Enka Insaat Ve Sanayi A.S v OOO “Insurance Company Chubb”
| Jurisdiction | England & Wales |
| Judge | Mr Justice Andrew Baker |
| Judgment Date | 20 December 2019 |
| Neutral Citation | [2019] EWHC 3568 (Comm) |
| Date | 20 December 2019 |
| Docket Number | Case No: CL-2019-000572 |
| Court | Queen's Bench Division (Commercial Court) |
[2019] EWHC 3568 (Comm)
Mr Justice Andrew Baker
Case No: CL-2019-000572
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Charles Béar QC and Rupert Allen (instructed by Shearman & Sterling (London) LLP) for the Claimant
David Bailey QC, Marcus Mander and Clara Benn (instructed by Kennedys Law LLP) for the Defendants
Hearing dates: 11 th, 12 th December 2019
Approved Judgment
Preface
This is my judgment following an expedited trial last week of a claim by the claimant (‘Enka’) for declaratory relief and an anti-suit injunction in respect of what it says is a breach and threatened continuing breach of an agreement to refer disputes to ICC arbitration with London seat. The substantive proceedings said to have been brought in breach of that arbitration agreement are proceedings brought by the first defendant (‘Chubb Russia’), a Russian insurer in the well-known Chubb Group, against Enka and 10 other parties, seeking damages in relation to a massive fire in February 2016 at the Berezovskaya power plant in Russia. Those proceedings are in the Moscow Arbitrazh (i.e. Commercial) Court, under action number A40-131686/19-89-822, and I shall call them ‘the Moscow Claim’.
Enka claims that the second to fourth defendants (‘Chubb UK’, ‘Chubb Europe’ and ‘Chubb Switzerland’), are amenable to being restrained by injunction also, on a suggestion that they are, or may be, ‘pulling the strings’ behind the breach, if it be a breach, of the arbitration agreement.
This judgment has been prepared in some haste to ensure the parties have my decision before the Christmas vacation, since a key milestone in the Moscow Claim has been set for 22 January 2020, and, it is thought, will not be delayed any further having already been adjourned twice. Whilst I can assure the parties that I have reflected with care on all of the points raised by them in writing or orally, they must forgive me that, in the circumstances, this judgment will not deal with all of those points, since in my analysis of the case many do not need to be decided, and may not deal as fully with some of those that matter as I might have done had there been more time.
I pay tribute to, and am very grateful for, the clear, thorough and helpful arguments prepared and presented by the parties, and for the efficient and useful way in which they dealt with the expert evidence of Russian law adduced for trial so that the trial, including cross-examination of the experts, Dr Andrey Loboda (called by Enka) and Prof Anton Asoskov (called by the defendants) was completed within two long sitting days. In particular as to thoroughness, the citation of authority was impressively comprehensive, the bundles of authorities running to some 62 decided cases, from Hamlyn & Co v Talisker Distillery in May 1894, [1894] AC 202, to A v B in July 2019, [2019] EWHC 2478 (Comm), and the textbook extracts and learned articles listed in the bibliography appended to this judgment.
Introduction
Apart from any impact of the arbitration agreement invoked by Enka, there could be no argument but that the Moscow Arbitrazh Court is an appropriate forum for Chubb Russia's substantive claim, and the Moscow Claim as brought is a suitable and convenient vehicle for its pursuit. The procedural background to the trial before me was somewhat chaotic, leading to a refusal of interim relief when the matter first came before the court: [2019] EWHC 2729 (Comm). Directions were instead set for the case to come on for final hearing, as it now has, on an expedited basis. (I mention for completeness that Mr Béar QC and Mr Allen, who appeared before me for Enka, were instructed only after that hearing before Carr J, DBE.)
I emphasise at the outset that it has been the defendants' position throughout that this court should not be getting involved, the question whether the arbitration agreement extends to the claim being brought against Enka in the Moscow Claim, being, say the defendants, a question of Russian law, and the Russian court being seized of an application by Enka to dismiss the claim against it without consideration, i.e. without reference to the merits, pursuant to Article II(3) of the New York Convention.
In The Angelic Grace [1995] 1 Lloyd's Rep 87, Millett LJ, as he was then, said this at 96 rhc:
“ … where an injunction is sought to restrain a party from proceeding in a foreign court in breach of an arbitration agreement governed by English law, the English court need feel no diffidence in granting the injunction, provided that it is sought promptly and before the foreign proceedings are too far advanced. … The justification for the grant of the injunction … is that without it the plaintiff will be deprived of its contractual rights in a situation in which damages are manifestly an inadequate remedy. The jurisdiction is of course discretionary, and is not exercised as a matter of course, but good reason needs to be shown why it should not be exercised in any given case.”
This was a bold approach, or at any rate it seemed so at the time, but it was explained and justified on the basis that, at 96 lhc: “There is no good reason for diffidence in granting an injunction to restrain foreign proceedings on the clear and simple ground that the defendant has promised not to bring them.”; and at 96 rhc, as regards the need to act promptly: “If there should be any reluctance to grant an injunction out of sensitivity to the feelings of a foreign court, far less offence is likely to be caused if an injunction is granted before that court has assumed jurisdiction than afterwards.”
In the 25 years since, Millett LJ's punchy statement of principle has become established, orthodox doctrine under English law. That is so even though it was obiter and the actual result, an anti-suit injunction to restrain Italian proceedings, cannot obtain under the Brussels-Lugano jurisdictional scheme after The Front Comor, West Tankers Inc v Allianz SpA, Case C-185/07, [2009] 1 AC 1138. The Front Comor definitively settled the law in favour of the proposition that it is incompatible with the Brussels Regulation for the court of a Member State to issue an anti-suit injunction relating to proceedings in another Member State in a civil or commercial matter, in that regard remembering that the ‘target’ proceedings are not prevented from being proceedings in a civil or commercial matter so as to fall within the scope of the Regulation because they are brought, if they are, in breach of an agreement to arbitrate, notwithstanding that arbitration falls outwith the scope of the Regulation. (In the Gazprom case, Case C-536/13, [2015] 1 WLR 4939, the Advocate General suggested that that proposition does not hold true for the recast Brussels Regulation. I agree with the decision of Males J, as he was then, in Nori Holding Ltd v PJSC Bank Otkritie Financial Corporation [2018] EWHC 1343 (Comm), [2018] 2 All ER (Comm) 1009, that the Advocate General's suggestion is unsound.)
When I say that Millett LJ's approach is now orthodox English law, that is as part of the lex fori governing a question properly raised before the English court whether to restrain by injunction a breach or threatened breach of contract. Under the common law, such a question is governed by the lex fori: see Dicey, para 7–011ff. It has yet to be decided whether that remains true under the Rome I Regulation ( Regulation (EC) No 593/2008), the suggestion in Dicey at para 32–155 being, “with some hesitation”, that it is a matter for the lex contractus under Rome I. But Rome I does not apply to arbitration agreements.
As stated, Millett LJ's formulation of the guiding principle is premised upon there being a breach of an arbitration agreement governed by English law. In the present case, the defendants say that the commercial contract in question and the arbitration agreement within it are governed by Russian law, and that that is a ‘game changer’. Their simple, primary argument in that regard is that it was and is of the essence of the orthodox doctrine that the anti-suit injunction is sought by way of enforcement of an arbitration agreement governed by English law. As will be seen, I disagree and prefer what may be regarded as a more subtle, but I think a more robust, analysis.
Finally, by way of scene-setting, as in The Angelic Grace itself, it is common ground that there exists between Enka and Chubb Russia a valid and binding arbitration agreement. That is so even though Chubb Russia is suing in Moscow, and is therefore sued here, as subrogated insurer of Enka's original contractual counterparty. Whether Russian law or English law governs that question, it is common ground that such an insurer is bound by its insured's applicable arbitration agreement. The dispute between the parties, then, again as it was in The Angelic Grace, is whether the claim being pursued in the target proceedings is a claim in tort that falls outside the scope of the agreement to arbitrate.
The detail is more complex than it was in The Angelic Grace, however, because in that case there was no dispute but that the claim as brought in Italy was a claim in tort, and it was common ground that the question whether it fell within the scope of the arbitration agreement was governed by English law. Here, as I have said, the law applicable to the question of the scope of the arbitration agreement is disputed; and it is also contentious between the parties whether the claim as brought under Russian law in the Moscow Claim is a claim in tort, or, more...
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