In the most significant decision in the arbitration world since Enka v Chubb, the Supreme Court has confirmed this week that parties to an English law governed contract subject to arbitration seated outside of England and Wales can still obtain anti-suit relief from the English courts despite there being no other connection to this jurisdiction.

RusChemAlliance (“RCA”), a Russian joint venture company, entered into contracts with a German third party for the construction of gas processing plants in Russia. Under those contracts, RCA was obliged to pay the contractor approximately EUR 10 billion including an advance payment of circa EUR 2 billion, which RCA duly made.

German bank UniCredit issued several on-demand bonds in favour of RCA to a total value of approximately EUR 420 million, four of which were to guarantee the performance of the contract and three of which were to secure repayment of the advance payments. Critically, the bonds were English law governed, and contained an arbitration clause stating that disputes are to be resolved by ICC arbitration seated in Paris. There was no express provision dealing with the governing law of the arbitration agreement itself in the bonds.

The contractor subsequently informed RCA that it could not continue to perform the contracts due to EU export controls imposed after February 2022, and that it could not return the advance payments. RCA itself is not designated under or otherwise subject to EU or UK sanctions.

RCA brought proceedings against UniCredit in the Russian courts seeking recovery of EUR 448 million under the bonds pursuant to Russian legislation introduced in 2020 allowing Russian parties to bring such proceedings. Subsequently, UniCredit issued a claim in the English courts alleging that the proceedings commenced by RCA in Russia were in breach of the arbitration agreements in the bonds and sought, inter alia, an anti-suit injunction requiring RCA to discontinue the Russian proceedings.

The High Court granted UniCredit an interim injunction on ex parte basis. However, at the return date at the end of September 2023, the High Court declared that it had no jurisdiction to hear the claim on the grounds that the arbitration agreements were governed by French law, and that in any event England was not the proper place for the claim.

UniCredit sought permission to appeal from the Court of Appeal which was heard on expedited basis in January 2024. The Court of Appeal allowed the appeal and granted a final prohibitory and mandatory injunction requiring RCA to discontinue the Russian proceedings [2024] EWCA Civ 64.

RCA immediately applied for permission to appeal from the Supreme Court (including interim relief and expedition) which was granted and the Supreme Court heard the parties during a 1.5 day expedited hearing on 17 and 18 April 2024.

The Supreme Court promptly issued their decision this week, with reasons to follow, dismissing RCA’s appeal. When it is published, the judgment will be a landmark decision for English law governed contracts, abilities of parties to obtain urgent relief from the English Courts (the action took eight months from initial application to Supreme Court decision) as well as the disputes emanating from the Russia sanctions and counter-sanctions regimes.

Boris Telyatnikov, Evgeniya Rubinina, Amy Spencer, Jonas Habert, Liam Baum and Ali Murad acted for RCA in the English proceedings instructing Alex Gunning KC and Alex Brown of One Essex Court. Sa’ad Hossain KC of One Essex Court was instructed for the Court of Appeal hearing.

The Supreme Court panel was made up of President of the Supreme Court, Lord Reed, Lord Sales, Lord Leggatt, Lord Burrows and Lady Rose.