Introduction

In the seminal decision of UniCredit Bank GmbH v RusChemAlliance LLC [2024] UKSC 30, delivered on 18 September 2024, the United Kingdom Supreme Court reaffirmed its authoritative stance on the enforcement of arbitration agreements and the issuance of anti-suit injunctions in international commercial litigation. The Court upheld the decision of the Court of Appeal, granting an anti-suit injunction compelling RusChemAlliance, a Russian corporate entity, to cease proceedings in the Russian courts against UniCredit Bank, a German financial institution. This judgment stands as a decisive statement on the English judiciary’s robust approach to upholding the sanctity of arbitration clauses and its jurisdictional preeminence in cross-border disputes.

The Jurisprudential Underpinnings of Anti-Suit Injunctions

The power of English courts to issue anti-suit injunctions is a well-established principle within the framework of international commercial litigation, rooted in the need to preserve the integrity of contractual dispute resolution mechanisms. Anti-suit injunctions are judicial orders that enjoin a party from pursuing or continuing legal proceedings in a foreign forum, thereby ensuring compliance with the forum selection clauses or, more pertinently, arbitration agreements embedded in the parties contractual arrangements. These injunctions are typically invoked in two principal contexts: first, when a party has contracted to resolve disputes in a particular forum, and second, when an arbitration agreement has been incorporated into the contract. English courts, recognising the sanctity of such agreements, are inclined to issue anti-suit injunctions to enforce compliance with the chosen dispute resolution mechanism, whether litigation or arbitration.

Governing Law and the Role of Arbitration Agreements

At the heart of the UniCredit v RusChem dispute lies a multifaceted issue concerning the law governing arbitration agreements. Arbitration clauses are foundational to the contract, delineating not only the procedural framework for dispute resolution but also specifying the substantive law that will govern disputes arising from the agreement. In certain instances, the law governing the main contract diverges from the law applicable to the arbitration agreement itself, thus complicating the interpretation and enforcement of such clauses. For example, a contract may be governed by English law, while the arbitration agreement might be governed by the law of a different jurisdiction, such as Singapore, with the seat of arbitration located in yet another country, such as Paris.

The complexity is exacerbated in scenarios where the arbitration agreement is silent on the choice of law. This was a central issue in Enka v Chubb [2020] UKSC 38, where the Supreme Court ruled that, absent an express choice of law provision in the arbitration agreement, the law governing the main contract would generally be deemed applicable to the arbitration agreement itself. The Court emphasised the need for consistency between the governing law of the contract and the law of the arbitration agreement, whilst acknowledging that in certain cases, this presumption might yield to other considerations, particularly where the intentions of the parties or the factual context warrant a departure from this rule.

The question of conflicting legal systems was again examined in Kabab-Ji v Kout Food Group [2021] UKSC 48, where the Supreme Court grappled with the issue of how differing legal approaches in multiple jurisdictions affect the enforcement of arbitration agreements. The case illuminated the tension between the law of the seat of arbitration in this instance, France and the law of the arbitral forum, English law, and highlighted the practical challenges arising from the recognition and enforcement of arbitral awards when competing legal systems are at play.

The Dispute: The Contours of the RusChem-UniCredit Disagreement

The dispute in UniCredit v RusChem arose from a series of bonds containing arbitration clauses. These bonds obliged UniCredit to guarantee certain payment obligations owed to RusChem by a third-party debtor. However, following the imposition of EU sanctions on Russian entities, UniCredit refused to honour its payment obligations under the bonds, prompting RusChem to initiate legal proceedings in a Russian court.

The Russian court accepted jurisdiction over the dispute, invoking Russian law, which ostensibly permitted it to circumvent the arbitration agreement in light of the sanctions regime. UniCredit, however, contested this approach, maintaining that the dispute was subject to arbitration under the terms of the bonds, which were governed by English law. Consequently, UniCredit sought an anti-suit injunction from the English High Court to restrain RusChem from pursuing litigation in Russia, invoking the principle that disputes should be resolved by the agreed-upon arbitration process, rather than through judicial proceedings in an alternate jurisdiction.

The UK Supreme Court, in a meticulous and reasoned judgment, upheld the anti-suit injunction, endorsing the principles established in Enka and Kabab-Ji. Lord Leggatt, in (para 32 – 60) of the judgment, underscored the English courts commitment to enforcing arbitration agreements and their discretion to restrain foreign litigation that violates the terms of such agreements. In so doing, the Court reaffirmed the presumption that when an arbitration agreement is governed by English law, English courts will exercise their jurisdiction to ensure that parties adhere to their chosen dispute resolution mechanism.

In addressing the argument that the seat of arbitration should take precedence over the governing law of the main contract, Lord Leggatt in (para 52) articulated a cogent rationale for rejecting this position, noting that such an approach would impose an unrealistic burden on parties to foresee all potential legal complexities and would unduly complicate the dispute resolution process, particularly in cases requiring the introduction of foreign law evidence as per (para 55) of the judgement.

Judicial Significance and the Role of English Courts
These proceedings represent the third such occasion within a span of approximately four years in which the Supreme Court has been called upon to address complex issues surrounding the interpretation and enforcement of arbitration agreements and the governing law of such agreements. Lord Leggatt’s erudite exposition on these matters significantly enhances, and, one hopes, conclusively clarifies, the applicable legal principles. His judgment serves as an authoritative restatement of the English Court’s robust capacity and resolute willingness to enjoin litigation that contravenes the terms of an arbitration agreement, provided it holds jurisdiction to do so. In this regard, the decision underscores with emphatic clarity the unwavering commitment of English courts to uphold the sanctity of arbitration agreements, even when faced with challenges stemming from competing foreign legal systems.