In Deutsche Bank AG v RusChemAlliance LLC  EWCA Civ 1144, the English Court of Appeal has confirmed the power of English courts to issue anti-suit injunctions (ASIs) to restrain court proceedings commenced in a foreign jurisdiction (Russia) in violation of an arbitration agreement providing for the seat to be in another country (Paris). This important decision provides helpful guidance after earlier conflicting High Court judgments on the point. The judgment also demonstrates the far-reaching powers of English courts to enforce arbitration agreements governed by English law, even where the seat of arbitration is in another country.
In 2021, RusChemAlliance LLC ("RCA") entered into an agreement with a German construction company (the "Contractor") for the construction of an LNG plant in Russia. In accordance with the construction contract, RCA made advance payments to the Contractor, and in return Deutsche Bank provided an advance payment guarantee to RCA. The guarantee was subject to English law and contained an arbitration agreement providing for disputes to be referred to ICC arbitration seated in Paris.
In 2022, the Contractor suspended its work following the Russian invasion of Ukraine and the adoption of EU sanctions imposed against Russia. Consequently, RCA terminated the construction contract and sought to recover its advance payments from the Contractor. The Contractor failed to pay, and RCA demanded payment from Deutsche Bank under the guarantee. Deutsche Bank declined to pay on the grounds that it was prohibited from doing so as it would be in breach of the sanctions regime, after which RCA commenced court proceedings against Deutsche Bank in Russia. Deutsche Bank commenced arbitration proceedings in Paris and also sought an interim ASI from the English court, which it considered to have jurisdiction as the guarantee and, it contended, the arbitration agreement therein, was subject to English law. Deutsche Bank sought the ASI to restrain RCA from pursuing the Russian court proceedings in breach of the arbitration agreement.
While it is well-established that English courts can grant ASIs in support of arbitration proceedings where the seat of arbitration is in England, it was unclear whether an English court could make an ASI where the seat of arbitration was not in England but, as in this case, in France.
Earlier inconsistent High Court Decisions
At first instance (in an anonymised decision: SQD v QYP  EHWC 2145 (Comm)), Mr Justice Bright accepted that pursuant to Enka v Chubb (2020), under English law the arbitration agreement was governed by English law. However, he concluded that granting the application would be inconsistent with the approach of the courts of the seat of the arbitration, as French courts do not contain ASIs in their domestic toolkit and the expert evidence indicated that they would not enforce an interim ASI granted by the English court. He found that, in choosing a Paris seat, the parties must have known and accepted that the French courts would not grant ASIs. The fact that the arbitration agreement was subject to English law did not lead to a different conclusion. Mr Justice Bright rejected the application for an ASI.
Just 10 days later, in Commerzbank AG v RusChemAlliance LLC  EWHC 2510 (a case involving the same fact pattern and defendant, but a different claimant bank), Mr Justice Bryan granted an ASI in aid of a Paris seated arbitration. He concluded that the seat of the arbitration was of limited relevance to the granting of an ASI, and that it was appropriate for an English court to grant the application where the arbitration agreement was governed by English law. In doing so, the judge noted that the evidence before him on French law was fuller than that before Mr Justice Bright in SQD v QYP, and indicated that there is no philosophical objection to ASIs under French law. He therefore did not feel constrained to take the same approach as the previous judge.
Finally, in G v R  EWHC 2365 (Comm), another case which reportedly involved RCA, Sir Nigel Teare considered the issue. He concluded that even if the relevant arbitration agreement was governed by English law (which he did not consider it was), in this case England was not the proper forum to enforce an arbitration agreement which provided for arbitration in Paris. Even though the remedy of an ASI was not available in France, substantial justice could still be done there.
Court of Appeal Decision
However, with the benefit of further evidence on French law, in Deutsche Bank (an appeal from SQD, with party names no longer anonymised), the Court of Appeal agreed with Mr Justice Bryan's conclusion in Commerzbank. It considered that, although a French court does not have the ability to grant an ASI as part of its domestic toolkit, it will recognise the grant of an ASI by a court which does have that power, provided that in doing so the foreign court's decision does not cut across international public policy.
Lord Justice Nugee accepted that it may seem natural to regard the grant of an ASI to restrain proceedings brought in breach of an arbitration agreement as intimately connected with the arbitration, and so the natural and "proper" place to bring any claim for an ASI would be the courts of the seat. In fact, however, he did not think that conclusion naturally followed.
Instead, the judge regarded the fact that the arbitration agreement was governed by English law, and that the English court would readily and usually enforce such an agreement through an ASI, as the determinative factor. In circumstances where there was no evidence that French courts would object to the granting of an ASI relief outside of France, Lord Justice Nugee concluded that the appropriate forum for the claim was the English court on the simple basis that such a claim could not be given effect to in France. Having reached that decision, it was a straightforward step to grant the ASI – there was no good reason not to.
The Court of Appeal's decision confirms the English courts' pro-arbitration attitude by using its far-reaching powers to enforce arbitration agreements. An ASI is a valuable tool, but not readily available in many jurisdictions. It is therefore important to check the applicable laws before choosing a seat of arbitration where there is a risk that a contractual party might not honour its obligations to arbitrate. If that is not possible, the Court of Appeal has opened the door to getting ASI from an English court provided that English law governs the arbitration agreement.
It is important to consider that the forthcoming reforms to the Arbitration Act 1996 will effectively reverse the current English law position on the presumed law applicable to an arbitration agreement, where, as is commonly the case, the agreement is silent on that issue. Under the amendments, the applicable law will be deemed to be the same as the law of the seat, rather than the law of the underlying agreement. Notwithstanding the decision in Deutsche Bank, the scope for seeking an anti-suit injunction from the English court in circumstances where the main contract is governed by English law but the parties have chosen a non-English seat may therefore be much reduced unless parties explicitly specify that English law applies to their arbitration agreement.