Joint Stock Asset Management Company Ingosstrakh-Investments v BNP Paribas Sa
| Jurisdiction | England & Wales |
| Judge | Lloyd,Stanley Burnton L JJ,Sir Mark Potter |
| Judgment Date | 24 May 2012 |
| Court | Court of Appeal (Civil Division) |
| Date | 24 May 2012 |
Court of Appeal (Civil Division).
Lloyd and Stanley Burnton L JJ and Sir Mark Potter.
Vasanti Selvaratnam QC and Henry Ellis (instructed by Bryan Cave LLP) for the appellant.
Graham Dunning QC and Stephen Houseman (instructed by Clifford Chance LLP) for the respondent.
The following cases were referred to in the judgment:
Cecil v BayatUNK [2011] EWCA Civ 135; [2011] 1 WLR 3086.
Deutsche Bank AG v Highland Crusader Offshore Partners LPUNK [2009] EWCA Civ 725; [2009] 2 CLC 45; [2010] 1 WLR 1023.
Fiona Trust & Holding Corp v PrivalovUNK [2007] EWCA Civ 20; [2007] 1 CLC 144.
Harbour Assurance Co (UK) Ltd v Kansa General International Insurance Co LtdELR [1993] QB 701.
Kyrgyz Republic Ministry of Transport Department of Civil Aviation v Finrep GmbHUNK [2006] EWHC 1722 (Comm); [2006] 2 CLC 402.
Star Reefers Pool Inc v JFC Group Co LtdUNK [2012] EWCA Civ 14; [2012] 1 CLC 294.
Anti-suit injunction — Challenging English jurisdiction — Foreign proceedings — Alternative service — First defendant Russian company guaranteed liabilities of subsidiary to bank — Guarantee governed by English law and containing London arbitration agreement — Bank claimed on guarantee and commenced arbitration — Appellant Russian company associated with guarantor commenced Russian proceedings to invalidate guarantee — Bank entitled to anti-suit injunction against appellant as non-party to arbitration agreement on basis of collusion between defendants to defeat purposes of arbitration proceedings — No issue estoppel arising from Russian proceedings — Delay did not disentitle bank to relief — Comity did not preclude grant of injunction — Appellant proper party to claim against guarantor — Bank could show that claim form would be served on guarantor when application made for service out — England appropriate forum — Anti-suit injunction properly granted — Good reason justifying retrospective validation of service by alternative means — Civil Procedure Rules 1998, r. 6.15(2), PD 6B, para. 3.1(3).
This was an appeal by a Russian company (D2) against orders dismissing its challenge to the jurisdiction, granting an anti-suit injunction restraining its pursuit of Russian proceedings and declaring the claim form to have been validly served by delivery to London solicitors.
The respondent French bank (BNP) had lent money to the subsidiary of a Russian company (D1) which had given a guarantee of the subsidiary's liability under the loan agreement. The guarantee was governed by English law, and provided for disputes to be referred to arbitration under the LCIA rules, with BNP having the option to bring proceedings in the courts of England instead.
A dispute arose under the loan agreement, and the bank sought to enforce the guarantee. It commenced arbitral proceedings against D1 claiming about US$80 million. D1 alleged that the guarantee was invalid for want of consideration and that it had not been approved by D1's board.
BNP and D1 agreed to vary the arbitration agreement to nominate a preferred arbitrator, who accepted appointment as sole arbitrator. In addition BNP and D1 agreed to remove the provision in the arbitration agreement by which London solicitors were appointed as D1's agents for service of process.
D2 was the trust manager of a small holding of shares in D1 belonging to a pension fund. D1 and D2 were related companies ultimately owned by the same individual. D2 commenced proceedings before the Moscow Arbitrazh Court seeking invalidation of the guarantee on the basis that it should have been, but had not been, approved by the Board of D1 and at a general meeting of the shareholders. Both BNP and D1 were defendants to those proceedings. BNP applied unsuccessfully to the Arbitrazh Court to dismiss the Russian proceedings on the basis of lack of jurisdiction by reference to the arbitration.
BNP obtained the arbitrator's permission for the purposes of s. 44(4) of the Arbitration Act 1996 to commence an anti-suit action against D1 and D2. BNP issued anti-suit proceedings and served them on D1's London solicitors pursuant to the original service clause in the guarantee, overlooking the fact that that clause had been removed by agreement. BNP obtained permission to serve D2 out of the jurisdiction as a necessary or proper party. D1 and D2 acknowledged service of the claim form and indicated their intention to dispute jurisdiction.
D2's claim in the Russian proceedings was dismissed, but it appealed.
The arbitrator dismissed D1's challenge to the validity of the guarantee under Russian law.
Blair J dismissed the defendants' challenges to English jurisdiction and granted anti-suit relief (see [2011] 2 CLC 924). Teare J retrospectively validated service of the proceedings on D2 by way of service on its London solicitors pursuant to CPR 6.15(2) ([2012] EWHC 1023 (Comm)).
Held, dismissing D2's appeals:
1. Any attempt by D1 to have any issue within the scope of the arbitration agreement determined otherwise than by arbitration was a breach of that agreement and the court would readily restrain such a breach by the grant of an anti-suit injunction. What was unusual in this case was that an injunction had been granted not only against a party to the arbitration agreement, but also against a non-party. By definition, a non-party had not agreed to submit his claim to arbitration, and in the absence of a good collateral ground for restraint, an anti-suit injunction should not be granted against it solely on the basis that the issue in the proposed suit was already the subject of arbitration proceedings involving an associated company. The ground alleged by BNP as justifying the inclusion of D2 in the anti-suit injunction was its collusion with D1 in bringing and prosecuting the Russian proceedings for the purpose of defeating or impeding BNP's right to pursue its remedy against D1 by arbitration and enforcement of any award. The evidence before Blair J justified his finding that BNP's allegation of collusion raised a serious issue to be tried.
2. There was no finding of the Arbitrazh Court which created an issue estoppel preventing BNP contending that D2 acted vexatiously or unconscionably in bringing the Russian proceedings in concert with D1.
3. There was no error or fault in the judge's consideration of the issue of delay nor in his conclusion that BNP's delay was not such as to disentitle it to injunctive relief.
4. If BNP's case was well founded, D2 had been a party to the breach of the arbitration agreement by D1. BNP was entitled to be protected from that breach, and in such a case, considerations of comity were of reduced importance and did not preclude BNP's right to an anti-suit injunction.
5. BNP was able to show that the claim form had been or would be served on D1 within CPR PD 6B para. 3.1(3) when it applied for permission to serve D2 out of the jurisdiction. BNP had not served the claim form on D1 when it made its application but it asserted that it would be served, relying mistakenly on the provision for service which had been removed from the guarantee. In the ordinary case, where there was a real question as to whether permission to serve out would be granted, it could not be said that a defendant would be served until permission was obtained. However, in relation to arbitration applications concerning arbitrations which had their seat within the jurisdiction it was the almost invariable practice of the court, reflected in para. 3.1 of Arbitration Practice Direction 62.4, to permit service upon a party's solicitor who had acted for that party in the arbitration. Thus, when the application was made, the court would have granted permission to serve D1 by service at its solicitors' address. There was then good reason to order service by alternative means. It followed that the court had jurisdiction over D2 as a necessary or proper party to the claim against D1. (Kyrgyz Republic Ministry of Transport Department of Civil Aviation v Finrep GmbHUNK[2006] EWHC 1722 (Comm); [2006] 2 CLC 402 and Cecil v BayatUNK[2011] EWCA Civ 135; [2011] 1 WLR 3086considered.)
6. The judge was right that England was the appropriate forum for determining BNP's claim to restrain the defendants from acting in concert to subvert the valid English arbitration agreement binding one of them.
7. There was no basis for interfering with Blair J's decision to grant interim injunctive relief.
8. There was no error of law or principle in Teare J's decision that there was good reason retrospectively to validate service of the claim form on D2 by the alternative means of delivery to its London solicitors, albeit they were not acting for it at the date of delivery.
1. This is another case in which the grant of an anti-suit injunction against a foreign company restraining it from continuing to prosecute proceedings in its own jurisdiction falls to be considered.
2. We have before us the following appeals by Joint Stock Asset Management Company Ingosstrakh-Investments, a Russian company:
(1) Its appeal against the order made by Blair J dated 24 November 2011 dismissing its challenge to the jurisdiction. I shall refer to his judgment leading to that order, [2011] EWHC 308 (Comm); [2011] 2 CLC 942, as his or the judgment.
(2) Its appeal against the Interim Order made by Blair J of the same date in which an anti-suit injunction was granted restraining it until further order from taking any further part in proceedings which it had commenced in Russia (“the Russian Proceedings”) on the ground that those proceedings involved vexatious, oppressive and unconscionable conduct on its part. I shall refer to his judgment leading to that order, [2011] EWHC 3252 (Comm), as his second judgment.
(3) Its appeal against the order dated 20 April 2012 made by Teare J pursuant to CPR 6.15(2) declaring...
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