No More Russian’s Rushing Between Courts: UK Supreme Court rules Russian firm cannot pursue litigation in Moscow
October 26, 2020
3 min read
What's going on here?
A Russian insurance company cannot pursue litigation in Moscow as this would breach an arbitration agreementgoverned by English and Welsh law, the UK Supreme Court has ruled.
What does this mean?
The case began following a 2016 fire in a Russian power plant. The power plant had been insured by Chubb Russia (the appellant) and had provided against this kind of damage. In 2019 it brought a claim against Enka (the defendant), a sub-contractor in the construction project, in the Moscow courts.
Enka responded by bringing an arbitration claim in the High Court in London stating that “by proceeding in the Russian court, Chubb Russia was in breach of the arbitration agreement.” Arbitration is a method of resolving a dispute outside the court. Third parties act as arbitrators and ultimately issue an “arbitration award” which is legally binding and enforceable in court. Enka, therefore, wanted to prevent Chubb from pursuing a claim in the Russian courts and sought an “anti-suit injunction.” This is an injunction that prevents an opposing party from starting or continuing legal proceedings in another jurisdiction. This was granted by the Court of Appeal and was challenged by Chubb meaning the decision was put before the Supreme Court. By a majority of 3:2, the Supreme Court dismissed the appeal., asserting that the “validity and scope of the arbitration agreement is governed by the law of the chosen seat of arbitration”. In this case, it was London.
What's the big picture effect?
The decision of the Supreme Court can be broken down into three main points. First, the courts should consider if there is an “express or implied choice of law” for the arbitration agreement. If no law was chosen but there was a law governing the main contract that law will apply. Finally, if the parties did not choose the law relating to the main contract then by default the arbitration will be most closely connected to the law governing the seat of arbitration.
Report written by Michael Johnson
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