In Mace (Russia) Ltd v Retansel Enterprises Ltd & Anor, the English court granted an anti-suit injunction in support of LCIA arbitration proceedings in London to prevent parallel arbitration proceedings in Russia. The interesting aspect of this case is not the granting of the anti-suit injunction itself but rather the novel way that the judge navigated the difficulties facing the claimant which included:
- the fact that the claimant had previously obtained a similar anti-suit injunction which the judge struck out for material non-disclosure; and
- the granting of a second injunction without the Tribunal’s authorisation contrary to Article 25.3 of the LCIA Rules which provides that parties can only obtain interim and conservatory measures from the court with the Tribunal’s authorisation.
The claimant had agreed to supply the second defendant with project management services for a Russian residential development and the contract was recorded in two agreements both governed by English law and providing for LCIA arbitration. The claimant commenced arbitration proceedings in London for non-payment of fees against the second defendant. The Tribunal was appointed and one week later the first defendant, who was the 100% shareholder of the second defendant, started an arbitration in Russia seeking a declaration that the second of the agreements was invalid under Russian federal law and the hearing was already set for 19 May 2016. The claimant applied for and obtained, without notice, an anti-suit injunction to prevent the continuation of the Russian proceedings on the basis that those proceedings were vexatious.
Our interest in the cases arises from the subsequent hearing between all the parties when the defendants applied for the anti-suit injunction to be set aside on the basis that the claimant had breached its obligation to disclose to the court all material facts relating to its application. The non-disclosures alleged included advice the claimant had received from Russian lawyers that the hearing in Russia set for 19 May 2016 would be postponed if the claimant made an appearance in the Russian proceedings. The application was successful but it was a short lived victory because the judge immediately granted a new anti-suit injunction finding that the Russian proceedings were an attempt to subvert the London proceedings and the defendants had colluded to start the Russian proceedings in an attempt to assist the second defendant to resist the claim in the London proceedings.
Article 25.3 of the LCIA Rules
As to the requirement in the LCIA Rules that the claimant should have obtained the Tribunal’s authorisation, that appeared to be an insurmountable hurdle as the court’s power to grant interim measures in support of arbitration is set out in section 44 of the Arbitration Act 1996 which expressly states that the court has that power “unless otherwise agreed by the parties”. It would seem that the parties had agreed that the court should only grant interim measures if the arbitrators had authorised this and clearly in this case they had not. To get over this, the judge decided that the court could grant an anti-suit injunction under section 37 of the Senior Courts Act 1981 which provides that “The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so”. The parties cannot contract out of this provision. Accordingly, the judge used this as the foundation for a decision to grant the second anti-suit injunction.
The requirement in Article 25.3 of the LCIA Rules that the Tribunal should authorise an application to the court for interim measures was only introduced in October 2014 at the same time as, and in support of, new articles introducing a regime to allow the appointment of emergency arbitrators. The court’s decision in Mace highlights the difficulty that the new Article 25.3 of the LCIA Rules creates and parties ought to consider seeking the Tribunal’s authorisation prior to approaching the court for interim measures. However, this decision also clarifies that the requirements of Article 25.3 only apply to the types of interim measures set out in section 44 of the Arbitration Act 1996. To the extent a party is seeking an interim measure beyond that set out in section 44 (e.g. an anti-suit injunction), it can still do so without the Tribunal’s authorisation pursuant to section 37 of the Senior Courts Act 1981.