Arbitration Claims Under CPR Part 62: Is Forum Non Conveniens Relevant?

This article reviews the recent case of Enka Insaat Ve Sanayi AS v OOO “Insurance Company Chubb” & Ors (Rev 1) [2020] EWCA Civ 574

Background

This was an appeal against a refusal at trial to grant an anti-suit injunction against a party alleged to be in breach of a London arbitration clause by bringing proceedings in Russia.

 The arbitration clause (‘the Clause’) was in the following terms:

 50.1 If [the matter cannot be resolved by negotiations], the Dispute shall be referred to international arbitration as follows:

• • • • • the Dispute shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce,
        • the Dispute shall be settled by three arbitrators appointed in accordance with these Rules,
        • the arbitration shall be conducted in the English language, and
        • the place of arbitration shall be London, England.

Key issues at trial were (i) whether the Clause was governed by Russian or English law; and (ii) whether the claims in the Russian proceedings (“the Moscow Claim”) fell within the scope of the Clause.

Notwithstanding the parties’ submissions and the evidence on Russian law, Andrew Baker J (‘the Judge’) took a course of his own initiative and declined to reach a decision on the governing law of the Clause.  He instead dismissed Enka’s claim on forum non conveniens grounds on the basis that the Court in Moscow should determine whether the Moscow Claim fell within the scope of the Clause, as it was clearly a more appropriate forum to address that question of Russian law.

The Court of Appeal

This article considers the first of the two issues decided on appeal: was the Judge right to dismiss the claim on forum non conveniens grounds?  We will be dealing with the second of the issues in a separate article.

Popplewell LJ (with whom Flaux and Males LJJ agreed) held that the Judge’s approach was wrong in principle.  Notwithstanding the distinction between the seat of an arbitration and its geographical venue, Popplewell LJ noted that it is ‘well established’ that choice of a ‘place’ for the arbitration is a choice of seat, not geographical venue. As, therefore, the court of the seat of the arbitration (“the curial court’), the English court was necessarily an appropriate court to grant an anti-suit injunction as part of its supervisory jurisdiction to protect and enforce the integrity of the arbitration agreement and arbitral process.

In this context, Popplewell LJ considered that issues of forum conveniens did not arise.  Arbitration claims, which include applications for anti-suit injunctions to restrain foreign proceedings brought in breach of an arbitration agreement, are governed by CPR Part 62.  Under CPR 62.5(1)(c), one of the gateways for such jurisdiction is where the seat of the arbitration is in England and Wales.

By contrast, however, with the express forum conveniens requirement for permission to serve out of the jurisdiction under CPR 6.37(3), there is no requirement in CPR 62.5(1)(c) that England and Wales must be the proper place in which to bring the claim.  Furthermore, that the power to grant permission to serve out of the jurisdiction in CPR 62.5(1) is expressed in discretionary terms (“The Court may grant permission…“) did not mean forum conveniens was a relevant discretionary factor where the gateway relied upon is the seat of the arbitration.

AES Ust-Kamenogorsk: Anti-Suit Injunctions Misunderstood?

The principle that questions of forum conveniens were inapplicable in the present context was further held not to be undermined by the comments of Lord Mance in his judgment in AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC [2013] 1 WLR 1889, which the Judge cited as support for his proposition that the anti-suit injunction jurisdiction was not an exercise of the supervisory jurisdiction of the court of the seat.

AES concerned an application to restrain foreign proceedings in circumstances where the applicant did not wish to commence arbitration and had no intention of doing so.  In that case, the Supreme Court held that an anti-suit injunction could nevertheless be granted to protect the integrity of the negative aspect of the arbitration agreement, i.e., the promise not to commence proceedings in a different forum.  The jurisdiction to grant an anti-suit injunction in such circumstances was held to arise under s 37 of the Senior Courts Act 1981, not s 44 of the Arbitration Act 1996 which was confined by its terms to powers exercisable “for the purposes of and in relation to arbitration proceedings.”

Given that the UKSC expressly rejected the submission that the Arbitration Act 1996 provided a complete set of rules for the determination of jurisdictional issues which  excluded the jurisdiction under s 37 of the Senior Courts Act 1981, Popplewell LJ did not consider that, just because the power to grant an anti-suit injunction arose under s. 37 of the 1981 Act, upholding the grant of the anti-suit injunction was not the exercise of the curial jurisdiction.

Popplewell LJ therefore concluded that, given the primary function of the English Court as the court of the seat to determine whether an anti-suit injunction should be granted, the Judge below should have addressed the two relevant questions, namely (1) whether the foreign proceedings are a breach of the arbitration agreement and (2) if so whether relief should be granted as a matter of discretion.

Commentary

This case confirms that the English courts will always have supervisory jurisdiction over claims arising from an English-seated arbitration. Notwithstanding the discretionary terms of CPR r 62.5(1), forum non conveniens is not engaged where jurisdiction is founded on CPR r 62.5(1)(c), i.e., on the basis that the arbitration is seated in England and Wales.

The case also illustrates the extent to which English courts define the supervisory jurisdiction broadly in support of arbitration and its principles generally. The negative aspect of an arbitration agreement nominating an English seat, i.e., the implicit agreement not to commence legal proceedings elsewhere but to arbitrate under the supervisory jurisdiction of the English courts, will be enforced.  This will be so even if arbitral proceedings have not actually been instituted, and are not contemplated or even intended.  The grant of an anti-suit injunction in these circumstances will be an exercise of the supervisory jurisdiction, irrespective of whether it is granted under the Senior Courts Act 1981 (appropriate where arbitral proceedings have not been instituted) or under the Arbitration Act 1996 (confined to powers exercised for the purposes of and in relation to arbitration proceedings).