Latham & Watkins Secures Victory In Groundbreaking Anti-Suit Injunction Case In UK Supreme Court

Latham & Watkins Secures Victory In Groundbreaking Anti-Suit Injunction Case In UK Supreme Court

In a groundbreaking ruling, the UK Supreme Court has affirmed, for the first time, that English Courts possess the authority to grant final mandatory anti-suit relief to halt proceedings initiated in violation of an arbitration agreement situated outside England and Wales.

Global law firm Latham & Watkins, representing UniCredit Bank GmbH, played a pivotal role throughout the process. UniCredit sought a mandatory anti-suit injunction to restrain proceedings launched by RusChemAlliance LLC (RCA) in Russia — a breach of their arbitration agreements.

The legal saga culminated in a landmark decision by the Supreme Court on April 23, 2024, affirming the Court of Appeal’s judgment in favour of UniCredit.

On August 4, 2023, RCA initiated proceedings in the St. Petersburg Arbitrazh Commercial) Court , demanding payment of €448 million based on seven bonds issued by UniCredit. These bonds, governed by English law, stipulated ICC arbitration seated in Paris (referred to as “the Bonds”).

RCA’s claim relied on Article 248.1 of Russia’s Arbitrazh Procedure Code, which empowers Russian Courts to disregard foreign arbitration agreements and assert exclusive jurisdiction over disputes related to EU sanctions.

Noteworthy aspects of the case include:

• French law does not allow anti-suit injunctions, preventing equivalent relief within the seat’s courts.
• The Russian Courts acted contrary to their mandatory obligation under Article II(3) of the New York Convention, which requires staying domestic court proceedings that breach exclusive arbitration agreements.

UniCredit secured an interim injunction on August 24, 2023, restraining RCA from pursuing the Russian proceedings. However, at a contested hearing on September 22, 2023. The High Court deemed itself lacking jurisdiction for final mandatory relief. The interim prohibitory injunction persisted pending an appeal on jurisdiction.

In a crucial turn, the Court of Appeal overturned the High Court’s decision on January 25, 2024, accepting jurisdiction to grant a final mandatory anti-suit injunction – forcing RCA to withdraw the Russian proceedings. The Court of Appeal’s rationale rested on the parties’ choice of Paris seat, insufficient to displace the presumption that the arbitration agreements were governed by English law.

RCA sought permission to appeal to the Supreme Court on two jurisdictional questions: Whether the Paris seat implied French law governed the arbitration agreements; and whether England was the proper forum for UniCredit’s claim.

While RCA’s appeal was expedited, the Supreme Court heard the case over one and a half days on January 17 and 28, 2024. On January 23, 2024 the court dismissed RCA’s appeal, upholding the Court of Appeal’s jurisdictional finding. A detailed judgment is forthcoming.

These proceedings delve into critical factual and legal questions, including the test for determining the governing law of non-English-seated arbitration agreements, as established in the UK Supreme Court’s Enka v. Chubb decision.

This landmark case marks the first instance of English Courts granting final mandatory anti-suit injunctive relief to uphold non-English-seated arbitration, even when the underlying contract lacks express jurisdiction conferred upon the English Courts.

The recent decision underscores the preeminent position of Latham’s Litigation & Trial Department as a combined force in both arbitration and sanctions matters within London. This case is just one among several high-stakes disputes involving international sanctions that the team is currently advising on.

The Latham team, spearheaded by London Partner Charles Claypoole, received invaluable support from Associates Alex Cox, Ram Mashru, and Michelle Taylor.