The English court took a mixed approach to judicial intervention in a number of cross-jurisdictional cases last year, although some further (welcome) clarity has recently been provided by the Court of Appeal. Perhaps the most salient and recent example of this has been the Court’s perceived willingness to grant Anti-Suit Injunctions (“ASIs”) to restrain foreign proceedings brought in breach of a foreign-seated arbitration clause. These recent cases have largely arisen following Russia’s 2020 amendment to Article 248 of the Arbitrazh (Commercial) Procedure Code (“2020 Amendment”), which itself was a direct policy response to Western sanctions against Russian companies and individuals following Russia’s invasion of Ukraine.
The 2020 Amendment establishes exclusive jurisdiction in favour of Russian Courts in circumstances where one party to the dispute is Russian and subject to sanctions, and the dispute relates to the imposition of those sanctions. The expansion of sanctions, which may implicate more Russian companies and individuals, has led many of these companies and individuals to seek refuge for their contractual claims in the Russian Courts, often in breach of applicable arbitration agreements.
Notably, in 2023 the English court granted ASIs in support of Paris-seated arbitrations in both Deutsche Bank AG v RusChemAlliance LLC (which overturned the High Court’s decision in SQD v QYP, refusing an ASI) and in Commerzbank AG v Ruschemalliance LLC  EWHC 2510 (Comm). Both of those cases arose from the same factual background, following the imposition of sanctions on RusChemAlliance (“RCA”) and subsequent breakdown in relations between RCA and Linde Engineering for the construction of an LNG plant in Russia. RCA commenced proceedings in Russian Courts, in reliance on the 2020 Amendment, and in both cases claimants sought an ASI in English courts.
The threshold issue in these cases was whether the arbitration clause (which nominated Paris as the seat of arbitration) was governed by English law, or whether there were any “additional” factors which would displace that general rule which should preclude an English court from granting the ASI. The common reasoning in both of these decisions was that an ASI should be granted because (i) there was a sufficiently strong connection to England, as the governing law of the underlying contracts (and likewise, it was held, the arbitration agreements in the contracts) was English law, and (ii) there was nothing to suggest that the granting of an ASI would be contrary to French public policy, even if those instruments are not part of the French procedural “toolkit”.
A third case arose in 2023 out of similar facts, in UniCredit v RusChemAlliance, in which the underlying arbitration agreement also provided for Paris as the seat of arbitration. The High Court initially took a different approach to the courts in both of the earlier decisions against RCA and caused some judicial uncertainty on the issue. At first instance, Teare J (refusing to grant UniCredit the ASI) held that despite the underlying contractual jurisdiction clause pointing to England, the arbitration agreement in the contract was not governed by English law, but rather French law as the seat of arbitration on the basis that “additional factors” displaced the general rule which would have pointed to England. The “additional factor”, he concluded, was that as a matter of French law, the law of the seat of arbitration is the default law of the arbitration agreement. Even if he was wrong on this, Teare J held that England was not the proper forum to grant this relief.
On appeal, however, the Court of Appeal disagreed, favouring an interpretation more in line with the Court of Appeal in Deutsche Bank and High Court in Commerzbank set out above and drawing a line under the issue at least for the time being. It remains to be seen, however, whether future judicial developments, including amendments to the Arbitration Act 1996 will signal the end of this debate or indeed raise further questions.
A further, related line of developments in 2023 in the realm of sanctions litigation concerned the judicial interpretation of “control” for the purposes of the scope of the UK’s sanctions regime. In Mints v PJSC National Bank Trust,the Court of Appeal suggested (albeit in obiter) that all Russian companies may be considered “controlled” by President Vladimir Putin, and therefore in theory could be subject to sanctions. While this conclusion would have had very significant and unexpected consequences on certain parts of the UK economy, the subsequent High Court judgment in Litasco SA v Der Mond Oil and Gas Africa SA adopted a much more restricted interpretation of “control”. Moreover, OFSI, together with the Foreign, Commonwealth & Development Office, responded to the Mints dicta by issuing guidance that states, amongst other things, that “there is no presumption on the part of the UK government that a private entity is subject to the control of a designated public official simply because that entity is based or incorporated in a jurisdiction in which that official has a leading role in economic policy or decision-making”.
Looking ahead to 2024, the uncertainty resulting from these somewhat contradictory developments is likely to give rise to further litigation, as disputes involving sanctioned entities continue to crystallise and these issues will continue to arise in litigation. Since liability for sanctions violations is strict, and sanctions issues arise not only in the context of regulatory enforcement, but also, for example, contractual disputes, these are areas of potentially significant risk for parties. We expect to see further developments on these two lines of cases, and indeed other cases arising from the application of sanctions on Russian entities, and Russia’s 2020 Amendment, in the coming year.
The following post was originally included as part of our recently published memorandum “Looking Forward Into 2024 and Beyond: Seven Trends in UK Disputes”
 Deutsche Bank AG v RusChemAlliance LLC  EWCA Civ 1144.
 SQD v QYP  EWHC 2145 (Comm).
 G v R  EWHC 2365 (Comm).
 Unicredit Bank GmbH v Ruschemalliance LLC  EWCA Civ 64 (2 February 2024).
 Mints v PJSC National Bank Trust  EWCA Civ 1132. See Cleary Gottlieb, Court of Appeal Gives Judgment on Effect of Russia Sanctions on Pending Litigation (23 October 2023), https://www.clearygottlieb.com/news-and-insights/publication-listing/court-of-appeal-gives-judgment-on-effect-of-russia-sanctions-on-pending-litigation.
 Litasco SA v Der Mond Oil and Gas Africa SA & Anor  EWHC 2866 (Comm).
 Foreign, Commonwealth & Development Office and Office of Financial Sanctions Implementation, Ownership and Control: Public Officials and Control guidance (17 November 2023), https://www.gov.uk/government/publications/ownership-and-control-public-officials-and-control-guidance/ownership-and-control-public-officials-and-control-guidance.