If a party to an English seated arbitration agreement commences proceedings against third parties elsewhere are there circumstances where it might, on the basis of that agreement, be restrained from doing so?

This arose last year in the EuroChem case and, in the light of current geopolitical events, is a topical area that has now returned in a recent decision, Re Renaissance [2024] EWHC 2843 – albeit this time with a different outcome. Read on to understand more.

What happened in the Renaissance decision?

In these proceedings, the claimant (R) and the defendants were in dispute over assets held by R under an investment service agreement (ISA). The assets belonged to the defendants but the claimants had frozen them, asserting that the defendants were subject to sanctions. The ISA was subject to English law, and a London-seated LCIA arbitration agreement.

The defendants commenced proceedings against R in Russia, in respect of which R obtained an anti-suit injunction (ASI) from the English courts on the basis of a breach of the arbitration agreement. Certain of the defendants, however, also brought other proceedings in Russia against affiliates of R (described in the judgment as ‘the RREs’, for ‘Renaissance Russia Entities’). These were tortious claims under Russian law which, in summary, asserted that, although the RREs were separate entities, they were part of a corporate group which would benefit from the actions of R and that they should therefore be held responsible for losses caused by R to the defendants.

This led R to seek an amendment to the ASI to also restrain those actions against the RREs on the basis that (i) they were claims which, pursuant to the arbitration agreement in the ISA, the defendants had agreed to submit to arbitration; or (ii) they had been vexatiously brought as a collateral attack on that arbitration agreement.

As to the first, the judge found that, as a matter of construction of the arbitration agreement under English law, it could not be said that the defendants had made any such agreement in relation to the claims against the RREs. Drawing from cases on exclusive jurisdiction clauses, the judge noted that the starting point, absent express words, is that only disputes between the parties to such an agreement are covered by it; and that this was all the more likely to be the more correct approach given other particularities of the arbitration context [30-32]. The judge then turned to the construction of the arbitration agreement in the ISA and concluded that there were various features of it inconsistent with the proposition that its scope would encompass the claims against the RREs; for example a number of features were only applicable to the parties, and not non-parties [33-40].

The judge also rejected R's arguments on vexation. Although a little opaque, his reasons, shortly put, seem to have been that he regarded such an argument as difficult given that the proceedings against the RREs were not within the scope of the arbitration agreement. But, also, R had offered no case on why, in such a case, England should be the natural forum for the resolution of the dispute between the defendants and the RREs, being a necessary condition for an injunction based on vexation [41-46, 48].

A contrast with EuroChem?

Regular readers of ArbitrationLinks may recall the Court of Appeal’s decision in EuroChem of last year. In that case (see here for more) an ASI was found to prevent a party (T) to an arbitration agreement participating in Italian proceedings against a third party; one of the reasons being that conduct was within the scope of the arbitration agreement.

The gist of the reasoning for that conclusion was that in doing so, T was simply seeking to litigate, or conduct a “proxy war” on, the very issue forming part of the parties’ dispute before the tribunal. EuroChem does not appear to have been relied upon by R in Renaissance, so the decision doesn’t directly deal with the difference. But, as a point of contrast/distinction, there may be a view that the nature of the proceedings in the latter were somewhat more towards free-standing claims against third parties (which, for reasons including those given by the judge, might ordinarily not be thought to be within the scope of the arbitration agreement between the parties). That is a point somewhat evident in the judge’s attitude (at [44]) as to whether the case against the RREs involved an orchestrated attempt to take advantage of Russian legislation on jurisdiction over sanctions disputes: such a characterisation of the defendants’ conduct in this particular case was “wrong”, according to the judge.  

This tends to suggest that a key point for a party in R’s position to focus on may be the degree to which the proceedings commenced by its counterparty against third parties are a contrived attempt to have the substance of the dispute between the parties to the arbitration agreement heard elsewhere; as it is possible that may then support an ASI either on a contractual basis, or, otherwise, on the basis that it is vexatious/oppressive.