The Court of Appeal has held that when parties agree exclusive jurisdiction of the English courts of a substantive dispute, after judgments have been obtained in other jurisdictions, the English courts have a discretion to grant an injunction against enforcement proceedings of those judgments in order to give effect to the terms of the exclusive jurisdiction agreement between the parties.

Background

In Arkhangelsky & Ors v Bank St Petersburg OJSC & Anor[2014] EWCA Civ 593, the applicants (A) appealed against a first instance decision to refuse an application for an anti-enforcement injunction. The injunction was intended to prevent the respondents (B) from pursuing enforcement proceedings for judgments obtained in the Russian courts that had already been initiated in Bulgaria and France, as well as any other enforcement action not yet taken elsewhere.

Following the Russian judgments, A commenced proceedings in the BVI and Cyprus which ran into jurisdictional difficulties. Subsequently, in December 2011, the parties agreed the exclusive jurisdiction of the English courts to resolve the substantive dispute. The purpose of the agreement was to prevent multiple proceedings, and in so doing, to avoid the substantial expense that such proceedings would likely cause.

Decision

The Court of Appeal granted an interim anti-enforcement injunction against existing enforcement proceedings and the initiation of any new enforcement proceedings. Given that there was a real prospect that the English proceedings could decide in favour of A, the court considered that enforcement of the Russian judgments should be restrained for at least the period of the English court proceedings. The court held that it would be contrary to the terms and the spirit of the exclusive jurisdiction agreement if the enforcement of the Russian judgments were to continue. In the event, B had already been granted a freezing injunction over assets in France and Bulgaria and so had security over assets should B be successful in the English proceedings.

The court disagreed with the first instance judge that to grant an interim injunction in support of the English proceedings would be an ‘unwarranted interference in the process of either the French or Bulgarian court’. In circumstances where the injunction had the effect of requiring B to cease pursuit of enforcement proceedings and not to initiate new proceedings, the intervention was one that concerned the party’s actions alone, and not the process of the foreign court.

The court relied upon the case of AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC which dealt with the grant of anti-suit injunctions arising out of an arbitration agreement with an exclusive jurisdiction clause. Please see our Law-Now on that casehere

The two other appeals at the same hearing related to the application of section 2 of the Foreign Limitation Periods Act 1984 regarding a three year Russian limitation period, and a refusal to dispense with service of separate Commercial Court proceedings.

Commentary

The court focussed on the parties’ agreement to the exclusive jurisdiction of the English courts. Whilst recognising that the grant of an interim injunction was discretionary, the Court of Appeal has given a clear signal that such injunctions will be appropriate when such jurisdiction agreements exist.

Further Reading

Please click here for the full judgment.