Following the decision in Ust-Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk Hydropower Plant LLP (2013), the UK Supreme Court has confirmed that the English courts have jurisdiction to grant anti-suit injunctions to restrain a person from commencing or continuing proceedings before a non-Member State of the European Union brought in breach of an arbitration agreement. This is so even where no arbitration has been commenced or is contemplated.
In Ust-Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk Hydropower Plant LLP (the "AES Case"), the applicant had been sued by the respondent in the courts of Kazakhstan in respect of a matter which the applicant contended fell within the scope of an arbitration agreement between the parties and thus should have been referred to ICC arbitration in London. The applicant sought an anti-suit injunction to restrain the respondent from pursuing proceedings against the applicant in the courts of Kazakhstan. The applicant obtained an interim anti-suit injunction in the English Commercial Court which was later made final with the applicant having been unable to rely on the interim injunction in the Kazakh courts. The unusual feature of this case was that the applicant did not have any intention of commencing arbitral proceedings but rather it wished not to be sued other than through arbitral proceedings brought in accordance with the arbitration agreement between the parties.
Upholding the decision of the Court of Appeal, a clear distinction was drawn by the Court between the position under the Brussels Regulation and the position outside the European Union. The CJEU had held in West Tankers v Allianz SpA (2009) that the English courts are unable to grant an anti-suit injunction to restrain a person from commencing or continuing proceedings before the courts of another Member State of the European Union. However, it was the opinion of the Court in the AES Case that the ability of English courts to grant an anti-suit injunction to restrain a person from commencing or continuing proceedings before the courts of a country which is not a Member State of the European Union (in this instance, Kazakhstan) is not affected by the decision of the CJEU in West Tankers.
The Court held that an arbitration agreement gives rise to a 'negative obligation' not to commence proceedings in any other forum which can be equated to the effect of an exclusive choice of court clause. Prior to the commencement of the Arbitration Act 1996, the English courts had an inherent power to enforce this 'negative obligation' where foreign proceedings had been brought in breach of an arbitration agreement by injuncting such proceedings. This was the case even when no arbitration proceedings had been commenced or were in contemplation. The justification for the granting of an anti-suit injunction is that, without it, the claimant would be deprived of its contractual right to have disputes resolved by arbitration. This contractual right applied even where there was no intention to commence arbitration proceedings.
The question the Court then had to consider was whether the introduction of the Arbitration Act 1996 had changed this position. As no arbitration proceedings had been commenced or were intended, section 44 of the Arbitration Act (under which the court's powers are expressly "for the purposes of and in relation to arbitral proceedings") did not apply. Whilst the Court acknowledged that it would be preferable to leave it to the foreign court to recognise and enforce the parties' agreement on forum, in this instance, the Kazakh Court had refused to do so. In such circumstances, the Court could legitimately grant relief under section 37 of the Senior Courts Act 1981 as it was seeking to protect and support an arbitration agreement rather than seeking to protect and support arbitration proceedings. Thus, the power of the Court under section 37 was not inconsistent with the Arbitration Act. Rather, it was to be exercised in scenarios outside the scope of section 44 (the Court of Appeal held that it would be "wrong as a matter of principle to utilise section 37 to get around the limitations of section 44"). The Court held that where a claimant was seeking an injunction to restrain foreign proceedings which have been brought in breach of an arbitration agreement, then the source of the Court's power to grant such an injunction lies not in section 44 of the Arbitration Act, but in section 37 of the Senior Courts Act. An injunction granted under section 37 is not "for the purposes of and in relation to arbitral proceedings" but rather, as expressed by Lord Mance in his judgment, it is "for the purposes of and in relation to the negative promise contained in the arbitration agreement not to bring foreign proceedings, which applies and is enforceable regardless of whether or not arbitral proceedings are on foot or proposed."
The decision of the Supreme Court makes clear that, other than by the decision in West Tankers, the power of the English courts to grant an anti-suit injunction under section 37 of the Senior Courts Act 1981 remains unfettered. As a result, parties can rely upon the English courts to afford them protection through an anti-suit injunction irrespective of whether arbitration proceedings have been commenced or are in contemplation provided that the proceedings have been brought in a non-member state of the European Union.