Facts
- A 1997 concession agreement for operation of a hydroelectric plant in Kazakhstan was governed by Kazakh law and included an ICC arbitration clause with London as the seat.
- The parties’ relationship deteriorated, and the owner (JSC) pursued litigation in Kazakhstan raising disputes said to fall within the arbitration clause.
- Kazakh courts had previously treated the arbitration clause as invalid under Kazakh law.
- The operator (AESUK) brought proceedings in the English Commercial Court seeking (i) a declaration that the arbitration clause was valid and binding and (ii) an anti-suit injunction restraining JSC from continuing or commencing Kazakh court proceedings in breach of the clause.
- AESUK had not commenced, and did not intend to commence, any arbitration; it sought to enforce the agreement’s negative promise not to litigate elsewhere.
- The High Court granted final declaratory relief and a final anti-suit injunction; the Court of Appeal affirmed.
Issues
- Whether an English court may grant a declaration and a final anti-suit injunction to enforce a London-seated arbitration agreement when no arbitration is on foot or contemplated, and the foreign proceedings are outside the Brussels/Lugano regime.
- Whether the Arbitration Act 1996 constitutes an exhaustive scheme that displaces or limits the court’s general injunctive power under Senior Courts Act 1981 § 37 in these circumstances.
- Whether relief is confined to the Arbitration Act 1996 § 44 (court powers “for the purposes of and in relation to arbitral proceedings”), requiring existing or proposed arbitral proceedings.
Decision
- The Supreme Court dismissed JSC’s appeal.
- The Court held English courts have power to grant declaratory relief and a final anti-suit injunction to restrain foreign proceedings brought in breach of a London-seated arbitration clause, even if no arbitration is pending or intended.
- The source of that power is the court’s general and inherent jurisdiction, including Senior Courts Act 1981 § 37; it is not excluded by the Arbitration Act 1996.
- The choice of London as the seat made the English court the appropriate supervisory (“curial”) court to protect the parties’ agreement, subject to discretionary considerations.
- Because the foreign proceedings were in Kazakhstan (outside Brussels/Lugano constraints), there was no bar to anti-suit relief on that ground.
Legal Principles
- An arbitration agreement has both a positive promise to arbitrate covered disputes and a negative promise not to litigate those disputes in other forums; the negative promise may be specifically enforced.
- Senior Courts Act 1981 § 37 authorizes injunctions where “just and convenient,” and that general jurisdiction remains available to restrain foreign litigation brought in breach of an arbitration agreement.
- Arbitration Act 1996 § 1(c) (“no court intervention except as provided”) is confined to “matters governed by this Part” and does not make the Act an exhaustive code for all court powers affecting arbitration agreements.
- Arbitration Act 1996 § 44 is supportive of arbitral proceedings and does not restrict the court’s separate power to protect the arbitration agreement itself, including by final anti-suit relief.
- When England is the chosen seat, English courts have a legitimate supervisory interest in enforcing the arbitration bargain against foreign court proceedings, subject to discretion and comity.
Conclusion
The Supreme Court confirmed that English courts may, under their general injunctive and declaratory jurisdiction, restrain non-EU foreign court proceedings brought in breach of a London-seated arbitration agreement even where neither party has commenced or intends to commence arbitration.