Introduction
Following Russia’s invasion of Ukraine in 2022 and the subsequent EU sanctions[1], the English Court of Appeal recently addressed a crucial issue in a decision from October 2023[2]: can an English court rightfully grant an anti-suit injunction (ASI) supporting a foreign seated arbitration to prevent proceedings initiated in Russia in breach of an arbitration agreement, especially if equivalent relief is not available in Paris, the arbitration’s seat? The court’s decision to grant an ASI elucidates the relationship between English law, arbitration practices, and the constraints imposed by a foreign arbitral seat.
This decision, as well as later English court decisions, such as UniCredit Bank GmbH v. RusChem[3], are particularly significant in the context of Article 248.1 of the Russian Arbitrazh Procedure Code, which permits Russian courts to disregard foreign arbitration agreements and exercise exclusive jurisdiction over disputes involving sanctions against Russia.[4] While English courts have historically issued ASIs to support arbitrations seated in England, their jurisdiction to grant such relief for arbitrations seated abroad, such as in Paris, remained unclear. The Court of Appeal’s decision offers essential clarity about the extent of English courts’ authority to uphold arbitration agreements under English law and the court’s position on the governing law of the arbitration agreement.
Factual Background
In 2021, RusChemAlliance LLC (RusChem), a Russian-based company, entered into a contract with Linde Engineering (Linde), a German construction company, for the engineering, procurement, and construction of an LNG plant in Russia. The contract required RusChem to make advance payments to Linde, secured by guarantees. One such guarantee, issued by Deutsche Bank AG (Deutsche Bank) for up to €230 million, was provided in favor of RusChem. The guarantee was governed by English law and included a dispute resolution clause requiring arbitration under ICC Rules, with Paris as the designated seat of arbitration. However, the arbitration agreement did not explicitly state which law it is governed by.[5]
After the European Union imposed sanctions on Russia in response to its invasion of Ukraine, Linde suspended its work under the contract. In response, RusChem terminated the contract and sought to reclaim its advance payment; however, Linde refused, citing the sanctions against Russia. Subsequently, RusChem demanded payment of the full amount under the guarantee from Deutsche Bank. Nevertheless, Deutsche Bank also refused payment, relying on the EU sanctions as justification.[6]
RusChem subsequently began litigation in Russia against Deutsche Bank, violating the arbitration agreement outlined in the guarantee, arguing that it was not enforceable. Soon after, Deutsche Bank initiated ICC arbitration in Paris, as required by the arbitration agreement. Meanwhile, while the arbitral tribunal had not yet been formed, Deutsche Bank sought an interim ASI and an anti-enforcement injunction (AEI) from the English Commercial Court to prevent RusChem from continuing its case in the Russian court proceedings.[7]
Summary of the Decision
Relying on the principles established by the English Supreme Court’s judgment in Enka v. Chubb[8], Justice Bright concluded that an arbitration agreement within a contract governed by English law is also subject to English law, even if the seat of the arbitration is located in another jurisdiction.[9]
Under English procedural law, foreign law is treated as a matter of evidence.[10] In support of its application, Deutsche Bank presented expert evidence on French law from Professor Claude Brenner.[11] Professor Brenner concluded that ASI, referencing inter alia the European Court of Justice’s decision in West Tankers[12], are not included in the procedural toolkit of France. Furthermore, he asserted that French law fundamentally opposed the issuance of such injunctions, deeming them incompatible with the principles of freedom of legal action and judicial autonomy. Relying on this evidence, Justice Bright observed that granting an ASI would create a direct conflict between English orders and French legal principles, particularly since Paris was the designated arbitral seat.[13]
Justice Bright also noted that a French court would neither recognize nor enforce an ASI issued by an English court and might even issue an anti-ASI in retaliation. He emphasized that French law deliberately excluded ASIs, reflecting a philosophical objection rather than a procedural gap. Given these factors, Justice Bright concluded that England was not the appropriate forum for Deutsche Bank’s claim. Accordingly, he dismissed the applications for both an ASI and an AEI, reasoning that the parties had chosen Paris as the seat and had to have contemplated the limitations of French procedural law. [14]
The English Court of Appeal overturned Bright J’s decision, relying on additional expert evidence submitted by Deutsche Bank during the appeal. This included further input from Professor Claude Brenner and new evidence from Professor d’Avout,[15] which clarified the treatment of ASIs under French law.[16] The new legal evidence demonstrated that while French courts lack procedural tools to issue ASIs domestically, they would recognize an ASI issued by a foreign court if it was (i) not contrary to international public policy (ii), issued by a foreign court with sufficient jurisdictional link, and that was (iii) issued without fraud by the claimant.[17] The Court of Appeal noted that the Commercial Court was hampered by having limited and unclear evidence of French law. However, upon reviewing the new evidence, the Court determined that while French courts do not have the jurisdiction to issue anti-suit injunctions, they were prepared to recognize and enforce such injunctions granted by other courts, provided the above criteria are met.[18]
The Court of Appeal then considered whether England was the proper forum for Deutsche Bank’s claim. Applying the test from two precedents of the English Supreme Court[19], the Court assessed three requirements: (i) whether there was a serious issue to be tried on the merits, (ii) whether there was a good arguable case that the claim fell within a relevant jurisdictional gateway, and (iii) whether England was the proper place for the claim. The Court found that Deutsche Bank had met the first requirement and satisfied the second through the “contract gateway,” as the claim involved a contract governed by English law (the arbitration agreement).[20]
Regarding the third requirement, the Court of Appeal emphasized that the court’s role is to “identify the forum in which the case can be suitably tried for the interests of all the parties and for the ends of justice.”[21] In this instance, the “ends of justice”[22] reflected the policy of English law that parties to contracts should comply with their contractual obligations. The Court observed that English courts would be the appropriate forum, particularly because an English court, faced with an English law contract containing an arbitration agreement also governed by English law, would readily enforce that agreement through an anti-suit injunction. It further highlighted that such an important remedy “can only in practice be obtained in England and not in France.”[23] Consequently, the Court of Appeal concluded that England was the proper forum and granted Deutsche Bank the requested ASI and AEI.[24]
Diverging Approaches to Anti-Suit Injunctions
Similar decisions were adopted in two other recent materially identical cases, Commerzbank AG v. RusChem[25] and UniCredit.[26] In UniCredit, the English Supreme Court upheld the issuance of an ASI in favor of arbitration seated in Paris. Like in Deutsche Bank, the Supreme Court concluded that the English court was the appropriate forum to issue the ASI. Additionally, the Court clarified that when an arbitration agreement does not specify its governing law, the main contract’s law will govern the arbitration agreement, even if the seat is in a different jurisdiction. There is currently no international consensus regarding this approach. Other jurisdictions, such as France, treat the law of the seat as the governing law of the arbitration agreement.[27]
The divergent approaches of English and French courts on ASIs highlight the interaction between legal cultures and arbitration philosophies. Based on the common law tradition, English courts regard ASIs as essential for preventing violations of arbitration agreements. On the contrary, as a civil law jurisdiction, France generally does not include ASIs in its procedural toolkit, leading French courts to dismiss them as inconsistent with their legal framework.[28]
Deutsche Bank and UniCredit indicate that when English law governs an arbitration agreement, English courts will uphold the parties’ contractual choice to arbitrate and grant ASIs when necessary to support the arbitration process. While this may not deter all parties from pursuing claims in breach of such agreements, the English court’s ability to issue anti-suit injunctions ensures that foreign judgments cannot be enforced against assets in England and may also hinder enforcement efforts in other jurisdictions.[29]
Limits to the Decision’s Significance
The impact of the decisions Deutsche Bank and UniCredit may be temporarily limited due to the ongoing reformation of the English Arbitration Act 1996.[30] The proposed Arbitration Bill, currently under consideration in the UK Parliament, introduces Section 6A, which addresses the law governing arbitration agreements. The provision, in its current draft, reads as follows:[31] Law applicable to arbitration agreement: (1) The law applicable to an arbitration agreement is— (a) the law that the parties expressly agree applies to the arbitration agreement, or (b) where no such agreement is made, the law of the seat of the arbitration in question. (2) For the purposes of subsection (1), agreement between the parties that a particular law applies to an agreement of which the arbitration agreement forms a part does not constitute express agreement that that law also applies to the arbitration agreement. […]
This reform significantly shifts the position established by Enka, UniCredit, and Deutsche Bank, proposing that, in the absence of an explicit choice of law governing the arbitration agreement, the default governing law will be the law of the arbitration’s seat. The intent of this change is to provide greater legal certainty by simplifying the determination of the governing law for arbitration agreements.[32] During the drafting process, the Law Commission made a key adjustment between the Second Consultation and the Final Report by removing the requirement that an express choice of law must appear “in the arbitration agreement itself.” This revision allows parties to rely on express choices located in other parts of the contract or related agreements, even if they do not specifically reference the arbitration agreement. However, this change has sparked debate among scholars, who are concerned that subsection 1(a) may lead to litigation over what constitutes a “sufficiently express” choice of law.[33]
The Arbitration Bill is currently making its way through the UK Parliament. It has completed its stages in the House of Lords and is now under consideration in the House of Commons. Once both Houses agree on the final text, it will receive Royal Assent and become law. The exact date for implementation will be established at that time.[34]
Conclusion
The judgment in Deutsche Bank, especially when viewed alongside the English Supreme Court’s decision in UniCredit, demonstrates the English courts’ commitment to upholding arbitration agreements governed by English law, even when the seat is abroad. These decisions affirm the availability of ASIs as a tool to protect arbitration agreements and party autonomy. However, the proposed Arbitration Bill 2024 may limit this scope by defaulting to the law of the seat if no explicit governing law is specified. To avoid jurisdictional uncertainties and ensure enforceability, parties should explicitly state the governing law of the arbitration agreement. Contract drafters are advised to include a clear choice of law clause for the arbitration agreement, separate from the substantive law governing the main contract.
Furthermore, both decisions underscore the importance of forum selection and the challenges posed by conflicting legal systems in international arbitration. In a fragmented geopolitical environment shaped by sanctions and national interests, these cases highlight the need to anticipate jurisdictional challenges and carefully draft dispute resolution clauses. By considering the interaction between substantive and procedural law, and understanding the legal approaches of key jurisdictions, parties can better protect their arbitration rights.
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Ann-Kathrin Reschny is an LL.M. candidate at NYU School of Law, specializing in the International Business Regulation, Litigation & Arbitration program. She earned her law degree from the University of Vienna. Before joining NYU, she worked as an associate in the dispute resolution department of a leading Austrian law firm, where she also published in the field of arbitration
[1] The European Union has imposed a series of sanctions on Russia, including Regulation (EU) 2022/328, which introduced import and export restrictions, prohibitions on transactions with the Central Bank of Russia, asset freezes, and a ban on financial assistance. Subsequent measures have further expanded these restrictions, with the most recent successor regulations being Regulations (EU) 2024/745, (EU) 2024/1745, and (EU) 2024/3192.
[2] EWCA Civ 11.10.2023, [2023] EWCA Civ 1144, Deutsche Bank AG v. RusChemAlliance LLC.
[3] UKSC 18.09.2024, [2024] UKSC 30, UniCredit Bank GmbH v. RusChemAlliance LLC.
[4] Referred to in UniCredit Bank GmbH v. RusChemAlliance LLC, para. 6; Art. 248.1, Russian Arbitrazh Procedure Code, enacted by Federal Law No. 95-FZ, 24 July 2002 (as amended).
[5] Deutsche Bank v. RusChem, para. 4-6.
[6] Deutsche Bank v. RusChem, para. 7-8.
[7] Deutsche Bank v. RusChem, para. 8-10.
[8] UKSC 15.10.2020, [2020] UKSC 38, Enka Insaat ve Sanayi AS v. OOO “Insurance Company Chubb, para. 170(iv).
[9] Deutsche Bank v. RusChem, para. 11.
[10] Art. 33.7, Civil Procedure Rules of England and Wales, enacted by the Civil Procedure Act 1997 (as amended).
[11] Professor at the University of Paris Panthéon-Assas.
[12] ECJ 10.02.2009, Case C-185/07, Allianz SpA v. West Tankers Inc.
[13] Deutsche Bank v. RusChem, para. 10-26.
[14] Deutsche Bank v. RusChem, para. 10-26.
[15] Professor at the University of Paris Panthéon-Assas.
[16] Deutsche Bank v. RusChem, para. 28- 44.
[17] Deutsche Bank v. RusChem, para. 30.
[18] Deutsche Bank v. RusChem, para. 30.
[19] UKSC 10.04.2019, [2019] UKSC 20, Lungowe v. Vedanta Resources plc.; UKHL 19.11.1986, [1986] UKHL 10, Spiliada Maritime Corpn v. Cansulex Ltd.
[20] Deutsche Bank v. RusChem, para. 34-35.
[21] Deutsche Bank v. RusChem, para. 37.
[22] Deutsche Bank v. RusChem, para. 38.
[23] Deutsche Bank v. RusChem, para. 40.
[24] Deutsche Bank v. RusChem, para. 36-41.
[25] EWHC 13.05.2024, [2024] EWHC 1474 (Comm), Commerzbank AG v. RusChemAlliance LLC.
[26] Due to the page limit, this paper will only discuss and compare the similarities with the recent English Supreme Court decision UniCredit Bank GmbH v. RussChem.
[27] Cour de Cassation, 1re Civ., 28 Septembre 2022, n° 20-20.260, Kabab-Ji SAL v. Kout Food Group; Jalal El Ahdab; What law governs an arbitration agreement and why it matters? Lessons from Kout Food Group v Kabab-Ji SAL, available at https://www.twobirds.com/en/disputes-plus/shared/insights/2022/global/what-law-governs-an-arbitration-agreement-and-why-it-matters-lessons-from-kout-food-group (last accessed: 12/5/2024).
[28] Vincent Carriou, Claire Debourg, et al., Les injonctions anti-suit anglaises, soutien inattendu des procédures arbitrales en France, Rev. Arb. 2024, p. 285, pp. 285–290.
[29] David Bridge, UK Supreme Court Upholds Anti-Suit Injunction in Favour of Paris-Seated Arbitration, November 2024, available at: https://cms-lawnow.com/en/ealerts/2024/11/uk-supreme-court-upholds-anti-suit-injunction-in-favour-of-paris-seated-arbitration (last accessed: 11/29/2024).
[30] David Bridge, UK Supreme Court Upholds Anti-Suit Injunction in Favour of Paris-Seated Arbitration.
[31]Arbitration Bill [HL], UK Parliament, Bill 140, Session 2023–24, available at https://bills.parliament.uk/publications/54937/documents/4641 (last accessed: 12/5/2024).
[32] John Fellas, One Thing You Need To Know About the Proposed Revisions to the English Arbitration Act, December 2023, available at: https://www.law.com/newyorklawjournal/2023/12/19/one-thing-you-need-to-know-about-the-proposed-revisions-to-the-english-arbitration-act/?slreturn=20241206183644 (last accessed 11/29/2024).
[33] Manuel Penades, The Law Governing Arbitration Agreements in England after UniCredit, November 2024, available at: https://eapil.org/2024/11/13/the-law-governing-arbitration-agreements-in-england-after-unicredit/ (last accessed 12/2/2024); Written evidence from Dr Manuel Penades – Response to the Call for evidence by the Special Public Bill Committee on the Bill to Amend the Arbitration Act 1996, available at https://committees.parliament.uk/writtenevidence/128263/pdf/(last accessed 12/4/2024).
[34] UK Parliament, Arbitration Bill Completes Lords Stages, 7 November 2024, available at: https://www.parliament.uk/business/news/2024/october/arbitration-bill-to-complete-stages-in-lords/ (last accessed 12/4/2024).