Is UniCredit the Final Frontier in Granting Anti-Suit Injunctions in England?

This post was written by Faidon Varesis, who is Assistant Professor in Private International Law and International Dispute Resolution at the University of Cambridge and a Fellow of St John’s College. It is the second contribution to the EAPIL online symposium on the UK Supreme Court Judgment in UniCredit Bank GmbH v RusChemAlliance LLC [2024] UKSC 30. The other contributions, by Manuel Penades and Etienne Farnoux can be found here and here, respectively.  Readers are encouraged to participate in the discussion by commenting on the posts.

In UniCredit v RusChemAlliance, the UK Supreme Court (the Court) positioned itself as a global enforcer of arbitration agreements governed by English law. The facts of the case, including the issue of applicable law, are well-known and are discussed in this symposium by Manuel Penades.

The Court concluded that granting an anti-suit injunction (ASI) can be based solely on the arbitration agreement being governed by English law. Although the Court asserted that this established a substantial connection with England, it is arguable that such connection is tenuous, since it is based on a very debated conflict of laws issue on the governing law of arbitration agreements and the effectiveness of the ASI granted is problematic.

1. The Decision of the Court on the Proper Forum Inquiry

In addressing the second question of the appeal, the Court considered whether England was the appropriate forum for granting an ASI.

Section 37 of the Senior Courts Act 1981 provides the authority to grant injunctions whenever it appears ‘just and convenient’ to do so. To grant an ASI, the Court must have jurisdiction over the defendant, a legitimate ground for relief, and must, as a matter of its discretion and with due regard to comity, conclude that an injunction is appropriate.

Since RusChem was not present in England, service outside the jurisdiction was required under Civil Procedure Rules (CPR) 6.36 and 6.37. UniCredit had to show a serious issue to be tried, that the case fell within a jurisdictional gateway, and that England was the proper forum under CPR Rule 6.37(3). The English law governed arbitration agreement satisfied the gateway in CPR Practice Direction 6B, paragraph 3.1(6)(c). There was no dispute that RusChem breached the arbitration agreement by initiating proceedings in Russia.

As to the proper forum inquiry, the parties assumed that the Spiliada principles should apply. Lord Leggatt, however, said that this ‘test is designed to deal with a different situation: one where (a) the claimant wishes to bring a substantive claim for relief in the English courts, (b) the defendant asserts that there is another available forum which is more appropriate for the trial of the action, and (c) no forum has been contractually agreed’ ([73]). Here, the issue was enforcing an arbitration agreement by way of an ASI. The Court applied the test from Donohue v Armco, where it was held that parties should generally be held to their contractual obligations (through a stay of proceedings or an ASI), unless there are strong reasons not to.

On the facts, the Court found no reason to deny the ASI. The absence of pending or imminent arbitration was irrelevant since RusChem breached the arbitration agreement. UniCredit did not need to seek relief in French courts or commence arbitral proceedings. In essence, breaching an English law-governed arbitration agreement was enough to justify an ASI.

The Court also addressed the issue discussed by Lord Goff in Airbus v Patel that, in addition to personal jurisdiction over the defendant, English courts must have an ‘interest or connection with’ the relief sought. The Court, however, held that Airbus did not apply to ASIs issued to prevent breaches of legal rights. Considering the matter, the Court dismissed (albeit in 3 lines) any suggestion that the choice of English law was a ‘tenuous connection’, affirming that this fact alone was a sufficient link to justify the court’s intervention.

Finally, the Court held that comity plays little to no role in cases involving breaches of arbitration agreements protected by the New York Convention 1958. Hence, no violation of comity for French or Russian courts was found. As to the French courts, the Court held that (a) multiple courts (and not only French courts as courts of the seat) could have jurisdiction to protect the arbitration agreement and (b) based on evidence on French law used in Deutsche Bank AG v RusChemAlliance LLC [2023] EWCA Civ 1144, while French courts could not issue an ASI, the enforcement of an English ASI would not be contrary to French international public policy. Regarding Russia, the Court found no infringement of comity, noting that Russia is a signatory to the New York Convention. Enforcing such an agreement, according to the Court, does not violate comity, but instead ensures that the parties honour their contractual commitments.

2. Substantial or Tenuous Connection?

The decision in UniCredit hinges upon the Court’s assertion that governing law alone is a substantial connection: ‘There is a substantial connection with England and Wales in the fact that the contractual rights UniCredit seeks to enforce are governed by English law’ ([83]). However, several points can be made:

First, the mere fact that the contract in question was governed by English law is a rather tenuous connection especially when the seat, parallel proceedings, and parties have no other links to England. The connection appears even more tenuous when considering the debated conflict of laws rule regarding the governing law of an arbitration agreement (see the EAPIL online symposium on the law governing arbitration agreements as well as the decision itself in [59] changing the rule in Enka v Chubb).

Second, given that an ASI operates as a remedy for a breach of an arbitration agreement, the Court’s approach in UniCredit could not be to abolish the proper forum inquiry altogether, but to establish a different (and lower) threshold that the one in Spiliada. This threshold is informed directly by the overarching aim of enforcing contractual agreements governed by English law and the strong international policy of upholding arbitration agreements. If, however, this had been a regular service out case based on a contract governed by English law, the courts would have applied the Spiliada principles to examine whether England is the ‘proper forum in which to bring the claim’ under CPR Rule 6.37(3). Related to this, one of the arguments of UniCredit on appeal before the Court (which the Court declined to decide because it had not been raised before the lower courts; see [19]) was that the relevant consideration is not the law governing the arbitration agreement, but rather the law governing the matrix contract (in this case, the bonds). According to this argument, if that is English law – regardless of the law applicable to the arbitration agreement – an ASI could be framed as a claim made in respect of a contract governed by English law under CPR Practice Direction 6B, paragraph 3.1(6)(c). Setting aside issues related to the separability of the arbitration agreement, the proper forum inquiry would still be required in such a case, and it would need to be decided if the lower threshold established in UniCredit or the Spiliada test should apply.

Third, Lord Leggatt highlighted an anomaly in English law regarding interim remedies and arbitration. A claim for interim relief under section 44 of the Arbitration Act 1996 can be served out of the jurisdiction under CPR Rule 62.5 without needing to establish that England is the ‘proper forum’. However, an ASI under section 37 of the Senior Courts Act requires claimants to prove that England is the proper forum. According to Lord Leggatt, however, ‘the proper principle to apply in both cases is that expressed in section 2(3) of the 1996 Act’ (at [92]). The purpose of this proviso, however, cannot be understood to be giving English courts a freestanding right to issue ASIs against overseas defendants without consideration of the proper forum inquiry under CPR Rule 6.37(3).

Fourth, the Court did not address the broader debate on the role of forum conveniens as a control mechanism for broadly construing jurisdictional grounds. Lord Leggatt’s position in FS Cairo (Nile Plaza) LLC v Lady Brownlie distinguished between the connection needed to establish jurisdiction and the role of forum conveniens in determining (by looking forward) where litigation should proceed. This distinction, however, suggests an argument against abolishing the proper forum inquiry, even in cases involving breaches of arbitration agreements.

Finally, the court surpassed any comity concerns not only based on the New York Convention but also on the fact that the remedy would be enforceable (in theory) in France even if French courts could not issue one themselves. On the contrary, the availability of arbitral remedies against the breach of the arbitration agreement was considered as ineffective by the Court due to the lack of coercive powers. Why an English ASI issued against an overseas defendant with no connection to England would be more effective than one issued by a tribunal in France remains unclear. In this context, it is submitted that (a) mechanisms exist to enforce such tribunal-ordered remedies; and (b) the general effectiveness of the remedy (both in France and in Russia) should have played a bigger role, especially considering that equity cannot act in vain.

3. A New Era of ASIs?

UniCredit signals a shift in how English courts approach ASIs for enforcing arbitration agreements. Beyond affirming the availability of ASIs in cases involving arbitration agreements governed by English law, irrespective of the seat of arbitration, the next step for litigants seeking ASIs before English courts if the matrix contract is governed by English law was already flagged. If this argument is accepted, it could lead to the availability of ASIs even if the default rule regarding the law applicable to arbitration agreements is statutorily changed to favour the law of the seat of arbitration.