Enka Insaat Ve Sanayi A.S. v OOO “Insurance Company Chubb”

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Males,Lord Justice Popplewell,Lord Justice Flaux
Judgment Date29 April 2020
Neutral Citation[2020] EWCA Civ 574
Docket NumberCase No: A4/2020/0068
Date29 April 2020

[2020] EWCA Civ 574

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS

OF ENGLAND AND WALES

COMMERCIAL COURT (QBD)

MR JUSTICE ANDREW BAKER

[2019] EWHC 3568 (Comm)

Royal Courts of Justice,

Strand, London, WC2A 2LL

Before:

Lord Justice Flaux

Lord Justice Males

and

Lord Justice Popplewell

Case No: A4/2020/0068

Between:
Enka Insaat Ve Sanayi A.S.
Claimant/Appellant
and
(1) OOO “Insurance Company Chubb”
(2) Chubb Russia Investments Limited
(3) Chubb European Group Se
(4) Chubb Limited
Defendants/Respondents

Robin Dicker QC and Niranjan Venkatesan (instructed by Shearman & Sterling (London) LLP) for the Claimant/Appellant

David Bailey QC, Marcus Mander and Clara Benn (instructed by Kennedys Law LLP) for the Defendants/Respondents

Hearing dates: 7–8 April 2020

Approved Judgment

Lord Justice Popplewell

Introduction

1

This is an appeal against a decision at trial not to grant an anti-suit injunction against a party alleged to be in breach of a London arbitration clause by bringing proceedings in Russia. It concerns the significance to be attached to the choice of London as the seat of the arbitration in exercising such jurisdiction and in determining the proper law of the arbitration agreement.

The Facts

2

The Claimant (“Enka”) is a Turkish company carrying on an international construction and engineering business based in Turkey but with a substantial presence and history of operations in Russia. The First Defendant (“Chubb Russia”) is a Russian company and part of the well-known Chubb insurance group. Chubb Russia commenced proceedings on 25 May 2019 against Enka and 10 other parties in the Moscow Arbitrazh Court, under action number A40-131686/19-89-822, seeking damages in relation to a massive fire in February 2016 at the Berezovskaya power plant in Russia. I shall refer to those as “the Russian proceedings” and to the claim made by Chubb Russia against Enka in those proceedings as “the Moscow Claim”.

3

The Moscow Claim has its genesis in the contractual arrangements for Enka's participation in building the power plant. The plant was built for PJSC Unipro, at the time named E.ON Russia (“Unipro”). In May 2011 Unipro engaged CJSC Energoproekt as general contractor for the design and construction of the power plant. Energoproekt engaged Enka as a subcontractor to provide works relating to the boiler and auxiliary equipment installation under a contract dated 27 June 2012 (“the Contract”). Enka was one of many contractors or subcontractors providing services in connection with the power plant. The Contract, which runs to 97 pages, with around 400 pages of attachments, was executed in Russian and English versions within a single document, set out with the Russian and the English side by side in a landscape format. It provides that the Russian language version of its terms prevails in case of inconsistency or conflict.

4

The arbitration agreement appears within clause 50.1 of the Contract in the following terms:

Resolution of disputes

50.1. The Parties undertake to make in good faith every reasonable effort to resolve any dispute or disagreement arising from or in connection with this Agreement (including disputes regarding validity of this agreement and the fact of its conclusion (hereinafter – “Dispute”) by means of negotiations between themselves. In the event of the failure to resolve any Dispute pursuant to this Article within 10 (ten) days from the date that either Party sends a Notification to the opposite Party containing an indication of the given Dispute (the given period may be extended by mutual consent of the Parties) any Party may, by giving written notice, cause the matter to be referred to a meeting between the senior managements of the Contractor and Customer (in the case of the Contractor senior management should be understood as a member of the executive board or above, in the case of Customer, senior management shall be understood as general directors of their respective companies). The parties may invite the End Customer to such Senior Management Meeting. Such meeting should be held within fourteen (14) calendar days following the giving of a notice. If the matter is not resolved within twenty (20) calendar days after the date of the notice referring the matter to appropriate higher management or such later date as may be unanimously agreed upon, 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.

50.2. Unless otherwise explicitly stipulated in this Agreement the existence of any Dispute shall not give the Contractor the right to suspend Work.

50.3. Not used.

50.4. Not used.

50.5. All other documentation such as financial documentation and cover documents for it must be presented in Russian.”

5

On 21 May 2014 Energoproekt, Unipro and Enka entered into an assignment of rights and obligations by which Energoproekt assigned to Unipro all rights against Enka resulting from the Contract. Clause 7.5 of that assignment agreement essentially reiterated the arbitration agreement and confirmed that disputes (i.e. now any disputes between Unipro and Enka) were to be finally and exclusively resolved by arbitration in accordance with the provisions of clause 50.1 of the Contract.

6

On 1 February 2016 the fire occurred at the plant. Unipro was insured by Chubb Russia under a primary policy, with reinsurance and retrocession arrangements involving retention of some risk in companies within the Chubb group and the balance of the risk ceded into the market. Between November 2016 and May 2017 Chubb Russia paid Unipro 26.1 billion Roubles (c.US$400 million) in total in respect of damage caused by the fire, and so became subrogated to any rights Unipro might have against Enka or others in respect of liability to Unipro for the fire.

7

On 23 September 2017, a Russian law firm, Rodin Djabbarov & Partners (‘RDP’) wrote a letter stated to be on behalf of “Reinsurance Company CHUBB” to Enka headed “Notice of low-quality performance of the works”. It asserted that the fire had been caused by defects in the fuel oil pipelines which RDP contended were attributable to low-quality performance of works for which Enka was responsible under the Contract. It gave notice that Chubb was subrogated to Unipro's rights. It concluded that “[Reinsurance Company CHUBB] informs [Enka] about the low-quality performance of the Works, which entailed occurrence of losses”. It did not make a claim, still less threaten any proceedings.

8

The next communication from RDP came some 18 months later. On 24 April 2019, RDP, again acting on behalf of Chubb Russia, sent to Enka a letter headed “Letter of Claim (according to the procedure in item 5 of Article 4 of the RF Arbitration Procedure Code).” It referred to the report of a Russian state commission issued a year earlier on 25 April 2018 as having concluded that “the accident was caused by defects (deficiencies) in the design, structures, fabrication and installation of the Facility including fuel oil pipelines”. It alleged that Enka was liable under various identified provisions of the Russian Civil Code because it had performed the installation of the fuel oil pipelines. It demanded payment of the losses suffered by Chubb of 26.1 million Roubles. It concluded: “If this demand is not implemented, [Chubb Russia] reserves its right to seek remedy in a lawful manner, including application to a court.”

9

Enka did not respond to RDP or Chubb Russia but took the matter up with Unipro in a formal letter of response dated 8 May 2019. It enclosed a copy of RDP's letter of 24 April, which it described as including a threat by Chubb Russia to sue Enka if the demanded payment was not made. Enka asserted that it had no liability and could have no liability, on the basis that in November 2014 the works which were alleged to have caused the fire had been excluded from the scope of works to be performed by Enka and had subsequently been performed by another contractor.

10

On 25 May 2019 Chubb Russia filed the Moscow Claim with the Moscow Arbitrazh Court. Enka became aware of that filing on 29 May 2019. The following day, 30 May 2019, the Moscow Arbitrazh Court made an order which deferred acceptance of the claim as lodged, and required Chubb Russia to remedy by 1 July 2019 what the court determined to be deficiencies in the articulation of the claim. The Court's view appears to have been that what was filed failed to particularise the allegations and the basis of liability sufficiently for the court to able to say that a legally viable claim against each separate defendant had been articulated. Enka saw a copy of that ruling on 3 June 2019. On 4 June 2019, Enka then received the filed statement of claim containing the Moscow Claim, although not its attachments.

11

Enka continued to deal with Unipro. There was a senior-level meeting at Unipro's offices in Moscow on 19 June 2019, following which Enka wrote again to Unipro by letter dated 30 June 2019. It recorded that at the meeting Unipro had acknowledged that Enka was not responsible in any way for the fire and reiterated the grounds on which the claim was said to be unfounded. It referred to the fact that the Russian judge had deferred acceptance of the claim by Chubb Russia. It went on to assert that...

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6 firm's commentaries
1 books & journal articles
  • Fine margins: Examining the minority-majority divide in Enka v Chubb
    • United Kingdom
    • LSE Law Review Nbr. 7-1, November 2021
    • 1 November 2021
    ...3 (New York Convention), art V(1)(a); see also Arbitration Act 1996, s 67. 6 Enka Insaat Ve Sanayi A.S. v OOO. Insurance Company Chubb [2020] EWCA Civ 574 [89]. 7 Peter Ashford, ‘The Proper Law of the Arbitration Agreement’ (2019) 85(3) International Journal of Arbitration, Mediation and Di......

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