Enka v Chubb: The Court of Appeal grants anti-suit injunction with indemnity costs

The Court of Appeal has today handed down judgment in what may well turn out to be the leading case on the English choice of law rules for ascertaining the proper law of an arbitration agreement and the role of the court of the seat of arbitration in granting anti-suit injunctions.

Enka, the claimant, was engaged in 2012 as one of the subcontractors providing services in relation to the construction of the Berezovskaya power plant in Russia. There was a massive fire at the plant in February 2016. Chubb, the defendant, claimed to have paid (as insurer) c. $400 million to the owner of the plant in respect of the damage caused by the fire. In September 2019, it commenced proceedings in the Moscow Arbitrazh Court against 11 parties, including Enka, seeking damages (as subrogated insurer) for the fire. The Enka contract however contained an arbitration agreement providing that disputes would be resolved by ICC arbitration in London. Enka accordingly issued a claim in the Commercial Court for an anti-suit injunction restraining Chubb from pursuing the Russian proceedings. Chubb resisted the claim on the ground that the arbitration agreement was governed by Russian law and that the Russian proceedings (said to be tort claims) did not under that law fall within the scope of it, although it was common ground that they did if the proper law was English law.

Andrew Baker J dismissed the claim at trial, holding that the English court was not the forum conveniens to determine Enka’s claim because the scope of the arbitration agreement, including the question of proper law (which he provisionally thought was Russian), should be determined by the Moscow Arbitrazh Court in the Russian proceedings commenced by Chubb. He also held, in the alternative, that an injunction should be refused in the exercise of his discretion by reason of delay and Enka’s failure to commence an arbitration.

Popplewell LJ, with whom Flaux and Males LJJ agreed, held that the Judge’s approach to each of these points was wrong in principle. As to the first, Popplewell LJ accepted Enka’s submission that parties who choose a London seat thereby submit to the jurisdiction of the court of the seat in certain respects, including the anti-suit jurisdiction under section 37 of the 1981 Act: [42]. Forum conveniens considerations therefore do not arise. This is why there is no requirement in CPR 62.5(1)(c) that England must be shown to be the ‘proper place’ to obtain leave to serve an arbitration claim form out of the jurisdiction, as there is in CPR 6.37(3): [61].

As to proper law, Popplewell LJ observed at [89] that the current state of the authorities ‘does no credit to English commercial law’ and that ‘the time has come to seek to impose some order and clarity on this area of the law’. This he proceeded to do, following a comprehensive review of the authorities and restatement of the principles in a section of his judgment ([68]-[105]) that is likely to prove influential. Applying those principles, he found that Enka’s arbitration agreement is governed by English law, although the main contract by Russian law.

Finally, Popplewell LJ accepted Enka’s submission that the Judge’s decision to refuse an injunction on discretionary grounds was also flawed in principle, particularly because (contrary to the Judge’s view) the failure to commence an arbitration seeking anti-suit relief ‘is not a relevant factor at all’: [112]. Exercising the discretion afresh, this was a ‘classic case’ ([119]) in which the court should grant an anti-suit injunction applying Angelic Grace principles, which the Court of Appeal accordingly did.

Enka was awarded its costs of the appeal and below on the indemnity basis. The judgment is available here.

Niranjan Venkatesan (led by Robin Dicker QC) acted for the successful appellant. He was instructed by Shearman & Sterling (London) LLP.