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Ust -Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk Hydropower Plant LLP
Factual and Procedural Background
The Respondent holds a concession to operate a hydro-electric plant in The Country under a 1997 agreement that is governed by the law of The Country but contains a London-seated International Chamber of Commerce arbitration clause. The Appellant, the current grantor of the concession, initiated court proceedings in The Country alleging the Respondent’s failure to supply information. Those courts had previously ruled the arbitration clause invalid.
The Respondent commenced proceedings in the English Commercial Court seeking (1) a declaration that the arbitration clause was valid and (2) an anti-suit injunction restraining the Appellant from continuing or starting litigation abroad. Judge Burton granted final declaratory and injunctive relief on 16 April 2010. The Court of Appeal dismissed the Appellant’s appeal on 1 July 2011. This appeal to the Supreme Court concerns the scope of the English court’s power to protect the negative aspect of an arbitration agreement when no arbitration is on foot or contemplated.
Legal Issues Presented
- Does the English court have power to declare that a claim may be brought only in arbitration and to restrain foreign proceedings outside the Brussels/Lugano regime?
- Does the Arbitration Act 1996 restrict or supersede the court’s inherent and statutory power under section 37 of the Senior Courts Act 1981 to grant such declaratory or injunctive relief when no arbitration has been commenced or proposed?
Arguments of the Parties
Respondent's Arguments
- The court retains an inherent declaratory jurisdiction and an express power under section 37 of the Senior Courts Act 1981 to protect contractual rights.
- The negative promise not to litigate elsewhere is as fundamental as the positive promise to arbitrate; it is enforceable regardless of whether arbitration is on foot.
- Nothing in the Arbitration Act 1996 abolishes or limits section 37; section 44 deals only with interim relief “for the purposes of and in relation to arbitral proceedings.”
Appellant's Arguments
- The Arbitration Act 1996 constitutes a complete scheme for determining arbitral jurisdiction: questions should first be addressed by arbitrators (sections 30, 32, 67, 72).
- The court should not intervene before arbitration is commenced; section 37 is displaced or, at minimum, should not be exercised in these circumstances.
- Section 44(2)(e) limits court-ordered injunctions to interim measures ancillary to existing or proposed arbitrations, precluding final anti-suit relief.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| West Tankers (ECJ, Case C-185/07) | Anti-suit injunctions are impermissible within Brussels/Lugano jurisdiction. | Distinguished; not applicable because the foreign forum lay outside the Brussels/Lugano regime. |
| South Carolina Insurance v De Zeven Provincien [1987] AC 24 | Parameters for granting injunctions under section 37. | Cited to confirm that section 37 applies where a legal right is threatened. |
| Channel Tunnel v Balfour Beatty [1993] AC 334 | Section 37 power is independent of arbitration legislation. | Used to emphasise that the arbitration clause is part of the factual matrix, not the source of the court’s power. |
| Pena Copper Mines v Rio Tinto (1911) 105 LT 846 | Anti-suit injunctions available even when no arbitration is commenced. | Relied on to show historical recognition of the negative obligation in arbitration clauses. |
| The Angelic Grace [1995] 1 Lloyd’s Rep 87 | Strong presumption in favour of granting anti-suit injunctions for breach of arbitration clauses. | Cited as leading authority confirming availability of injunctions. |
| Donohue v Armco [2002] 1 All ER 749 | Anti-suit relief for breach of exclusive jurisdiction clauses; strong reasons needed to refuse. | Analogised to arbitration context; supports enforcement of forum agreements. |
| Turner v Grovit [2002] 1 WLR 107 | Party’s contractual right not to be sued elsewhere justifies injunction. | Reinforces legitimacy of enforcing negative aspect of forum clauses. |
| Lesotho Highlands v Impregilo [2006] 1 AC 221 | Arbitration Act 1996 re-balances court/arbitration relationship but is not exhaustive. | Supports view that Act does not eliminate pre-existing court powers. |
| Dallah v Pakistan [2011] 1 AC 763 | Kompetenz-Kompetenz does not give arbitrators exclusive authority over jurisdiction. | Used to show court may decide jurisdiction questions independently. |
Court's Reasoning and Analysis
1. The Supreme Court reviewed historic authority demonstrating a long-standing jurisdiction to issue anti-suit injunctions enforcing both arbitration clauses and exclusive jurisdiction clauses, even where no arbitration is pending.
2. It held that the negative promise not to litigate elsewhere is integral to an arbitration agreement; enforcement of that promise does not depend on the existence or imminence of arbitral proceedings.
3. Examining the Arbitration Act 1996, the Court noted that Part I is not a complete code. Section 1(c) states that the court “should” (not “shall”) refrain from intervention, signifying caution rather than prohibition.
4. Sections 30, 32, 44, 67 and 72 presuppose existing or proposed arbitrations. They do not speak to situations where the claimant does not wish to commence arbitration but seeks protection against foreign litigation.
5. Section 44 concerns interim relief “for the purposes of and in relation to arbitral proceedings.” The requested injunction was not ancillary to arbitral proceedings but enforced a substantive contractual right; hence section 37 of the Senior Courts Act 1981 was the proper source of power.
6. Nothing in the 1996 Act expressly or implicitly removes the section 37 jurisdiction. Parliament’s silence, especially against the backdrop of well-known cases like The Angelic Grace, indicated no intention to curtail the power.
7. The Court emphasised that where foreign courts refuse to honour a London arbitration clause, English courts may intervene to protect parties’ contractual bargain, subject to comity and discretion.
Holding and Implications
APPEAL DISMISSED.
The Supreme Court confirmed that English courts possess power under section 37 of the Senior Courts Act 1981 to grant declaratory and injunctive relief restraining foreign proceedings in breach of a London-seated arbitration clause, even when no arbitration is envisaged. The decision preserves a long-standing remedial tool for safeguarding arbitration agreements and clarifies that the Arbitration Act 1996 did not displace this jurisdiction. Although the judgment does not create new precedent, it re-affirms the availability of anti-suit injunctions outside the Brussels/Lugano context and thus strengthens the attractiveness of English-seated arbitration.
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