The relationship between court and arbitration proceedings has often been described as a partnership. However, as with any good relationship, the partnership between court and arbitration requires an element of give and take. Nowhere is this need for balance more acutely felt than where there is disagreement in separate jurisdictions as to the correct procedure to follow in any given case. This issue has recently come before the English Supreme Court in the case of Ust-Kamenogorsk Hydropower Plant JSC (the “Appellant”) v AES Ust-Kamenogorsk Hydropower Plant LLP (the “Respondent”) [2013] UKSC 35.

The Appellant was the grantee and lessee of a 25 year concession which entitled it to control an energy-producing hydroelectric plant in Kazakhstan while the Respondent was the owner and grantor of that concession. The concession agreement was governed by Kazakh law but contained an arbitration clause which required any dispute to be settled in London in accordance with the rules of the International Chamber of Commerce (the “ICC”).

A dispute arose after the Respondent alleged that it had made a request for information regarding concession assets which the Appellant had failed to provide. As a result, the Respondent brought a claim before the Kazakh court seeking the disclosure of the information sought. The Appellant’s application to stay these proceedings on the basis of the arbitration clause in the concession agreement failed; the Kazakh court ruled the clause to be invalid on the basis that (a) it concerned tariff disputes and (b) the reference to the ICC left the arbitral body unspecified. In response, the Appellant applied for, and was successful in obtaining, an interim anti-suit injunction from the English Courts which was later made final. However, the Kazakh courts proceeded to reject the Appellant’s attempts to rely on the interim injunction.

The English Court of Appeal declared that the English courts were not bound by the Kazakh court’s ruling as both of the grounds on which it ruled the arbitration clause to be invalid were unsustainable under English law. As such, Burton J. declared that the claim in question could only properly be pursued by arbitration. This restrained the Respondent’s pursuit of the claim via the courts in Kazakhstan, or indeed, in any other forum.

The matter eventually came before the English Supreme Court, which was asked to consider whether it had the power to declare that a claim could only properly be brought in arbitration and/or to injunct the continuation or commencement of proceedings brought in any other forum outside the Brussels/Lugano regime.

In reaching its decision, the Court considered the application of section 37 of the Senior Courts Act 1981, which states 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 Court acknowledged that the power in section 37 should be exercised sensitively and with due regard to the principles underpinning the Arbitration Act 1996, but held in the circumstances that section 37 permitted the English courts to injunct the commencement or continuation of proceedings brought in another forum where an arbitration agreement existed. Further, the Court ruled that this power was equally exercisable where an arbitration was on foot or proposed (as in the case in hand) and that arbitral proceedings do not need to have been commenced.

In reaching its decision, the Supreme Court highlighted that it will take care before enforcing this power and acknowledged that there will be some cases where foreign proceedings are brought in breach of an arbitration clause or exclusive court agreement and the appropriate course is to leave it to the foreign court to recognise and enforce the parties’ agreement on forum. However, where, as in the present case, the foreign court refuses to do so on a basis which is not sustainable under English law, there is every reason for the English Court to exercise its power to intervene under section 37.