header-logo header-logo

Sanctions dispute boosts protection for parties in arbitration

25 September 2024
Issue: 8087 / Categories: Legal News , Arbitration , International , International justice , Commercial
printer mail-detail

The Supreme Court has blocked Russian proceedings brought in breach of an arbitration agreement, in a decision that appears to lower the bar on jurisdiction

In UniCredit Bank v RusChemAlliance [2024] UKSC 30, five justices unanimously upheld the Court of Appeal’s decision to grant an anti-suit injunction restraining the proceedings.

Russian company RusChem agreed contracts with German companies for the construction of gas processing plants in Russia, and paid the advance payments of about €2bn. After the EU imposed sanctions on Russia in response to the invasion of Ukraine, the German companies said they could not fulfil the contracts nor return the advance payment due to the sanctions.

The contracts had been guaranteed by bonds issued by German bank UniCredit. RusChem therefore demanded payment of the bonds but UniCredit refused on the grounds this was also prohibited by the sanctions. The contracts provided for disputes to be governed by English law and settled in Paris under International Chamber of Commerce rules.

However, RusChem sued UniCredit in the Russian courts. In response, UniCredit successfully applied for an interim injunction blocking RusChem from continuing the Russian proceedings.

Joel Seager, partner, and Robaidh Allighan, associate, at Fladgate, said: ‘A key takeaway from the judgment is that a party seeking injunctive relief to enforce an arbitration agreement will no longer have to show that England is the most appropriate forum.

‘Instead, parties may be held to their agreement by any court which can reasonably assume jurisdiction. The judgment lowers the threshold for parties seeking extra-territorial injunctive relief, opening the door to future litigants who have been deprived of their contractual right to arbitrate a dispute.’

Seager and Allighan said the court ‘emphasised the importance of having a clear and simple rule that, where the law of an arbitration agreement is not specified, the governing law of the main contract will apply’.

However, they noted there was ‘tension’ between the common law position and the new draft Arbitration Act, which currently provides the governing law of an arbitration agreement will be the law of the arbitral seat.

MOVERS & SHAKERS

Excello Law—five appointments

Excello Law—five appointments

Fee-share firm expands across key practice areas with senior appointments

Irwin Mitchell—Grace Morahan

Irwin Mitchell—Grace Morahan

International divorce team welcomes new hire

Switalskis—14 trainee solicitors

Switalskis—14 trainee solicitors

Firm welcomes largest training cohort in its history

NEWS
Small law firms want to embrace technology but feel lost in a maze of jargon, costs and compliance fears, writes Aisling O’Connell of the Solicitors Regulation Authority in this week's NLJ
Artificial intelligence may be revolutionising the law, but its misuse could wreck cases and careers, warns Clare Arthurs of Penningtons Manches Cooper in this week's NLJ
Bea Rossetto of the National Pro Bono Centre makes the case for ‘General Practice Pro Bono’—using core legal skills to deliver life-changing support, without the need for niche expertise—in this week's NLJ
Charlie Mercer and Astrid Gillam of Stewarts crunch the numbers on civil fraud claims in the English courts, in this week's NLJ. New data shows civil fraud claims rising steadily since 2014, with the King’s Bench Division overtaking the Commercial Court as the forum of choice for lower-value disputes
Charles Pigott of Mills & Reeve reports on Haynes v Thomson, the first judicial application of the Supreme Court’s For Women Scotland ruling in a discrimination claim, in this week's NLJ
back-to-top-scroll