoning of the two courts in the cases before them was as follows (references in square brackets are to paragraphs in the respective judgments of the CA and Bryan J).
England was the proper forum
Both the CA [34-35] and Bryan J [20, 26-27] were satisfied that it could be said that the arbitration agreements before them were governed by English law such that personal jurisdiction could then be established over the defendant (pursuant to CPR PD6B 3.1(6)(c))
The main issue they then considered was, therefore, whether England was the proper forum for the ASI claims and whether there were reasons of discretion not to grant the ASIs.
As to the former issue, in a nutshell, both the CA and Bryan J saw England as the proper forum. In particular, this was because the arbitration agreements gave rise to rights under English law and ASIs were not available from other relevant fora [CA at 38, 40-41] [Bryan J at 28, 35(4)]
In reaching these conclusions, notably, both were not overly deterred by the significance of a foreign seat; albeit that there were points of difference in their reasoning. Whilst Bryan J largely focussed on the significance of the court’s in personam jurisdiction over the defendant [35(1)-(2)], the CA expressed itself a little differently. It acknowledged that, where the seat is in England, authority on ASIs emphasised the “supervisory” nature of the English court. In its view, however, this did not translate, in the present context, into an assumption that England could not be the appropriate forum. High authority indicated that the question was simply to “identify the forum in which the case can be suitably tried for the interests of all the parties and for the ends of justice”. It was clear that in this matter, justice required the court to enforce the negative promise in the arbitration agreement, which was subject to English law, not to litigate elsewhere [36-38,40].
Discretion and new French law evidence.
In the light of the above, both Bryan J [at 35(3)] and the CA [39, 42] were prepared to approach the grant of an ASI on Angelic Grace principles i.e. where there is a breach of an arbitration agreement there is a prima facie presumption that an ASI will be granted unless there are exceptional circumstances not. As to the latter, both courts were persuaded that the nature of the expert evidence on French law before them was different to that in SQD. In short, the gist was that, although French courts lack jurisdiction/procedure to grant an ASI, they are not (in non-EU cases) fundamentally hostile to other courts doing so and they might recognise an ASI issued by the English courts.
Accordingly, Bryan J was persuaded that the seat being Paris did not “amount to exceptional circumstances which would militate against the granting of anti-suit relief” [58-60]. Likewise, the CA reached a similar conclusion [at 42] remarking that the evidence in the case before it was of a “different effect” to that before Bright J in SDQ. Accordingly, it thought there was “no good reason” not to issue the ASI (as an aside, it is also notable that, in the context of the appeal before it, this fresh evidence meant that the CA was free to “ reconsider the question for ourselves” based on that evidence, rather than decide the different question of whether Bright J’s conclusion in the light of the evidence before him was correct [32,41]).
Comment
As we indicated in previous posts, this is a fast-developing field of jurisprudence. In these rulings, the CA and Bryan J, at the appropriate forum stage, de-emphasised the importance of the foreign seat; placing more emphasis on contractual enforcement of the parties’ arbitration agreement. This is a robust approach and carries a different emphasis to Bright J’s approach in SQD and Teare J’s in GvR (see here). Although the French law evidence was important in these cases it also stands to reason that the degree of impact it may have on a court’s assessment depends, in turn, on its starting point to such matters.
And, of course, appropriate forum (and discretion) are not the only issue. Other than establishing a breach of the arbitration agreement, where the defendant is overseas, there is the issue of service out; which, on the recurring fact profile of the reported decisions, has been obtained on the basis of the applicable law of the arbitration agreement being English law. In that respect, as previously observed, the decision in GvR raised issues which do not appear to have been before either the CA or Bryan J.
One further, final point, is that, as also arose in GvR, the degree to which rulings (such as those of the CA and Bryan J) were handed down in uncontested proceedings may affect the weight given to them.
This leaves us several questions awaiting authoritative determination. In the current environment it seems only a matter of time before they will receive further consideration.18 October 2023
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