UniCredit Saga Ends with Banks Losing Jurisdictional Battle

The UK Supreme Court judgment in UniCredit Bank GmbH v RusChemAlliance LLC [2024] UKSC 30, upholding an anti-suit injunction restraining Russian proceedings brought in violation of an arbitration agreement providing for a seat in France, has caused significant interest. We covered it on the EAPIL Blog in a post noting the judgment and in a symposium (here; here; here and here).

The latest, and likely final, instalment of the UniCredit saga, the judgment of the Court of Appeal of England and Wales of 11 February 2025 ([2025] EWCA Civ 99; Vos MR giving the judgment of the court with which Asplin and Phillips LJJ agreed), reflects a clear and ultimate defeat for the claimant banks. Confronted with a Russian anti-anti-suit injunction, supported by a threat of a EUR250m penalty for non-compliance, UniCredit asked the Court of Appeal to discharge the anti-suit injunction, which the court did. The other two claimant banks, Deutsche Bank and Commerzbank, also threw in the towel. In separate proceedings, Deutsche Bank discontinued its English claim, while Commerzbank applied to discharge the anti-suit injunction.

Facts

In the prior proceedings that resulted in the anti-suit injunction, RusChemAlliance had submitted that it would comply with the orders of English courts. However, after the Supreme Court judgment, it dispensed with the services of its English solicitors and obtained an anti-anti-suit injunction from the Arbitrazh Court of Saint Petersburg and Leningrad Region, which:

(1) prohibited UniCredit from initiating arbitrations or court proceedings against RCA, except in the Russian courts, in respect of the bonds, (2) prohibited UniCredit from continuing any proceedings, or enforcing any judgments, except in the Russian courts, against RCA in respect of the bonds, and (3) obliged UniCredit to ‘take all measures within its control (including applying to cancel and others) aimed at cancelling the effect of [the English anti-suit injunction]’ within two weeks of the Ruling coming into legal force, and (4) provided that, if UniCredit failed to comply with these orders, it would have to pay RCA €250 million by way of a court-imposed penalty. ([3])

Accordingly, UniCredit asked the Court of Appeal to discharge the anti-suit injunction. In order to decide on this request, the court had to address the following five questions:

(i) whether UniCredit is actually at risk of being forced to pay a penalty, (ii) whether the court has power to revoke or vary a final order for an anti-suit injunction, (iii) whether UniCredit has been coerced into making this application, and if so, whether that weighs against acceding to it, (iv) whether there are English public policy reasons for refusing to accede to the application, and, if so, how strongly they militate in favour of refusing it, and (v) whether the application should be allowed and, if so, whether the [Court of Appeal’s] Order should be revoked or varied. ([10])

Judgment

The court held that (i) UniCredit was actually at risk of being forced to pay a penalty, (ii) the court had power to revoke or vary a final order for an anti-suit injunction, (iii) UniCredit had been coerced into making this application, but this was not a weighty factor against acceding to the application, (iv) there were no strong enough English public policy reasons militating in favour of refusing to accede to the application, and (v) the application should be allowed.

The most interesting part of the judgment is the discussion of the coercion and English public policy issues. It may be remembered that the Supreme Court upheld the anti-suit injunction because “the policy of securing compliance with the parties’ contractual bargain is further reinforced by the strong international policy of giving effect to agreements to arbitrate disputes” (UKSC judgment, [68]). According to Lord Leggatt:

If the proceedings are brought abroad rather than in England, the court is not obliged to grant an injunction to restrain the prosecution of the proceedings. But, as in cases where the parties have agreed to submit the dispute to a specified court, strong reasons are required to displace the prima facie entitlement to enforce the contractual bargain. Furthermore, unlike in cases where the contractually agreed forum is a court, the existence or risk of parallel proceedings is not a factor which in itself carries any weight. Not only is this possibility inherent in the choice of arbitration as a method of dispute resolution (given that arbitration proceedings cannot be consolidated with court proceedings or, in the absence of consent, with another arbitration); but to treat it as relevant would be inconsistent with the mandatory policy embodied in article II(3) of the New York Convention. (UKSC Judgment, [69])

And yet this “strong international policy” played virtually no role in the Court of Appeal’s judgment. Other factors prevailed.

On one hand, “this is a private litigation between commercial parties” ([24]) and “UniCredit is a major bank, capable of making its own decisions. It is making this application, no doubt, because its board has decided that it is in its own commercial interests to do so” ([30]; similarly [43]). Furthermore, “parties can always waive their right to arbitration, and it seems that UniCredit may, in effect, be doing so here” ([35]).

On the other hand, the Russian court did not do anything wrong – it made “an entirely in personam order…against, and intended to operate against, UniCredit”, enforcing its own laws ([35]-[36]). While EU sanctions prohibited EU courts from discharging anti-suit injunctions sanctioning the enforcement of said Russian laws, there were no such sanctions in UK law ([37]). And it did not matter that RusChemAlliance had promised to comply with the orders of English courts and was therefore in contempt of those courts ([39]).

In sum, in the words of the Court of Appeal, UniCredit and RusChemAlliance were involved in a “jurisdictional battle” ([23], [25]), “jurisdictional contest” ([39]), which UniCredit simply lost:

It is commonplace for competing orders to be made against the parties in different jurisdictions. Eventually, it is one party that ‘wins’ the jurisdiction battle, and the parties either agree or are constrained to accept that the litigation will take place in that party’s chosen jurisdiction. It would be strange indeed if the party that obtained the ‘losing’ anti-suit injunction could not return to ask for it to be discharged even if it was an order made after a trial. ([25])

Discussion

It is difficult to disagree with the decision of the Court of Appeal, although the whole UniCredit saga leaves somewhat of a bitter taste. The Supreme Court judgment was essentially based on upholding the principle of pacta sunt servanda – if parties agree to arbitration, English courts will hold them to their bargain if they have personal jurisdiction over the party that has or will breach the arbitration agreement. But the Court of Appeal judgment essentially acknowledges that the anti-suit injunction in this case was impotent because RusChemAlliance “has no assets outside Russia, and its officers do not travel outside Russia” ([6]) and there was nothing that either English courts or UniCredit could do about it.

This raises the question of whether the (in)efficacy of the anti-suit injunction should have been considered before it was granted. At the end of my post noting the Supreme Court judgment, I wrote:

although the Supreme Court found support for its decision in the fact that French court were not an available forum and that any anti-suit injunction granted by a prospective arbitral tribunal would be ineffective, it did not assess whether an English anti-suit injunction would be any more effective. The seizure in Russia of hundreds of millions of euros belonging to UniCredit, as well as Deutsche Bank and Commerzbank, for the non-payment of guarantees less than a month after the Supreme Court announced its judgment suggests that this may not be the case. The EUR463m seized from UniCredit represents only 4.5 per cent of its assets in Russia and the remainder is at risk due to new court cases in Russia over guarantee payments.

A failure to consider the reality on the ground has resulted in a huge cost of time and money and very little to show for it in the end (apart from, of course, the UKSC judgment, which is universally supported by the arbitration community).