AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC [2011] EWCA Civ 647

The Appellant and Respondent were both Kazakhstan companies. They had entered into a concession agreement which was governed by Kazakhstan law, but which contained an arbitration agreement governed by English law and providing for arbitration in London.  

When the Appellant brought a claim against the Respondent in the Kazakhstan courts, the Respondent applied to have the claim dismissed on the basis that disputes had to be arbitrated in London. This application was rejected. The Kazakhstan court relied on a previous decision of the Kazakhstan supreme court, in proceedings between the parties’ predecessors, that the arbitration clause in question was void.

The Respondent then obtained a declaration from the English court that the Appellant was required to submit disputes, including those relating to the effectiveness of the arbitration clause, to arbitration in London. It also obtained an anti-suit injunction preventing the Appellant from litigating disputes which fell within the arbitration clause in Kazakhstan.  

The Appellant appealed this decision, arguing that the English court had no power to intervene in the absence of existing or prospective arbitration proceedings in England. It also submitted that the Respondent lacked a proper jurisdictional gateway for service of its proceedings out of the jurisdiction, and that because the Respondent had submitted to the jurisdiction of the Kazakhstan court, that court’s decision should be enforced and/or recognised by the English court.  

The appeal was dismissed. The Court held that, where a party asks the court to protect its interest in a right to have its disputes settled in accordance with an arbitration agreement (even where no arbitration has been commenced and none is intended), the court may consider whether, and how best, to protect such a right to arbitration. While the court must be careful not to usurp any arbitral process, it has the jurisdiction to consider such issues.  

The Court also held that it was not bound by the Kazakhstan court’s construction of the English law arbitration agreement (which, in any event, had been misconstrued), subject to any question of submission. It was also not bound by the Kazakhstan court’s view that the agreement was contrary to Kazakhstan public policy. In the circumstances, there was no reason why the Kazakhstan judgment should be recognised or enforced.  

Finally, the Court held that the Respondent had not submitted to the jurisdiction of the Kazakhstan court. While it had unsuccessfully challenged the jurisdiction and then argued the merits while maintaining its objection to jurisdiction, it had not gone on to defend the merits after failing on jurisdiction. Even if that was wrong, the Kazakhstan judgment did not have to be and should not be recognised or enforced.