Court of Appeal Upholds English Law Jurisdiction in Unicredit Bank GmbH v Ruschemalliance LLC Anti-Suit Injunction Case

Citation: [2024] EWCA Civ 64
Judgment on

Introduction

In the case of Unicredit Bank GmbH v Ruschemalliance LLC, the Court of Appeal (Civil Division) examines several legal principles pertinent to jurisdiction and the enforceability of arbitration agreements in international contracts. The case centers around whether the English court has jurisdiction to grant an anti-suit injunction restraining proceedings in Russia, given a contract governed by English law but with an arbitration clause providing for arbitration in Paris under International Chamber of Commerce (ICC) rules.

Key Facts

  • Unicredit Bank GmbH issued on-demand bonds under a contract with arbitration clauses stipulating English law and Paris arbitration.
  • Ruschemalliance LLC (RCA) initiated claims in Russian courts against the contractual obligation to arbitrate in Paris.
  • The English High Court initially found it did not have jurisdiction to grant an anti-suit injunction, citing that the arbitration agreement was governed by French law and substantial justice could be obtained through arbitration in France.
  • Unicredit Bank appealed against this decision.
  • The key issue for the Court of Appeal was whether the arbitration agreement was governed by English or French law and whether the English court was the proper forum to grant an anti-suit injunction.

Governing Law of the Arbitration Agreement

The Court of Appeal applied principles established by the Supreme Court in Enka v Chubb to determine the governing law of the arbitration agreement. The principles assert that the governing law is either the law chosen by the parties or, in absence of such choice, the system of law most closely connected to the arbitration agreement.

The Court of Appeal found that English law governed the arbitration agreement, refuting the claim that a general rule favoring the law of the seat (French law, in this case) applied. The Court clarified that the French legal principle emphasizing the parties’ common intent did not satisfy the exception to the general rule since it did not directly prescribe that contracts with arbitration seated in France are governed by French law.

Appropriateness of the Forum

The decision utilized the “proper place” approach, requiring a summary examination of connecting factors to determine the most suitable forum for the interests of all parties and the ends of justice. The Court concluded that substantial justice could not be obtained through the French courts, as they would not grant an anti-suit injunction and could not provide substantial relief given the unenforceability of any potential arbitral award in Russia.

Anti-Suit Injunction

The legal principle of upholding arbitration agreements was central to the Court’s decision to grant a final injunction. It underlined the English law policy that parties who agree to arbitrate must abide by that agreement and should not litigate elsewhere. The Court opined that English courts can grant anti-suit injunctions in support of arbitrations with foreign seats if required to prevent breaches of arbitration agreements.

Outcomes

  • The Court of Appeal overturned the High Court’s decision, asserting jurisdiction to grant an anti-suit injunction to stop RCA from pursuing its claims in the Russian court.
  • The Court concluded that the arbitration agreement is governed by English law and that England is the proper forum to enforce the agreement.
  • A final injunction was granted to restrain RCA from prosecuting its claims in Russia and to order the immediate termination of the Russian proceedings.

Conclusion

In Unicredit Bank GmbH v Ruschemalliance LLC, the Court of Appeal provides a cogent example of English courts’ willingness to enforce international arbitration agreements and uphold contractual obligations. The case reaffirms the legal principle that in contracts with English law jurisdiction clauses and foreign arbitration seats, the governing law of such arbitration agreements defaults to that of the contract unless specific exceptions apply. It underscores the English court’s role in granting anti-suit injunctions to protect the integrity of arbitration agreements, even when the seat of arbitration is outside of England. This decision solidifies the pro-arbitration stance of English law and affirms its support for the enforcement of arbitration clauses in international contracts.