Replace 13 March 2024 Paul MacMAhon studies the case goes to the UKSC.
I’m mopping up the weblog queue so forgive me for posting late on Deutsche Financial institution v RusChemAlliance [2023] EWCA Civ 1144, a profitable attraction of SQD v QYP (Rev1) [2023] EWHC 2145 (Comm). (Common readers of the weblog know that I do are likely to Tweet these circumstances with some course of the blogpost’s course of journey).
Nugee LJ [1]
A assure issued by a German financial institution in favour of a Russian firm is ruled by English regulation and offers for arbitration in Paris. When a dispute arises, the Russian firm points proceedings in Russia in obvious breach of the arbitration settlement. Ought to the English court docket grant an anti-suit injunction (“ASI”) to restrain these proceedings in circumstances the place no such injunction might be obtained in France? That’s the query raised by this attraction.
In brief, the anti-suit injunction was now granted.
Brilliant J on the idea of the skilled’s proof, had thought-about at first occasion [82]
My understanding from the proof is that this isn’t as a result of the grant of ASIs is an rising doctrine beneath French regulation (cf. the incremental acceptance of freezing injunctions: English regulation was a comparatively early adopter, making it pure and sometimes useful for the English courts to grant worldwide freezing injunctions in help of litigation in jurisdictions the place there was no conceptual opposition to freezing injunctions, however the jurisprudence had not but developed). It’s, slightly, that French regulation has a philosophical objection to ASIs.
[83]
“ASIs should not within the French authorized toolkit, however this isn’t a mere omission. It’s a deliberate alternative. French regulation considers ASIs to “contradict the elemental precept of freedom of authorized motion.” ASIs are a instrument that French regulation doesn’t like.”
That might not [85] cease a French court docket from recognising an ASI validly issued elsewhere, however this, Brilliant J had held, was not the state of affairs at situation: [86]
The details of this case don’t fall inside that paradigm. The seat of the arbitration being Paris, the procedural regulation that the events have agreed upon is French regulation. I subsequently perceive this to be a case the place the French court docket wouldn’t implement an interim ASI granted by this court docket, had been I to grant one. Quite the opposite, if requested to take action in its capability of court docket of the seat of the arbitration, the French court docket may nicely grant an anti-ASI.
I don’t do that usually however it’s worthwhile on this case to repeat your entire conclusion by the primary occasion choose seeing because it engages with the vital query to what diploma an English court docket ought to shot throughout the bow of the seat of arbitration therefore throughout the curial regulation: [91 ff]
Finally, SQD had two details.
The primary was that the settlement to arbitrate is topic to English regulation, and the English courts have an curiosity in securing the efficiency of contracts which are topic to English regulation. I settle for this in precept, however the English courts won’t act in each case the place the related settlement is topic to English regulation. That is apparent (i) from the truth that CPR 6.36 doesn’t give the English courts jurisdiction in each case regarding a contract topic to English regulation – it’s at all times crucial for England and Wales to be the correct discussion board; and (ii) from the truth that The Angelic Grace acknowledges that there could also be distinctive circumstances the place as an ASI shouldn’t be granted regardless that the overseas proceedings are in breach of the settlement to arbitrate. Certainly, Enka at [177] means that it ought to make no distinction if the governing regulation is English or another regulation – which can indicate that the seat is extra vital than the governing regulation.
The second was that the truth that an ASI can’t be obtained in France makes this court docket the correct discussion board. SQD mentioned that the supply of ASIs in England and Wales was a official juridical benefit – cf. Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460. Nevertheless, this begs the query whether or not it’s proper to contemplate the juridical benefit that English jurisdiction affords official, in circumstances the place the regulation of the seat of the arbitration takes a distinct view.
I take into consideration Lord Mustill’s repeated urging in Channel Tunnel of the should be cautious. I additionally take into consideration the issues of the DAC report back to keep away from any battle or conflict, particularly a battle or conflict with the court docket of the seat of the arbitration. Within the gentle of the proof that I’ve obtained in relation to French regulation, I take into account that England is just not the correct discussion board and that this court docket mustn’t grant the interim ASI and AEI that SQD seeks.
I’ve reached that view in two complementary methods. The primary is that to grant an interim ASI can be inconsistent with the method of the courts of the seat of the arbitration and (subsequently) with the curial regulation that applies. This court docket ought to have deference to the method of French regulation. To do in any other case would or at the least may give rise to a battle or conflict.
The second is that the court docket must also have deference to the target intention of the events. The events intentionally selected Paris because the seat of the arbitration. They should be taken to have carried out so figuring out that the French courts won’t grant ASIs. I don’t settle for as practical the suggestion that the collection of English regulation because the governing regulation signifies an intention that there is perhaps an utility to this court docket, regardless of the specific collection of a French seat.
In some international locations, ASIs are available to help arbitration. In others, they don’t seem to be. Every nation is free to kind its personal coverage on this level. Equally, contracting events are free to arbitrate the place they like. If the events select to arbitrate in a rustic equivalent to France, the place the coverage is that ASI won’t be granted and won’t usually be enforced, this court docket ought to acknowledge the importance of those circumstances. Vive la différence.
It’s usually proper for the courts of England and Wales to help arbitration on this jurisdiction. It’s not the job of the courts of England and Wales to help arbitration in France by granting ASIs, given the basically inconsistent method in France on whether or not such help is suitable or fascinating. Certainly, evidently the help of this court docket can be unwelcome.
In reaching this conclusion, I notice that Lord Mustill seems to have held related views: see Channel Tunnel at p. 368E-G.
The purpose that has made me pause longest is that primarily based on Spiliada – i.e., that it could be a advantage, not an insult, for this court docket to step in the place the French courts can not. The easiest way of growing that time (I believe) can be that, whereas it’s true that the events have chosen French regulation because the curial regulation/regulation of the seat, they’ve additionally chosen to undertake the ICC Guidelines – which (as I perceive it) allow the arbitrators to grant conservatory and interim measures, together with ASIs. The French courts can not grant ASIs, however the arbitrators can (together with an emergency arbitrator). Accordingly, even when French regulation objects to ASIs, the events don’t. All SQD is in search of is an interim ASI to take care of the established order till the ICC arbitrators can take over and grant their very own ASI.
This method assimilates an ASI granted by this court docket to at least one granted by the arbitrators, on the idea that the injunction I’m requested to me is an anticipatory and short-term model of the reduction that may sooner or later be given by the arbitrators.
I take into account this a false equivalence. There are actual variations between orders granted by courts and people made by arbitrators – which is why events are sometimes astute to ask for reduction from the court docket, the place they’ll discover a strategy to justify this. Above all: court docket orders are backed by the coercive powers of the state; arbitrators’ orders should not.
That is exemplified by the draft order introduced to me by SQD. Distinguished on its entrance web page is a penal discover, which threatens the recipient with being held in contempt of court docket and being fined or having belongings seized. The final word penalty is imprisonment. That is precisely what the French system regards as unacceptable. The truth that the events have agreed to the arbitrators having the ability to make orders for interim measures doesn’t imply that they’ve implicitly accepted the supply of a court docket order equivalent to that introduced to me in draft.
Finally, subsequently, I subsequently am unmoved by this level and by SQD’s different arguments. SQD’s utility is dismissed.
The Court docket of Attraction reversed and accomplished the evaluation itself. It held that France doesn’t a lot have a philosophical objection to ASI, slightly lacks the process to grant it. [32]
Brilliant J was hampered by having restricted proof of French regulation whose import was removed from clear, and it isn’t maybe shocking that he learn that proof as suggesting that French regulation had a philosophical objection to the usage of ASIs, even to the extent of countenancing an anti-ASI injunction. However the proof earlier than us, as might be seen, is to a distinct impact. It’s that though a French court docket doesn’t have the power to grant an ASI as a part of its home toolkit, it would recognise the grant of an ASI by a court docket which does have that as a part of its personal toolkit, offered that in doing so it doesn’t lower throughout worldwide public coverage.
That final bit is just not in actual fact completely different from Brilliant J’s suggestion I imagine.
[34] ff Nugee LJ first considers the jurisdiction of the E&W courts. [36]
…It’s pure to treat the grant of an ASI to restrain proceedings introduced in breach of an arbitration settlement as intimately related with the arbitration (whether or not already on foot or proposed), and one can level to statements of excessive authority to the impact that the place the seat of the arbitration is in England, the follow of the English court docket in readily granting ASIs is a part of the “supervisory” or “supporting” jurisdiction of the English court docket: see, for instance, West Tankers Inc v Ras Riunione Adriatica di Sicurtá SpA (The Entrance Comor) [2007] 1 Ll Rep 391 (“West Tankers (HL)”) at [21] per Lord Hoffmann; and Enka at [174] and [179] per Lords Hamblen and Leggatt. At first blush it is perhaps thought to observe that the pure (and therefore “correct”) place by which to deliver any declare for an ASI can be the courts of the seat of the arbitration, and therefore that the place the seat is just not in England, England is just not the correct place for such a declare.
However he then [37] refers to Briggs LJ’s speech in Vedanta, and his mentioning of
that the duty of the Court docket is to “determine the discussion board by which the case might be suitably tried for the pursuits of all of the events and for the ends of justice”.
[38]
There is no such thing as a problem in figuring out what English regulation regards as required by “the ends of justice” in a case equivalent to the current. It’s the coverage of English regulation that events to contracts ought to adhere to them, and particularly that events to an arbitration settlement, who’ve thereby impliedly agreed to not litigate elsewhere, mustn’t accomplish that. The English court docket, confronted with an English regulation ruled contract containing a promise by a celebration to not do one thing and a menace by that social gathering to do the very factor he has promised to not do, will readily and often implement that promise by injunction.
(reference ia to Enka).
- The one declare within the current case is a declare for interim injunctive reduction primarily based on these well-established rules of English regulation. Such reduction, regarded by English regulation as a precious instrument to uphold and implement the arbitration settlement, can solely in follow be obtained in England and never in France. Brilliant J, as defined above, thought, on the idea of the proof earlier than him, that that was as a result of French regulation had a philosophical objection to the grant of ASIs. The proof earlier than us is to a distinct impact and strongly means that whereas French regulation doesn’t have the power to grant an ASI as a part of its procedural toolkit, it has no objection in precept to (and can recognise) the grant of an ASI by a court docket which may by its personal procedural guidelines grant one, at any fee the place the idea for the ASI is the events’ contractual settlement to submit disputes to a specific discussion board.
- In these circumstances it appears to me that the discussion board by which the declare for an interim ASI might be suitably tried for the pursuits of all of the events and for the ends of justice is the English court docket, on the easy foundation that such a declare can’t be given impact to in France. I don’t suppose it crucial to contemplate what the place would have been had Brilliant J’s understanding been right – that’s, if the French court docket would regard the grant of an ASI by the English court docket as inappropriate and unwelcome – which raises questions of some problem and on which we now have heard little or no argument. On the place because it seems to us, the selection is between the English court docket the place an ASI might be granted and a French court docket the place it can not, not due to any hostility to the idea, however due to an absence of home procedural guidelines allowing them. Since it isn’t to be supposed that DB would take the futile step of making use of to a French court docket for an ASI which it has been repeatedly and clearly suggested the French court docket can not grant, the true alternative is just not between two competing boards, however between the English court docket entertaining the declare and the declare not being introduced in any respect. Seen on this gentle, I might maintain that the English court docket is certainly the correct place to deliver the declare. I might subsequently grant DB permission to serve the declare out of the jurisdiction.
Having selected the existence of ASI jurisdiction, solely two paras are then spent to conclude that one should so granted within the circumstances, together with an anti-enforcement injunction AEI ought to a judgment be obtained in any Russian proceedings.
Examine nb additionally Commerzbank AG v RusChemAlliance LLC [2023] EWHC 2510 (Comm), and see Unicredit Financial institution GmbH v Ruschemalliance LLC [2024] EWCA Civ 64 which overturned G v R (In an Arbitration Declare) [2023] EWHC 2365 (Comm) and which is notable as a result of right here the ASI is remaining slightly than interim and uncontested.
Be aware not everyone seems to be proud of the E&W cours turning into the world’s ‘arbitral policeman’ – nevertheless the underlying contract being one with English regulation because the lex contractus would appear to be rising as a pure boundary to the English courts’ intervention.
Geert.
