Deutsche Bank AG v Ruschemalliance LLC
[2023] EWCA Civ 1144
LLC EuroChem North-West-2 v Tecnimont SPA & Anor
21 June 2023
[2023] EWCA Civ 688
Court of Appeal
Two companies had a contract with an arbitration clause. One company got an order stopping the other from going to foreign courts. The second company went to a foreign court anyway to help its case in the arbitration, breaking the order. The judge said they were wrong and the appeals court agreed. The second company couldn't avoid arbitration by going to a different country.
Key Facts
- •EuroChem NW (Russian company) and Tecnimont SPA (Italian company) had contracts for a construction project subject to London (ICC) arbitration clauses and English jurisdiction clauses in associated bonds.
- •Tecnimont and MT Russia (another Russian company) stopped work, and EuroChem NW tried to draw down on performance bonds. Banks refused due to sanctions against EuroChem NW's owners.
- •Appellants (Tecnimont and MT Russia) commenced arbitration against EuroChem NW, claiming unlawful bond calls.
- •EuroChem NW obtained an anti-suit injunction (ASI) against the Appellants, preventing them from pursuing foreign proceedings to impede bond payments.
- •Tecnimont intervened in Italian proceedings concerning a Decree freezing assets of a related EuroChem company, arguing an interest in upholding the Decree which supported its defense in the English proceedings.
- •EuroChem NW claimed Tecnimont breached the ASI by this intervention.
- •The Judge found Tecnimont in breach and refused to vary the ASI.
Legal Principles
Anti-suit injunctions are discretionary remedies under s. 37 of the Senior Courts Act 1981, granted where necessary in the interests of justice.
Senior Courts Act 1981, s. 37
ASI terms are construed strictly due to penal consequences of breach. Natural and ordinary meaning in context, including historical context and order's object, is applied.
Pan Petroleum AJE Ltd v Yinka Folawiyo Petroleum Co Ltd and others [2017] EWCA Civ 1525 at [41]; Sans Souci Ltd v VRL Services Ltd [2012] UKPC 6 at [11] to [16]; In Re A (A Child) (Judgment Corrections) [2014] EWCA Civ 871 at [32]; Banca Generali SPA v CFE (Suisse) SA [2023] EWHC 323 (Ch) at [18] to [22]
Arbitration clauses are given a broad and purposive construction, assuming parties don't intend disputes under the same agreement to be determined by different tribunals.
Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40 at [13]; Sebastian Holdings Inc v Deutsche Bank AG [2010] EWCA Civ 998 at [39]
An applicant for an ASI must show a high probability of success that the foreign proceedings breach the arbitration agreement.
QBE Europe SA/NV v Generali España de Seguros y Reaseguros [2022] EWHC 2062 (Comm) at [9]
Outcomes
Appeal dismissed.
Tecnimont's intervention in the Italian proceedings constituted a breach of the ASI because it was a pursuit of proceedings aimed at impairing bond payments, and was inconsistent with the London arbitration clauses.
Judge's finding of breach upheld.
Tecnimont's intervention in the Italian proceedings was found to be "for the purpose of...otherwise impairing payment under the bonds", even if indirectly. The intervention was seen as a pursuit of a claim within existing proceedings, with the purpose of improving Tecnimont's position in the arbitration and bank proceedings and thus inhibiting payment under the bonds.
Refusal to vary the ASI upheld.
The Judge's refusal to vary the ASI was within his discretion. There was no unfairness in allowing EuroChem Agro to challenge the Decree without Tecnimont's intervention; any prejudice to Tecnimont was limited given the Italian authorities' contestation of the challenge. Further, the Variation Application was considered late.