The Court’s findings
The English High Court agreed with the Chubb defendants that it was not the appropriate forum to determine whether there had been a breach of the London arbitration agreement. If Enka was not content with pursuing its application before the Moscow Court to stay the claim against it to arbitration, then Enka should have commenced arbitral proceedings and sought relief from the arbitrators. Further, as regards Chubb Russia’s co-defendants, the Judge had no hesitation in dismissing Enka’s claims since they were founded on “something not far short of a purely speculative conspiracy theory”.
Governing law of the arbitration agreement
Although the Judge did not actually decide the choice of law issues, his judgment does contain a timely analysis of the case law on the proper law of arbitration agreements, with particular consideration of the effect or implication of the juridical seat.
The judgment includes analysis of the leading decision in Sulamérica SA v Enesa Engenharia SA . The Judge observed that “there are choices of seat and choices of seat”: in other words, not all choices are equal, and a choice of seat is not always sufficient to convey a choice of law for the arbitration agreement that is different from the choice of law for the contract as a whole (if one exists).
Put the other way round, where there is seemingly a choice of law for the contract as a whole (e.g. a classic “this contract” governing law clause), a choice of seat in the arbitration clause may not be sufficient on its own to cause that choice of law to be displaced so as not to apply to the arbitration agreement that forms part of the wider contract. In the case at hand, the choice of London as the place of the arbitration under the ICC Rules was “not of any real moment” given the essentially supranational nature of ICC arbitration.
The decision will be of considerable interest to all carriers of multinational insureds which habitually incorporate London arbitration clauses into their contractual arrangements.
The English High Court conducted a careful re-examination of The Angelic Grace principles and related case law, including the concept of ‘strong reasons’, and concluded that even if the English Courts had been the appropriate forum for deciding the question of breach it would have refused to grant an injunction against Chubb Russia on the grounds of delay, failure to pursue arbitration and the degree of Enka’s participation in the Russian proceedings.
The English High Court took its decision based upon the particular facts of the case. However, general lessons to be drawn from the judgment include:
- The choice of London as the arbitral seat alone does not lead inexorably to the straightforward application of The Angelic Grace orthodoxy requiring that an anti-suit injunction should be granted. As the judgment here illustrates, the position may be more nuanced.
- Delay allowing foreign proceedings to progress may defeat a claim for an anti-suit injunction. Take advice and anti-suit action immediately upon awareness of a threatened or actual breach of a contractual agreement to arbitrate.
Read other items in London Market Brief - January 2020