In Sulamerica Cia Nacional de Seguros Sa v Enesa Engenharia SA  EWCA Civ 638, the Court of Appeal found that the decision of Mr Justice Cooke (previously reported here) that an anti-suit injunction in favour of arbitration proceedings was valid would be upheld.
At first instance, Cooke J held that the arbitration agreement in question was governed by English, not Brazilian law and that the arbitration clause prevailed over the exclusive jurisdiction clause which specified that all disputes would be subject to Brazilian law. He therefore held that the anti-suit injunction restraining Enesa from proceeding in Brazil should be continued. Endesa appealed.
The Court of Appeal upheld the decision of the first instance judge and therefore ruled that the anti-suit injunction preventing Enesa from continuing its proceedings in Brazil would be maintained. It was held that Cooke J was correct to find that the arbitration clause in question was governed by English law, not Brazilian law, which was the law governing the main contract between the parties. Lord Justice Moore-Bick stated he did not think that that the parties' "express choice of Brazilian law to govern the substantive contract is sufficient evidence of an implied choice of Brazilian law to govern the arbitration agreement". This was particularly the case in circumstances where the choice of Brazilian law would be likely to alter the effect of the arbitration clause, as Brazilian law required that each party must consent to the commencement of arbitration (which consent was not required by the arbitration clause itself). The question was, therefore, whether the agreement to arbitrate had the closest connection with Brazil or England. The Court of Appeal held that the choice of London as the seat of the arbitration clearly meant that its closest connection was with England and that it was, therefore, governed by English law.
The Court of Appeal also upheld Cooke J's decision that the arbitration clause "trumped" the exclusive jurisdiction clause, such that the commencement of proceedings in Brazil by Enesa was in breach of the arbitration clause. Enesa's appeal was therefore dismissed and the anti-suit injunction preventing further action being taken in Brazil was maintained.
This decision, which simply affirms that the decision of Cooke J at first instance was correct, serves to further clarify that the choice of the seat of an arbitration will often strongly suggest that the agreement to arbitrate will be governed by the law of the country chosen as the seat. Further, it also highlights that in most instances, an arbitration clause will "trump" an exclusive jurisdiction clause, such that proceedings may not be commenced in breach of the arbitration clause.