Disputes Yearbook 2024:
Arbitration

Anti-suit and anti-enforcement relief in England and Wales

In September this year, the Supreme Court handed down its unanimous reasoned judgment in UniCredit Bank GmbH v RusChemAlliance LLC, in which it dismissed RCA's appeal and maintained the final anti-suit injunction in respect of proceedings brought by RCA in Russia in breach of an arbitration agreement (see our most recent blogpost here). The judgment is notable in its robust defence of the Supreme Court's prior decision in Enka v Chubb relating to the law governing arbitration agreements. Determining the law governing the arbitration agreement was England and Wales, the court concluded it had jurisdiction to grant anti-suit relief even though the parties had chosen Paris-seated arbitration. The choice of a foreign seat was not in itself a reason why the English court could not or should not uphold the parties' bargain.

Another recent case of note is Investcom Global Limited v Plc Investments Limited [2024] EWHC 2505 (Comm), in which the English Commercial Court also confirmed that although it was prepared to intervene in respect of a contract in which a London seat had been designated, it would not have jurisdiction over a claim where there was "no good arguable case that the tribunal would find that the seat was London".

Together, these cases serve as reminders of the jurisdictional hurdles faced by parties wishing to rely on anti-suit relief from the English courts and, secondly, the importance of clearly designating both a seat of arbitration in your contract (Investcom) and the governing law of the arbitration agreement (UniCredit).

Arbitration Bill reintroduced in King's Speech

Following the UK general election in July 2024, the new Labour Government re-introduced the Arbitration Bill to Parliament's legislative agenda. The Bill is intended to support more efficient dispute resolution, attract international business and promote UK economic growth.

The Bill introduces a number of reforms, including codifying arbitrators' duties of disclosure, strengthening arbitrator immunity and making express provision for the summary disposal of issues. The Bill also contains a new default rule for the arbitration agreement to be governed by the law of the seat unless the parties expressly agree otherwise. This is intended to avoid disputes regarding the governing law of the arbitration agreement, as per Enka v Chubb and the decision in Unicredit v RusChem as above.

The third reading of the Bill in the House of Lords took place on 6 November 2024. The Bill was passed and presented to the House of Commons on the same day. It will need to continue to pass through the House of Commons and the final stages before it receives Royal Assent. The passage of the Bill can be tracked here.

Insolvency and arbitration: Privy Council changes the tide

In Sian Participation Corporation (In Liquidation) v Halimeda International Ltd [2024] UKPC 16, the Privy Council considered an appeal from the Court of Appeal of the Eastern Caribbean Supreme Court (BVI). The appeal was as to whether a company should be wound up where the debt on which the winding up application was based was subject to an arbitration agreement and was said to be disputed and/or subject to a cross-claim.

The Privy Council concluded that the correct test for the court to apply, regardless of whether the parties have agreed an exclusive jurisdiction or arbitration clause, is whether the debt is disputed on genuine and substantial grounds. It is for the court to decide whether a debt is genuinely disputed on substantive grounds and, if it is not, a creditor should be able to obtain a winding up order without having to first arbitrate (or litigate) the issue.

In reaching its conclusion, the Privy Council found that the English Court of Appeal decision in Salford Estates (No 2) Ltd v Altomart Ltd (No 2) [2014] EWCA Civ 1575, which was the leading authority on this issue up until now, was wrongly decided. The Privy Council directed that the decision reached in this appeal represents the law of England and Wales such that Salford Estates should no longer be followed (see here for our summary of the Salford Estates decision).

The pragmatic approach taken by the Privy Council ought to reassure creditors that their choice of dispute resolution forum should not impact their ability to engage the insolvency process, where required. It should also prevent creditors from having to participate in arbitration proceedings with respect to debts that are not genuinely disputed. For situations where a creditor brings a winding up petition to bypass an arbitration agreement, as the Privy Council has noted, the court has other tools at its disposal, including the power to sanction them for abuse of process and order indemnity costs.

For more information, see our blogpost here.