B. First instance decision

At the first instance, the trial judge, Mr Justice Baker (Baker J), declined to grant an anti-suit injunction to restrain Chubb from pursuing the Russian Proceedings.

Notwithstanding the parties’ choice of London as the seat of the arbitration, Baker J declined to exercise jurisdiction on forum non conveniens grounds. His view was that the power of the English court to grant an anti-suit injunction arose not from its position as the curial court with supervisory powers over the arbitration, but rather as a matter of the court’s power to restrain a defendant over whom the court had personal jurisdiction from breaching a contract; and that, as such, an anti-suit injunction application required the court to consider issues of forum non conveniens. Applying this approach, he considered that the Moscow Arbitrazh Court was the appropriate forum to determine the scope of the arbitration agreement and its applicability to the Russian Proceedings.

Baker J held, in the alternative, that he would have declined to exercise his discretion to grant an anti-suit injunction due to (i) Enka’s delay in seeking relief; (ii) Enka’s failure to commence arbitration proceedings; and (iii) Enka’s participation in the Russian Proceedings.

C. The Court of Appeal’s decision

Following Enka’s appeal, the Court of Appeal granted an anti-suit injunction restraining Chubb from pursuing the Russian Proceedings. The court held that:

1. Given that the parties had chosen England as the ‘seat’ of the arbitration, English law was intended to function as the curial law (i.e., the law governing the arbitration).
2. The English court therefore had the power to grant an anti-suit injunction to support the arbitration and to restrain the defendant from pursuing remedies in Russia.
3. Importantly, issues of forum non conveniens did not arise in the context of the English court’s powers over an arbitration where English law was the curial law.
4. The arbitration agreement in this case was governed by English law; the court provided guidance as to the governing law of an arbitration agreement.
5. There was no good reason to refuse the injunctive relief sought by the claimant. The decision sets an important precedent with respect to what constitutes a relevant delay in the context of anti-suit injunctions to support arbitration agreements.

D. The role of the court of the seat and the application of ‘forum non conveniens’

The Court of Appeal clarified that an express choice of England as the seat means that English law is the curial law

The Court of Appeal identified and mentioned the interchangeable and sometimes confusing use of labels such as ‘supervisory jurisdiction’, ‘seat’, ‘curial law’ and ‘lex fori’. For the purposes of its decision and to clarify any misapprehensions as to the effect of the label ‘seat’, the Court of Appeal stated that this meant curial law.

Power to grant anti-suit injunctions in relation to an English ‘seated’ arbitration is unfettered by considerations of forum non conveniens

The Court of Appeal confirmed that the English court, as the curial court (or the court of the seat of the arbitration), is necessarily an appropriate court to grant an anti-suit injunction to uphold the parties’ agreement to arbitrate. In choosing an English seat for arbitration, the parties submitted to the curial jurisdiction of the English court, including its jurisdiction to grant declaratory and anti-suit relief in relation to foreign proceedings brought in breach of the arbitration agreement.

The Court of Appeal further clarified that contrary to the approach taken by Baker J, forum non conveniens is not a relevant consideration for the curial court in the exercise of its jurisdiction to grant anti-suit injunctions. While other courts (such as a court with personal jurisdiction over a defendant or a court in which proceedings are commenced in breach of an arbitration agreement) may have jurisdiction to protect the integrity of the arbitral process and restrain a party from taking or pursuing proceedings in breach of an agreement to arbitrate, this did not require the curial court to consider the concept of forum non conveniens in the exercise of its curial jurisdiction. The court determined that it would defeat considerations of certainty and party autonomy if the curial court deferred to a non-curial court on grounds of forum non conveniens.

E. The governing law of the arbitration agreement

The Court of Appeal applied the well-established English common law three-stage test to determine the governing law of the arbitration agreement, namely (i) is there an express choice of law?; (ii) if not, is there an implied choice of law?; and (iii) if not, with what system of law does the arbitration agreement have its closest and most real connection?

Stage one: is there an express choice of law?

The Court of Appeal recognised that an express choice of law in the main contract may amount to an express choice of law for the arbitration agreement. This would be a matter of construction of the whole contract, including the arbitration agreement, applying the principles of construction of the main contract.

On the facts of the case, while it was common ground that the main contract was governed by Russian law, there was nothing to suggest an express choice of Russian law to govern the arbitration agreement.

Stage two: is there an implied choice of law?

In determining whether there was an implied choice of law governing the arbitration agreement, the Court of Appeal considered the relative significance to be attached to the curial law (namely the law of the seat) and the law governing the main contract.

Favouring the approach in C v. D² over Sulamerica,³ the Court of Appeal held that where there is no express choice of law and subject to any powerful countervailing factors, there is a strong presumption that the parties have impliedly chosen the curial law to govern the arbitration agreement. Given the significant overlap between the scope of the curial law and the law governing an arbitration agreement, businesses should not, without more, be taken to have intended for the curial court to have to apply two different systems of law when exercising its curial function.

Applying this presumption, the Court of Appeal held that the parties had impliedly chosen that the proper law of the arbitration agreement should coincide with the curial law and be English law. There were no countervailing factors. The Russian Proceedings were brought and pursued by Chubb in breach of the arbitration agreement.

F. What constitutes undue delay in bringing an application for an anti-suit injunction and other considerations?

The Court of Appeal did not consider that there was undue delay by Enka in seeking an anti-suit injunction such as to cause it not to grant the anti-suit injunction. The Court of Appeal considered the leading authorities on ‘delay’, which establish that an anti-suit injunction should not be granted where the party seeking relief has delayed unduly in applying for one.

However in the present case, the Court of Appeal recognised that Enka was justified in waiting until it knew whether Chubb’s claims would be entertained by the Moscow Arbitrazh Court before seeking the anti-suit injunction in England. Up until that time, the Russian Proceedings were being treated by the Moscow Arbitrazh Court as defective and those defects might never have been cured so as to lead to an acceptance of Chubb’s claims by the Moscow Arbitrazh Court. Indeed, the court held that had Enka applied to the English court for relief prior to this, it would have risked wasting time and expense in an unnecessary application and being told that the application was premature.

Enka’s failure to commence arbitration was not a relevant factor in the exercise of the English court’s discretion to grant injunctive relief, which arises irrespective of any actual or contemplated arbitration proceedings.

Enka’s participation in the Russian Proceedings was also irrelevant since Enka simply attempted to get the Moscow Arbitrazh Court to dismiss the claims made by Chubb in Russia and to force Chubb to respect its bargain not to litigate its claim in Russia.

G. Comment

This decision demonstrated the willingness of the English court to exercise its powers as the curial court to uphold and support agreements to arbitrate.

It provides important clarity on the powers exercisable by the English court in support of arbitrations which have their seat in England, and which powers may be exercised by the court irrespective of the law that is held to govern the arbitration agreement. In particular, the decision shows that questions of forum non conveniens are not required to be taken into consideration by the English court when granting interim relief in support of an arbitration, and in particular an anti-suit injunction to restrain proceedings in breach of the arbitration agreement. The English court will be willing to exercise its powers to grant anti-suit injunctions where appropriate irrespective of the law governing the arbitration agreement. The decision therefore highlights both the importance of the parties’ choice of seat and the attractions of England as the seat, given the potency of an anti-suit injunction granted by the English court as an interim remedy to restrain proceedings in breach of the parties’ arbitration agreement.

The decision further confirms that in the absence of an express or implied choice of law to the contrary, parties will be taken by the English court to have impliedly chosen the curial law (namely the law of the seat) to govern the arbitration agreement. It will be interesting to see if the Court of Appeal’s approach is adopted by the courts in other jurisdictions. Parties can avoid uncertainty and complexity by expressly stipulating the law which they intend to govern their agreement to arbitrate.

The Court of Appeal’s decision also provides important clarification for applicants for interim relief in support of an arbitration on what will and will not constitute excessive delay by the applicant in applying for such relief.

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1. The full judgment can be found here.
2. C v. D [2008] 1 All ER (Comm) 1001.
3. Sulamerica Cia Nacional de Seguros SA v. Enesa Engelharia SA [2013] 1 WLR 102.