Security Enforcement Proceedings Under a Mortgage Jurisdiction Clause Do Not Breach a Separate Facility Arbitration Clause

1) Introduction

FH Holding Moscow Ltd v AO UniCredit Bank & Anor [2026] EWCA Civ 468 concerned an attempt by a borrower (a Cypriot company operating in Russia) to restrain Moscow foreclosure proceedings by relying on an arbitration clause in a related facility agreement. The facility agreement was governed by English law and provided for arbitration seated in Vienna (VIAC rules). The mortgage agreement over Russian real estate was governed by Russian law and contained an exclusive jurisdiction clause in favour of the Commercial Court of Moscow.

The borrower’s core case was that the lenders (through the Russian bank acting as security agent) could not start mortgage enforcement in Moscow unless and until a Vienna tribunal had first determined that an “Event of Default” had occurred under the facility agreement. The borrower therefore sought an English anti-suit injunction restraining the Moscow proceedings.

The Court of Appeal (Lord Justice Males giving the main judgment; Lord Justice Lewison and Lord Justice Popplewell concurring) dismissed the appeal. The decisive holding was that the Moscow proceedings were not brought in breach of the Vienna arbitration clause, because the mortgage agreement’s own enforcement machinery and Moscow jurisdiction clause contemplated that disputes about default could be determined within the Moscow enforcement procedure.

2) Summary of the Judgment

  • The Court of Appeal agreed with the Commercial Court that the Moscow foreclosure proceedings were not a breach of the facility agreement’s Vienna arbitration clause.
  • Because there was no breach, the anti-suit injunction claim failed, and it was unnecessary to decide the remaining grounds on jurisdiction and discretion.
  • The Court refused permission to adduce fresh evidence on appeal about the meaning of “arbitration court” in the mortgage agreement, applying Ladd v Marshall [1954] 1 WLR 1489 (the evidence was obtainable below and would not materially affect the result).
  • The Court made significant (but expressly non-determinative) observations about (i) the potentially expansive consequences of treating an anti-suit claim as “in respect of” an underlying English-law contract even where the arbitration agreement is governed by foreign law, and (ii) a procedural tension between service-out gateways under PD6B and CPR 62.5 for arbitration claims.

3) Analysis

3.1 Precedents Cited

A. Competing dispute resolution clauses: BNP Paribas SA v Trattamento Rifiuti Metropolitani SpA

The Court applied the principles summarised by Hamblen LJ in BNP Paribas SA v Trattamento Rifiuti Metropolitani SpA [2019] EWCA Civ 768, [2020] 1 All ER 762 (para 68 in that case), including:

  • a presumption against overlapping clauses where sensible reading allows each clause to govern its “own” subject-matter;
  • a purposive, commercially-minded construction across the whole transaction;
  • recognition that, where overlap is unavoidable, it may be that “either clause can apply”.

These principles underpinned the conclusion that disputes about the occurrence of an Event of Default could fall within both instruments’ dispute resolution provisions, and that the mortgage agreement’s clause could validly capture default disputes in the specific context of security enforcement.

B. Anti-suit injunctions and contractual breach: Renaissance Securities (Cyprus) Ltd v ILLC Chlodwig Enterprises

The borrower relied on the general approach that an anti-suit injunction is typically granted where foreign proceedings are brought in breach of a dispute resolution agreement unless strong reasons exist not to. That proposition was referenced via Renaissance Securities (Cyprus) Ltd v ILLC Chlodwig Enterprises [2025] EWCA Civ 369, [2025] 1 Lloyd's Rep 518. However, the Court of Appeal held the premise (breach) was not established; accordingly, the discretionary framework did not arise for decision.

C. Governing law of the arbitration agreement: Enka, UniCredit v RusChemAlliance, and the Arbitration Act 2025

A notable contextual point was the Court’s emphasis that the arbitration clause was not governed by English law. By reason of section 6A of the Arbitration Act 1996 (inserted by the Arbitration Act 2025), the arbitration agreement’s governing law defaults to the law of the seat (Vienna/Austria). This statutory default reverses the approach in Enka Insaat ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38, [2020] 1 WLR 417, which had treated the law of the main contract as the default law of the arbitration agreement (absent contrary indication), and which was applied/clarified in UniCredit Bank GmbH v RusChemAlliance LLC [2024] UKSC 30, [2025] AC 1177.

Although not determinative of the breach question (which the parties argued on an English-law-analogous basis), this feature materially weakened the conceptual “English interest” in granting a remedy as intrusive as an anti-suit injunction in relation to Russian enforcement proceedings concerning Russian land.

D. Appellate restraint and adopting first-instance reasoning: Neumans LLP v Andronikou

The Court endorsed the trial judge’s reasoning and avoided repetition, citing Neumans LLP v Andronikou [2013] EWCA Civ 916, [2013] Bus LR 1152 (paras 36–37) as authority for that approach where the first-instance analysis is sufficient.

E. Fresh evidence on appeal: Ladd v Marshall; and evidential fairness

The borrower sought to introduce a new expert report on translation, arguing that “arbitration court” in the mortgage agreement referred to Russian state arbitrazh courts rather than a private arbitral tribunal. The Court refused under Ladd v Marshall [1954] 1 WLR 1489, holding (i) the evidence could have been obtained for the hearing below and (ii) it would not have an important influence on the result because clause 9’s core meaning did not turn on that phrase.

The Commercial Court’s concern about fairness—preventing a late “change tack” after evidence and submissions had proceeded on a shared assumption—was treated as a further reason not to admit the new point.

F. Witness statements and interpretation; limits of non-expert evidence: Vizcaya Partners Ltd v Picord

In addressing the “arbitration court” point below, the judge noted that witness statements were not admissible as expert evidence of meaning, citing Vizcaya Partners Ltd v Picord [2016] UKPC 5 (at [60]). Their relevance lay instead in showing what the parties reasonably understood to be in issue at the time.

G. Service out in arbitration claims: AES Ust-Kamenogorsk, UniCredit v RusChemAlliance, and Shipowners' Mutual ... v Containerships ...

The Court recorded (without deciding) an argument that CPR 62.5 may be the exclusive service-out route for arbitration claim forms, potentially displacing PD6B gateways. The Court noted that both AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC [2013] UKSC 35, [2013] 1 WLR 1889 and UniCredit Bank GmbH v RusChemAlliance LLC proceeded on the assumption that PD6B gateways can be used, though the exclusivity point does not appear to have been argued.

The Court also referenced Shipowners' Mutual Protection And Indemnity Association (Luxembourg) v Containerships Denizcilik Nakliyat Ve Ticaret AS [2015] EWHC 258 (Comm), [2015] 1 All ER (Comm) 966, where Teare J declined to treat a Supreme Court observation as erroneous.

3.2 Legal Reasoning

A. The key interpretive move: clause 9 as a “single-stage” enforcement mechanism

The borrower’s theory required the Court to read “occurrence of any Event of Default” (mortgage clause 9.1.1) as effectively meaning “a Vienna tribunal has determined an Event of Default”. The Court rejected that as commercially artificial and textually inconsistent with the mortgage structure.

The Court emphasised that clause 9.1.2 expressly permits execution “immediately after the occurrence of the Event of Default” and does so “subject to Clause 21 (Dispute Resolution)”—i.e., the Moscow court process specified by the mortgage agreement itself. That drafting was taken to indicate that the parties contemplated disputed default questions being resolved within the Moscow “judicial procedure” required for enforcement (clause 9.1.3), rather than by a mandatory preliminary arbitration step.

B. Competing clauses can overlap without contractual breach

The Court accepted that, linguistically, a default dispute could fit both the Vienna arbitration clause (facility agreement) and the Moscow jurisdiction clause (mortgage agreement). Applying BNP Paribas, it held that the mortgage agreement governed the enforcement subset of disputes and that the parties had “legislated” for that in clause 9. Hence, commencing Moscow enforcement proceedings was not a renunciation of the arbitration clause but an exercise of a contractually specified enforcement route for the security.

C. Fragmentation was tolerated, but unnecessary duplication was not imposed

The Court observed that some fragmentation might occur on the banks’ case (e.g., arbitration to pursue an unsecured shortfall), but the borrower’s construction created certain duplication by making a Vienna award a condition precedent to any security enforcement. The Court treated that as a strong commercial indicator against the borrower’s reading, particularly where Russian real estate enforcement could require speed and interim measures in the local court.

D. Foreign law context and judicial comity (without deciding conflict-of-laws issues)

Although the parties argued the central breach issue as if English interpretive principles applied (or as if Russian/Austrian principles could be assumed similar), the Court expressed scepticism that English law should be the lens at all, given: (i) the mortgage was Russian-law and Russia-jurisdiction; (ii) the property was in Russia; and (iii) the arbitration agreement was governed by Austrian law.

Additionally, the Court noted that the Moscow court had already decided the mortgage did not require a prior VIAC decision; accepting the borrower’s argument would entail an “ambitious” conclusion that the Moscow court misconstrued its own Russian-law instrument.

3.3 Impact

A. Transactional drafting and enforcement strategy

The decision confirms that, where a security document (i) requires enforcement by local court process and (ii) contains a broad local jurisdiction clause, an enforcement claim premised on “event of default” may be brought in that court even if the underlying facility has a broad arbitration clause. Parties who intend a two-stage process (arbitration first, enforcement second) will likely need to draft that condition precedent explicitly and consistently across the suite of documents.

B. Anti-suit injunctions: breach remains the gateway question

The case illustrates that the “breach of dispute resolution clause” question can be dispositive: absent breach, the court need not engage with wider discretionary considerations or contested service-out routes.

C. Post-2025 arbitration-agreement governing law: practical consequences for English anti-suit relief

By highlighting the effect of section 6A of the Arbitration Act 1996, the judgment signals a likely increase in cases where (despite an English-law main contract) the arbitration agreement is foreign-law-governed due to a foreign seat. That may:

  • reduce the perceived “English supervisory interest” in policing the arbitration agreement by anti-suit injunction;
  • increase the importance of jurisdiction/service-out analysis where defendants are abroad; and
  • intensify scrutiny of attempts to anchor jurisdiction via the governing law of the underlying contract alone (an issue flagged as potentially “wide-ranging”).

D. Procedure: unresolved tension between PD6B gateways and CPR 62.5

The Court’s discussion (though obiter) draws attention to a structural problem: CPR 62.5(1)(c) service-out is tied to an English seat (or section 2(4) conditions), potentially leaving a lacuna for foreign-seated arbitration anti-suit claims unless PD6B gateways are available. The Court suggested the Rules Committee is best placed to resolve the policy choice.

4) Complex Concepts Simplified

Anti-suit injunction (ASI)

An ASI is an order restraining a party from starting or continuing proceedings in a foreign court. In the arbitration context, it is typically sought where foreign litigation is said to breach an agreement to arbitrate.

“Competing” dispute resolution clauses

In multi-document financings, one contract may send disputes to arbitration while a related security document sends disputes to a court. Courts try to interpret the documents so they fit together commercially, often allocating different categories of dispute to different fora.

Event of Default vs enforcement of security

An “Event of Default” is a contractual trigger (e.g., non-payment) that may allow acceleration and enforcement. The question here was procedural: must default be determined by arbitration before a lender can ask the local court to enforce a mortgage? The Court held that, under this mortgage’s wording, default could be resolved within the local enforcement proceedings.

Fresh evidence on appeal (the Ladd v Marshall test)

Appellate courts generally will not admit new evidence unless it could not reasonably have been obtained for the hearing below and would likely have an important effect on the outcome. The borrower’s new translation evidence failed that test.

Governing law of the arbitration agreement after section 6A

Under section 6A (introduced in 2025), an arbitration clause is presumptively governed by the law of the seat (here, Austria), even if the main contract is governed by English law. This changes the default rule applied in Enka.

5) Conclusion

[2026] EWCA Civ 468 establishes, on the construction adopted, that Moscow mortgage enforcement proceedings mandated by a Russian-law mortgage (with a Moscow jurisdiction clause and an “immediate” enforcement mechanism) did not breach a separate English-law facility agreement’s Vienna arbitration clause, even though the existence of an Event of Default was disputed. The Court’s reasoning emphasises coherent interpretation across a transaction’s documents, resistance to commercially artificial duplication, and sensitivity to the local court process embedded in security enforcement—while also flagging, for future development, the jurisdictional and procedural consequences of foreign-law-governed arbitration agreements under section 6A and the unsettled interaction between PD6B and CPR 62.5 in service-out of arbitration claims.