AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC

JurisdictionEngland & Wales
CourtSupreme Court
JudgeLord Toulson,Lord Mance,Lord Neuberger,Lord Sumption,Lord Clarke
Judgment Date12 June 2013
Neutral Citation[2013] UKSC 35
Date12 June 2013

[2013] UKSC 35


Trinity Term

On appeal from: [2011] EWCA Civ 647


Lord Neuberger, President

Lord Mance

Lord Clarke

Lord Sumption

Lord Toulson

Ust-Kamenogorsk Hydropower Plant JSC
AES Ust-Kamenogorsk Hydropower Plant Llp


Lord Goldsmith QC

Sophie Lamb

(Instructed by Debevoise & Plimpton LLP)


Toby Landau QC

Jessica Wells

(Instructed by Allen & Overy LLP)

Heard on 1 and 2 May 2013

Lord Mance (with whom Lord Neuberger, Lord Clarke, Lord Sumption and Lord Toulson agree)


An agreement to arbitrate disputes has positive and negative aspects. A party seeking relief within the scope of the arbitration agreement undertakes to do so in arbitration in whatever forum is prescribed. The (often silent) concomitant is that neither party will seek such relief in any other forum. If the other forum is the English court, the remedy for the party aggrieved is to apply for a stay under section 9 of the Arbitration Act 1996.


The issue on this appeal is whether, if the other forum is a foreign jurisdiction outside the European régime of the Brussels Regulation (EC) No 44/2001 and the Lugano Convention, the English court has any and if so what power to declare that the claim can only properly be brought in arbitration and/or to injunct the continuation or commencement of the foreign proceedings. (It is clear that injunctive relief in relation to foreign proceedings within the Brussels/Lugano space is impermissible under the Regulation and Convention: West Tankers Inc v Allianz SpA (formerly RAS Riunione Adriatica di Sicurta SpA) (The Front Comor) ( Case 185/07) [2009] 1 AC 1138.


By order dated 16 April 2010, Burton J granted the respondent, Aes Ust-Kamenogorsk Hydropower Plant LLP ("AESUK"), such a declaration together with an injunction in relation to the bringing of proceedings against it by the appellant, Ust-Kamenogorsk Hydropower Plant JSC ("JSC"): [2010] 2 All ER (Comm) 1033. By order dated 1 July 2011 the Court of Appeal dismissed JSC's appeal against the judge's order: [2012] 1 WLR 920.


The perhaps unusual feature is that AESUK has not commenced, and has no intention or wish to commence, any arbitration proceedings. Its contention is simply that JSC should not pursue or be free to pursue court proceedings against it. If JSC commences arbitration proceedings, then no doubt AESUK will defend them.


AESUK is the current grantee and lessee of a 25 year concession granted by agreement dated 23 July 1997 entitling it to operate an energy producing hydroelectric plant in Kazakhstan. From 1997 to 2007, the concession was held by its parent or affiliate company, Tau Power BV. JSC is the current owner and grantor of the concession, having succeeded to the concession's original owner and grantor, the Republic of Kazakhstan.


The concession agreement is governed by Kazakh law (clause 31), but contains a London arbitration clause (clause 32). It was common ground below and it remains common ground, at least for the purposes of this appeal, that this clause is governed by and to be construed in accordance with English law. It is therefore unnecessary to consider authority in this area such as C v D [2007] EWCA Civ 1282, Sulamérica Cia Nacional de Seguros SA v Enesa Engenharia SA [2012] EWCA Civ 638 and Arsanovia Ltd v Cruz City 1 Mauritius Holdings [2012] EWHC 3702 (Comm).


The arbitration clause provides in summary that, subject to provisions contained in clauses 17.8 and 17.9, any dispute or difference arising out of or in connection with any matter or thing in relation to the provisions of the concession agreement and the transactions contemplated by the parties that cannot be resolved by negotiation should be settled by arbitration in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce (the "ICC") to be conducted in London.


Relations between the owners and holders of the concession have for some years been fraught. Burton J summarised the history in paras 5 to 10 of his judgment, and it is unnecessary to repeat it here. Some salient facts suffice.


First, during the period when it owned the concession, the Republic of Kazakhstan brought proceedings in Kazakhstan against AESUK's predecessors in title, Tau Power BV, and on 8 January 2004 obtained from the Kazakh Supreme Court a ruling that the arbitration clause was invalid. This was on two grounds: that the arbitration agreement included tariff disputes, which would put such disputes beyond the control of the Republic contrary to its public policy; and that the reference in clause 32 to the Rules of the ICC was not a reference to the ICC and left the arbitral body unspecified.


Burton J and the Court of Appeal held that they were not bound by the Kazakh court's conclusions in relation to an arbitration agreement subject to English law, and that neither ground was sustainable. Tariff disputes were in fact outside the arbitration agreement, by reason of the reference to clauses 17.8 and 17.9, under which they fell to be dealt with by an expert; and the reference in clause 32 to the ICC was plainly sufficient to mean that any arbitration was to be by the ICC. There is no appeal to this Court in relation to these matters.


On 12 June 2009 JSC brought proceedings against AESUK in the Specialist Inter-District Economic Court of East Kazakhstan Oblast ("the Economic Court"), alleging that AESUK had failed to supply information concerning concession assets pursuant to a request duly made under the concession agreement. AESUK's application to stay these proceedings under the arbitration clause was dismissed on 28 July 2009 on the ground that the clause had been annulled by the Supreme Court's ruling of 8 January 2004.


On 31 July 2009 AESUK issued proceedings before the English Commercial Court claiming declarations that the arbitration clause was valid and enforceable and a without notice interim anti-suit injunction restraining JSC from pursuit of the proceedings before the Economic Court. AESUK's attempt to rely on this injunction in the Kazakh courts was rejected by the Economic Court on 5 August 2009 and on an appeal to the East Kazakhstan Regional Court on 11 September 2009. Both the Economic Court and the Regional Court also held that JSC was entitled to the information which it had requested.


Meanwhile on 21 August 2009 the interim injunction granted by the English Commercial Court was continued by consent pending a challenge by JSC to the jurisdiction of the English courts and amended to provide that JSC would withdraw its request for information the subject of the Kazakh proceedings. However, despite being requested, JSC did not undertake either that it would not resubmit a request for information or that it would not commence further proceedings in Kazakhstan. Hence, the continuation of the present proceedings, leading to Burton J's and the Court of Appeal's judgments and orders.

Burton J's order

The order dated 16 April 2010 giving effect to Burton J's judgment declares in paragraph 2 that JSC "cannot bring", and orders in paragraph 3 that JSC "is restrained from bringing" "the claim, the subject matter of the [Kazakhstan proceedings], or any other claim arising out of or in connection with any matter or thing in relation to the provisions of the Concession Agreement …., save only for [excepted matters], otherwise than by commencing arbitration proceedings in the International Chamber of Commerce in London and pursuant to its Rules." By its order dated 1 July 2011 giving effect to its judgment, the Court of Appeal simply dismissed the appeal against Burton J's order.


In its terms and form, Burton J's order was and is a final order, as to both the declaration and the injunction which it granted. Indeed, in para 1 of his judgment, Burton J recorded that he was being asked to give "final relief" on AESUK's arbitration claim form, and in the final para 54 to 56 of his judgment, referring back to para 21, he concluded that AESUK was entitled to the grant of "(limited) final declaratory and injunctive relief". In these paragraphs, he made clear that he regarded an injunction in the wording of his later order as "limited" in a way which would avoid any concern about "usurpation or ouster" of the jurisdiction of the arbitrators, if any arbitration were to take place, and would give "the opportunity …. for any proper challenge to be made to the jurisdiction of the arbitrators or the applicability of the arbitration clause".


Rix LJ, giving the main judgment in the Court of Appeal with which his colleagues agreed, addressed the nature of the order made by commenting (para 108) that it might possibly be said that a binding declaration as to the existence of the arbitration agreement trespassed on the theoretical possibility that an arbitral tribunal might one day have to grapple with that very issue, that he did not himself think that it would do, but that he "need not decide that question here, for the judge has been cautious not to give such a declaration and the operator [AESUK] as respondent in this appeal has not sought to go further than the judge has gone".


Before the Supreme Court, both sides have in their submissions treated the judge's order as a final order; and so in terms it is. Neither side has sought to have the order, if it stands, corrected or qualified. Appeals lie against orders, and parties are entitled and correct to take orders at their face value. Burton J's order was in terms a final order declaring that certain claims could only properly be pursued in arbitration, and restraining their pursuit in any other forum. If an arbitration were to be commenced, by either side, in the future, it would not, under Burton J's order, be open to the respondent to object to its...

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