English Commercial Court refuses to grant interim injunctive relief requiring a party to withdraw a claim in another jurisdiction

In A v OOO "Insurance Company Chubb" and other companies [2019] EWHC 2729 (Comm), the English Commercial Court (the Court) refused, for various reasons, to consider an application for interim relief. The application sought an order requiring a party to withdraw a claim in the Russian courts and seek a stay of those proceedings. The application was made on an urgent ex parte (but on notice) basis. The Court found that the matter, although capable of quick disposal, was not yet in a position to proceed any further because it was insufficiently prepared to enable there to be a fair hearing.

Background

The Claimant (A) was a party to a contract under which it was to perform equipment installation works at a power plant (the Contract). The Contract contained an alleged arbitration agreement which provided for disputes to be resolved by London-seated arbitration under the ICC Rules.

On the facts of the case, a fire broke out at the power plant. In respect of resulting losses, the First Defendant, Chubb Russia, paid out $400 million to its insured, Unipro, which was the other party to the Contract. Chubb Russia argued that it was subrogated to the claims of Unipro and sought to recover from A in Russian litigation in respect of the sums Chubb Russia had paid out.

A contended that its works were unrelated to the fire and objected to the Russian court's jurisdiction on the grounds (amongst others) that the dispute should be referred to arbitration in accordance with the Contract. A accordingly brought a motion for stay of the Russian proceedings.

A also made an ex parte, but on notice, application to the Court seeking interim injunctive relief and leave to serve out of the jurisdiction (England). The relief sought comprised of the following orders:

• an order that Chubb Russia withdraw its claim in the Russian courts and seek a stay of the Russian proceedings;
• an interim injunction requiring the Third Defendant (Chubb Europe) to ensure that Chubb Russia takes the necessary steps to comply with order (i) if given; and
• an order dispensing with service of the application notice on all defendants save the Second Defendant (Chubb Investments).

At the initial ex parte hearing, the Court permitted service of the claim form and application on Chubb Russia, Chubb Europe and the Fourth Defendant (Chubb Holding) out of the jurisdiction, and listed the application as a matter of urgency.

Decision

Following the return hearing, the Court provided five main reasons for concluding that the relief sought by A should not be granted.

First, the Court found it unclear why the application was made as an ex parte rather than inter partes application. It noted that the urgency of a matter did not in itself justify it proceeding on an ex parte basis.

Second, A was found to have delayed in making the application because it had known of the Russian proceedings since May 2019 - a good while before making the application. The Court commented that the fact that the Russian proceedings were not actually accepted or formally commenced until early September, some time after A learnt of them, was irrelevant.  If the risk to A's assets and business in Russia was as great as it argued, it seemed likely A would have taken action in relation to these proceedings earlier.

Third, the Court was of the opinion that there was no compelling reason why the application was so urgent that it had to be heard before the Russian court determined the motion for stay of proceedings brought by A. The Court found that, ultimately, this was because no prejudice to A had been identified which would result from hearing its application after the Russian courts had determined the motion for stay of proceedings.

Fourth, the Court pointed to a failure of full and frank disclosure on the part of A of the fact that the Contract was (at least in part) governed by Russian law. It emphasised that this issue was one which would always obviously have been relevant and raised.

Fifth, it was of particular importance that the so-called "interim injunctive relief" sought by A was not purely interim relief, because it would potentially have final effects. The Court reasoned that if it were to grant the relief sought, this would effectively be a consensual dismissal of Chubb Russia's claim against A in the Russian courts and would act as a significant bar to any attempt by Chubb Russia to revive its claim against A. The Court emphasised that it would not make a mandatory order with potentially permanent consequences without the merits being properly heard.

In addition to these five main reasons for not granting the relief sought, the Court noted a number of factors pertaining to the conduct and preparedness of the parties for the hearing which led to it refusing to allow the matter to proceed further at this time. These included (amongst others) difficulties and inadequacies associated with the content of the parties' skeleton arguments. A's skeleton in particular was criticised for failing to comply with the requirements of the Commercial Court Guide (the Guide). The Court stressed the importance of parties complying with the Guide in order to allow the Court to provide services effectively and noted failures by both parties to do so. In addition to the content of A's skeleton failing to comply with the Guide, the parties also failed to comply with the Guide by submitting their skeleton arguments after the deadline had passed. These problems were further compounded by there being issues with the bundles. Various evidential issues were also noted which included incomplete evidence on Russian law and the absence of a key contractual document. Both parties were further criticised for being unclear on, and unconfident about, the tests the Court should be applying. The Court commented that the case appeared "to be in chaos today"- a brutally forthright assessment.

Comment

This case is a useful and firm reminder of the importance of careful timing and preparation for successful applications of this kind. In order to succeed in an application for interim relief, it must be clear that the relief requested is in fact interim in nature. Seeking relief which will, in substance, finally determine the outcome of the matter is likely to be challenging.  Any application should also be brought at the earliest opportunity possible, so as to avoid a finding that there has been delay. It is important to consider whether or not an application for interim relief is best brought ex parte in light of all the circumstances, and not merely by reference to whether the application is urgent. In making any ex parte application, the duty of full and frank disclosure must be met.

Finally, careful preparation for hearings and compliance with relevant court guides is vital. While the Court in this case determined that the issues should have been capable of disposal in a day, a further hearing was required as the Court was not prepared to let the matter proceed further substantively given the "disarray" of the case, caused by inadequate preparation.

For more information, please contact Craig Tevendale, Partner, Vanessa Naish, Professional Support Consultant, Rebecca Warder, Professional Support Lawyer, or your usual Herbert Smith Freehills contact.