UK Supreme Court Upholds Anti-Suit Injunction to Protect Foreign-Seated Arbitration

The Supreme Court’s decision in UniCredit Bank GmbH v RusChemAlliance LLC [2024] UKSC 30 represents a significant step forward in the clarification of English law regarding anti-suit injunctions (ASIs) in support of foreign-seated arbitrations. The ruling provides definitive guidance on two key issues: the law governing arbitration agreements and the jurisdictional scope of the English courts to grant ASIs when arbitration is seated outside of England and Wales. This judgment not only reinforces England’s role as a global leader in enforcing arbitration agreements but also offers essential insights into the evolving landscape of international dispute resolution.

For practitioners, arbitrators, and scholars, this decision signals a clear endorsement of judicial intervention to preserve the sanctity of arbitration agreements, particularly in cross-border disputes where litigants may seek to bypass arbitration by pursuing parallel proceedings in national courts. Moreover, the judgment offers further refinement of the principles set out in Enka Insaat Ve Sanayi AS v OOO Insurance Company Chub [2020] UKSC 38 regarding the governing law of arbitration agreements, a matter that remains at the core of disputes in international arbitration.

The Facts

The dispute arose from bond contracts between UniCredit Bank GmbH (“UniCredit”) and RusChemAlliance LLC (“RusChem”), governed by English law. The contracts contained an arbitration clause stipulating that disputes would be resolved in Paris under the auspices of the International Chamber of Commerce (ICC). Despite the clear agreement to arbitrate in Paris, RusChem initiated proceedings before the Russian courts, seeking payment under the bond guarantees. In response, UniCredit sought an anti-suit injunction from the English courts to restrain the Russian litigation, invoking the arbitration agreement. The key issues before the Supreme Court were twofold: (i) whether English law governed the arbitration agreements (the “Governing Law Issue”), and (ii) whether England & Wales was the proper forum for UniCredit to seek the anti-suit injunction (the “Proper Place Issue”). The Court’s resolution of these issues, particularly in light of Enka, not only reaffirmed the existing jurisprudence but also offered vital insights into the future direction of international arbitration.

The Governing Law Issue

Central to the Court’s analysis was the question of which law governed the arbitration agreements. UniCredit contended that, as the main contracts were governed by English law, the arbitration agreements should similarly be governed by English law. RusChem, however, argued that French law should apply, as Paris was the seat of arbitration. The Court’s reasoning was rooted in its prior decision in Enka, which sought to clarify the relationship between the law of the underlying contract and the law governing the arbitration agreement. In Enka, the Supreme Court established the presumption that, in the absence of an express choice of law for the arbitration agreement, the law governing the underlying contract would generally govern the arbitration agreement as well. This presumption, the Court held, remained valid and applicable in UniCredit. The Court rejected RusChem’s argument that French law should govern the arbitration agreement simply because Paris was the seat of arbitration. The Court emphasized that the key question was not the seat of arbitration, but the parties’ intentions as reflected in the contractual documents. It was neither reasonable nor practical to infer that the choice of Paris as the seat necessarily implied an intention to apply French law to the arbitration agreement, particularly in light of the broader context of the contract, which was governed by English law. This decision further strengthens the principle that the law of the main contract will govern the arbitration agreement unless the parties have expressly chosen otherwise.

For practitioners and arbitrators, the UniCredit judgment reinforces the importance of drafting arbitration clauses with clarity. Given the complexities of international arbitration, the law governing the arbitration agreement should be expressly stipulated to avoid unnecessary litigation over jurisdictional issues. Arbitrators must remain cognizant of the governing law of the contract in disputes involving multi-jurisdictional elements.

The Proper Place Issue

The second pivotal issue was whether the English courts were the proper forum for UniCredit to seek an anti-suit injunction, given that the seat of arbitration was in Paris. RusChem argued that, as the seat of the arbitration, French courts should have exclusive jurisdiction to supervise the arbitration and grant any associated injunctions. The Court, however, rejected this argument, affirming that England & Wales was the appropriate forum for the ASI. This aspect of the judgment is particularly important for the arbitration community, as it highlights the ongoing tension between the supervisory role of courts at the seat of arbitration and the broader jurisdictional powers of national courts to intervene in arbitration-related matters. The Supreme Court made a crucial distinction: the court of the seat has a supervisory role, but this does not preclude the exercise of jurisdiction by courts in other jurisdictions, particularly where an injunction is necessary to prevent a party from breaching its contractual obligation to arbitrate.

The Court also dismissed the argument that French courts were the proper forum, pointing out that expert evidence had shown that French courts did not have jurisdiction to grant the ASI and were unlikely to offer effective relief. This ruling underscores the idea that the existence of an arbitration clause does not automatically vest exclusive jurisdiction in the courts of the seat of arbitration, particularly where the enforcing court has a demonstrated capacity to grant appropriate remedies. From a practical perspective, the UniCredit judgment affirms the English courts’ willingness to intervene in international arbitrations when necessary to uphold the integrity of arbitration agreements. It reinforces the view that the proper forum for granting an ASI is not constrained by the location of the seat of arbitration, particularly when the English courts have the requisite jurisdiction to enforce the arbitration agreement effectively.

Implications for the Future of International Arbitration

Anti-Suit Injunctions and the Role of National Courts

The ruling reiterates the role of national courts, particularly in England, as crucial enforcers of arbitration agreements. While the judgment upholds the principle that arbitration agreements are to be respected, it also emphasizes that English courts have a continuing and vital role in ensuring that such agreements are not circumvented by parties seeking to litigate in parallel national courts. This underscores the importance of selecting an appropriate forum for disputes, as the English courts are prepared to exercise their jurisdiction in support of foreign-seated arbitrations.

The Governing Law of Arbitration Agreements

The Court's reaffirmation of the Enka principles offers clarity on the law governing arbitration agreements. In the absence of an express provision, the governing law of the main contract will typically apply. This principle reduces the uncertainty that often arises when arbitration agreements are silent on the issue of governing law. However, practitioners and arbitrators must be aware of the changing landscape, as legislative developments, including the draft Arbitration Bill in Parliament, could shift the default rule to favour the law of the seat of arbitration unless the parties agree otherwise.

Drafting and Strategic Considerations

The judgment in UniCredit calls for a more sophisticated approach to the drafting of arbitration clauses in international contracts. The ruling highlights the importance of precise and unambiguous language to avoid costly jurisdictional disputes. Given the evolving nature of international arbitration law, particularly with the potential changes to the determination of the governing law, it is crucial for practitioners to stay ahead of developments and advise clients on the best practices for drafting arbitration agreements.

The Evolving Relationship Between Seat and Jurisdiction

UniCredit also reinforces the evolving jurisprudence concerning the relationship between the seat of arbitration and the jurisdictional authority of national courts. While French courts, as the seat of the arbitration, would have supervisory powers, the English courts can still exercise jurisdiction in cases where an ASI is necessary. This reflects a broader trend in international arbitration, where courts outside the seat of arbitration are increasingly willing to enforce arbitration agreements and ensure that arbitration is not undermined by parallel court proceedings.

Conclusion

The decision in UniCredit v RusChemAlliance is a significant milestone in the jurisprudence of international arbitration. It provides a definitive answer to questions regarding the law governing arbitration agreements, the jurisdictional scope of English courts, and the enforceability of anti-suit injunctions. For practitioners, arbitrators, and those engaged in the international arbitration community, this judgment reinforces the importance of clarity in drafting, the strategic selection of dispute resolution forums, and the continuing centrality of national courts in ensuring the integrity of the arbitration process.

As the landscape of international arbitration continues to evolve, UniCredit provides essential guidance for those involved in cross-border disputes. The judgment not only offers resolution to complex issues of jurisdiction and governing law but also sets the stage for future developments in arbitration law. It is a powerful reminder that, in international arbitration, the role of national courts—particularly in common law jurisdictions—remains pivotal in upholding the principles of fairness, enforcement, and integrity within the arbitration system.