## Facts

- Brazilian insurers issued two “all risks” policies covering construction of the Jirau hydroelectric project in Brazil.
- After March 2011 incidents, the insured claimed under the policies; insurers denied liability, alleging losses were uninsured or excluded and that an unnotified “material alteration” breached the policies.
- The policies included: (i) an express Brazilian governing law clause for the contract, (ii) an exclusive Brazilian court jurisdiction clause, (iii) a London-seated arbitration clause, and (iv) a mediation provision whose effect was disputed.
- The insurers commenced London arbitration seeking declarations of non-liability and material alteration.
- The insured filed proceedings in São Paulo seeking to prevent arbitration and obtained a Brazilian injunction restraining the insurers from continuing the arbitration, relying on a Brazilian-law consent requirement.
- The insurers sought an English anti-suit injunction; the Commercial Court granted and continued interim relief, holding the arbitration agreement governed by English law and was enforceable.
- The insured appealed to the Court of Appeal.

## Issues

1. What law governed the arbitration agreement: Brazilian law (contract law) or English law (law of the seat)?
2. Whether the mediation provision imposed an enforceable obligation and/or a condition precedent to arbitration.
3. Whether the arbitration clause covered liability disputes or only disputes about quantum.
4. How to reconcile the exclusive Brazilian court jurisdiction clause with the London arbitration clause.
5. Whether an English anti-suit injunction restraining the Brazilian proceedings should be maintained.

## Decision

- The Court of Appeal dismissed the appeal and upheld continuation of the anti-suit injunction.
- The arbitration agreement was governed by English law, despite the policy’s express choice of Brazilian law for the contract generally.
- The mediation provision was not an enforceable obligation and was not a condition precedent to arbitration.
- The arbitration clause covered disputes about liability as well as quantum.
- The Brazilian jurisdiction clause did not displace the arbitration agreement; it applied to matters outside the arbitration agreement and/or ancillary court proceedings.

## Legal Principles

- An arbitration agreement is separable from the main contract; an express governing law clause for the contract does not necessarily constitute an express choice for the arbitration agreement.
- Determining the law of the arbitration agreement follows a structured inquiry: express choice, implied choice, and failing those, the law with the closest and most real connection.
- Selection of a London seat strongly indicates an intention to submit to English curial law and supervisory jurisdiction, supporting English law as the law most closely connected to the arbitration agreement.
- Courts construe arbitration clauses broadly absent clear language to the contrary; references that appear to concern payment issues do not confine arbitration to quantum alone.
- ADR clauses are enforceable only if sufficiently certain; open-ended mediation language without defined process may be too uncertain to compel compliance or delay arbitration.
- Where a party brings foreign proceedings in breach of an arbitration agreement, the court at the seat may restrain that breach by anti-suit injunction, notwithstanding comity concerns, to protect the agreed arbitral process.

## Conclusion

The Court of Appeal treated the London-seated arbitration clause as governed by English law, rejected mediation as a precondition to arbitration, construed the clause to include liability disputes, reconciled it with the Brazilian jurisdiction clause as addressing different matters, and upheld an anti-suit injunction to stop Brazilian proceedings brought to obstruct the arbitration.


Sulamérica Cia Nacional de Seguros S.A. v. Enesa Engenharia S.A., [2012] EWCA Civ 638 (Eng. Ct. App. 2012)