The Court of Appeal confirms that English courts may impose anti-suit injunctions in respect of foreign proceedings to prevent a breach of an arbitration agreement even in circumstances where there is no actual or intended arbitration. AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC (2011)
The Court of Appeal recently upheld a ruling that the English courts had jurisdiction to grant a final anti-suit injunction preventing foreign court proceedings brought in breach of an arbitration agreement, even though there was no actual or intended arbitration.
This judgment addresses the relationship between the courts' powers under (i) section 44 Arbitration Act 1996 (AA96) and (ii) section 37 Senior Courts Act (SCA81). The approach adopted in this case preserves the courts' powers under the SCA81 to grant injunctive relief in support of an arbitration agreement in cases that fall outside the scope of section 44 AA96.
The claimant and the defendant had a concession agreement to produce hydroelectric energy in Kazakhstan. Although the agreement contained an arbitration clause specifying that disputes were to be resolved by arbitration, to be conducted in London, D brought court proceedings against C in Kazakhstan. C applied to the English High Court, seeking declaratory relief and an anti-suit injunction under section 44 AA96 and/or section 37 SCA81 to restrain the Kazakhstan proceedings. The Court held that, in the absence of actual or intended arbitration proceedings, the Court could not intervene under section 44 AA96, but that it did have jurisdiction to do so under section 37 SCA81. C was granted a final anti-suit injunction and a declaration.
D appealed, arguing (amongst other things) that section 1(c) AA96, which provides that the court "should not intervene except as provided by this Part", prevented section 37 SCA81 from being used to circumvent the limitations of section 44 AA96. The Court of Appeal accepted that where section 44 AA96 applied section 37 SCA81 should not be used in this way. However, where there was no arbitration in prospect, section 44 AA96 did not apply, and there was no objection to the court's jurisdiction under the SCA81. The words "should not intervene" were intended to prevent intervention in the conduct of an arbitration, not litigation which threatened to undermine an arbitration agreement. Furthermore, the remaining principles in section 1 (eg, avoidance of delay and expense) were considered relevant and favoured court intervention.
In clarifying that section 1(c) is a general principle intended to assist in interpreting the AA96, rather than a binding rule, the Court of Appeal has made it clear that the AA96 does not remove its jurisdiction under section 37 of the SCA81. Conversely however, section 37 SCA81 cannot be used purely to get round the limitations of section 44 AA96.
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