Anti-Suit against Non-Party

In Joint Stock Asset Management Company Ingosstrakh Investments v BNP Paribas SA [2012] the Court of Appeal upheld an anti-suit injunction against a non-party to an arbitration clause on the grounds that Russian proceedings being pursued by that non-party were vexatious and oppressive.  The decision shows that there will be circumstances (for example, where there is sufficient evidence of collusion) in which the English courts are willing to grant an anti-suit injunction against a third party. 

In Joint Stock both D1 and D2 were Russian companies ultimately controlled by a Mr Deripaska.  D1 had provided a guarantee to BNP (the Bank) by which it guaranteed certain liabilities of one of its subsidiaries under a loan made by the Bank to that subsidiary.  The guarantee was governed by English law and provided for London seated arbitration under the LCIA Rules (with an option for the Bank to bring proceedings in the English courts).  D2 was the trust manager of a very small shareholding in D1. 

A dispute arose under the loan and the Bank brought arbitration proceedings against D1 seeking payment under the guarantee.  D1 asserted in those proceedings that the guarantee was void as it had not been properly approved under Russian company law.   D2 (and other shareholders of D1) brought proceedings in Russia against the Bank and D1 seeking a declaration that the guarantee was void.   The Bank obtained an interim anti-suit injunction against both D1 (seeking to restrain D1 from assisting in the Russian proceedings) and D2 on the basis that the Russian proceedings were vexatious and oppressive.   D1 and D2 appealed.

The Court of Appeal upheld the injunction on the basis that there was sufficient evidence to show that D2 colluded with D1 in bringing the Russian proceedings in an attempt to defeat or impede the arbitration brought by the Bank.   The factors taken into account by the Court of Appeal were:

  • the common control of D1 and D2;
  • the importance of the transaction (i.e. that Mr Deripaska must have known of the guarantee and both sets of proceedings);
  • the timing of the Russian proceedings (being brought so long after the guarantee was executed in 2008, but shortly after the Bank filed its Statement of Case in the arbitration); and
  • the improbability of D2 acting alone.

It is not unusual for a third party affiliated to a defendant to attempt to undermine proceedings against that defendant by bringing competing proceedings in another jurisdiction.   The problem is that the third party will (invariably) not be party to the arbitration agreement and will, unlike the defendant, not be bound by that agreement. 

The decision of the Court of Appeal in this case demonstrates that the English court are willing, in an appropriate case, to intervene and grant an anti-suit injunction against a third party.   However, as the Court of Appeal was very careful to stress, it will not be enough simply to show that a company involved in foreign proceedings is affiliated to the party bound by the arbitration clause.  More will be required; in this case, sufficient evidence that the court was able to infer that collusion had occurred and that the foreign proceedings were being pursued with the intention of undermining the on-going arbitration.  Where such evidence is present, the English court will act robustly to prevent parties who have agreed to a contractual dispute resolution mechanism from using related parties to subvert that agreement.

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