“In the event of any dispute or disagreement arising under, or in connection with, this Agreement, such dispute or disagreement shall be resolved by binding arbitration held in London under the rules of the London Court of International Arbitration (which rules are deemed to be incorporated herein; hereinafter - the ‘Rules’), save that no requirements of the Rules as to the nationality of arbitrators shall apply, with 3 (three) arbitrators appointed in accordance with the Rules (where each of the Pledgee and the Pledgor shall appoint one arbitrator; the two arbitrators so elected shall appoint the chairman). The London Court of International Arbitration shall be the appointing authority. The working language of the proceedings shall be English. The Parties’ addresses for service of process shall be the addresses specified in this Agreement.”
(1) The Bank purchased bonds with a face value of US $600 million issued by O1 Group Finance.
(2) O1 Group Finance used the sale proceeds to lend money to the borrowers under the Loan Agreements which the borrowers then used to repay the loans to the Bank.
(3) The Loan Agreements were then terminated.
(4) By agreements dated 9 and 10 August 2017 (“the Pledge Termination Agreements”) the claimants and the Bank agreed to terminate the Pledge Agreements.
(5) The Pledge Termination Agreements were governed by the law of Cyprus. Each contained an arbitration clause, clause 8, as follows:
“Any dispute, controversy or claim which may arise out of or in connection with this Deed, or the execution, breach, termination or invalidity thereof, shall be settled in accordance with provisions of clause 19 of the Share Pledge.”
(1) Any application for anti-suit relief should be made to the arbitral tribunal now that it has been constituted and the court should not intervene.
(2) The Russian proceedings are not in breach of the arbitration agreements because (a) the arbitration clauses should be construed as not extending to an insolvency claim to set aside a transaction at an undervalue which is within the exclusive jurisdiction of the Moscow Arbitrazh Court and/or (b) such claims are not arbitrable.
(3) There can be no injunction to restrain proceedings in Cyprus, an EU member state: see West Tankers Inc v Allianz SpA (Case C-185/07)  AC 1138.
(4) There are strong reasons why no injunction should be granted, in particular because the Russian and Cyprus proceedings will continue in any event and those jurisdictions comprise the natural forums in which to determine the dispute.
(5) As a matter of discretion there should be no injunction to restrain the Russian proceedings because the claimants have delayed in making this application.
“What this [the Supreme Court decision in AES\ still leaves open is the extent to which, when granting a temporary anti-suit injunction [i.e. under section 37 of the Senior Courts Act 1981], the court is required to have regard to the matters arising under section 44 (i.e. urgency and the tribunal’s inability to act effectively). Our view is that in cases where the tribunal is able in some way to act effectively once constituted, the court should do no more than ‘hold the ring’ pending the constitution of the tribunal. If the tribunal is unable to act effectively (or there is no arbitration pending), it is hard to see why the section 44 criteria are relevant.”
“(1) A party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter.
(3) An application may not be made by a person before taking the appropriate procedural step (if any) to acknowledge the legal proceedings against him or after he has taken any step in those proceedings to answer the substantive claim.
(4) On an application under this section the court shall grant a stay unless satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed.”
“58. The Angelic Grace  1 Lloyd’s Rep 87 in particular was a highly prominent decision, expressed in emphatic terms during the very period when the DAC was preparing the Bill for the Act and its own report. Nothing in the DAC report of 1996 addresses either it or the long-standing and well recognised jurisdiction which was its subject matter. Yet a regime under which the English court could no longer enforce the negative rights of a party to a London arbitration agreement by injunctive relief restraining foreign proceedings would have been, and would have been seen, as a radical diminution of the protection afforded by English law to parties to such an arbitration agreement. It would have aroused considerable interest and, no doubt, concern. The only sensible inference is that the drafters of the Act never contemplated that it could or would undermine the established jurisprudence on anti-suit injunctions.
59. It was only later that the Court of Justice in Luxembourg restricted the use of such injunctions; and then only in relation to foreign proceedings in the area covered by the Brussels/Lugano regime and on the basis of the mutual trust affirmed to exist between courts within that regime. The interest and concern that this aroused witnesses to the interest that would have been aroused had the Bill or 1996 Act been seen as having any such radical intention or effect in relation to courts worldwide. The West Tankers case (Case C-185/07)  AC 1138 suggests that it did not occur to anyone until this case that it did.
60. The power to stay domestic legal proceedings under section 9 and the power to determine that foreign proceedings are in breach of an arbitration agreement and to injunct their commencement or continuation are in truth opposite and complementary sides of a coin. Subject to the recent European inroad, that remains the position. The general power provided by section 37 of the 1981 Act must be exercised sensitively and, in particular, with due regard for the scheme and terms of the 1996 Act when any arbitration is on foot or proposed. It is also open to a court under section 37, if it thinks fit, to grant any injunction on an interim basis, pending the outcome of current or proposed arbitration proceedings, rather than a final basis. But, for the reasons I have given, it is inconceivable that the 1996 Act intended or should be treated sub silentio as effectively abrogating the protection enjoyed under section 37 in respect of their negative rights under an arbitration agreement by those who stipulate for an arbitration with an English seat.”
“20. The underlying basis for a generous approach towards construing the scope of an arbitration clause is the assumption that commercial parties, as rational business entities, are likely to prefer a dispute resolution system that can deal with all types of claims in a single forum. This assumption is reasonable in relation to private remedial claims, which may arise either before or during the period when a company becomes insolvent. It is conceivable that the company’s pre-insolvency management would prefer all these claims to be dealt with in a single forum. However, this reasoning cannot be applied to avoidance claims pursued during insolvency proceedings. The commencement of insolvency proceedings results in the company’s management being displaced by a liquidator or judicial manager. Since avoidance claims can only be pursued by the liquidators or judicial managers of companies, there is no reason to objectively believe that a company’s pre-insolvency management would ordinarily contemplate including avoidance claims within the scope of an arbitration agreement.
21. For the reasons stated above, it makes sense to draw a line between private remedial claims (either common law or statutory), which the company’s pre-insolvency management have good reason to be concerned about, and claims that can only be made by a liquidator/judicial manager of an insolvent company, to which they are completely indifferent. We therefore hold that arbitration clauses should not ordinarily be construed to cover avoidance claims in the absence of express language to the contrary ... and that the Arbitration Clause did not cover Petroprod’s claims against Larsen.”
“45. A distinction should be drawn between disputes involving an insolvent company that stem from its pre-insolvency rights and obligations, and those that arise only upon the onset of insolvency due to the operation of the insolvency regime. Many of the statutory provisions in the insolvency regime are in place to recoup for the benefit of the company’s creditors losses caused by the misfeasance and/or malfeasance of its former management. This is especially true of the avoidance and wrongful trading provisions. This objective could be compromised if a company’s pre-insolvency management had the ability to restrict the avenues by which the company’s creditors could enforce the very statutory remedies which were meant to protect against the company’s management. It is a not unimportant consideration that some of these remedies may include claims against former management who would not be parties to any arbitration agreement. The need to avoid different findings by different adjudicators is another reason why a collective enforcement procedure is clearly in the wider public interest.
46. We, therefore, are of the opinion that the insolvency regime’s objective of facilitating claims by the company’s creditors against the company and its pre-insolvency management overrides the freedom of the company’s pre-insolvency management to choose the forum where such disputes are to be heard. The court should treat disputes arising from the operation of the statutory provisions of the insolvency regime per se as non-arbitrable even if the parties expressly included them within the scope of the arbitration agreement.”
“... even though proceedings do not come within the scope of Regulation No 44/2001, they may have consequences which undermine its effectiveness, namely preventing the attainment of the objectives of unification of the rules of conflict of jurisdiction in civil and commercial matters and the free movement of decisions in those matters. This is so, inter aha, where such proceedings prevent a court of another member state from exercising the jurisdiction conferred on it by Regulation No 44/2001.”
“It follows that the objection of lack of jurisdiction raised by the claimant before the Tribunale di Siracusa on the basis of the existence of an arbitration agreement, including the question of the validity of that agreement, comes within the scope of Regulation No 44/2001, and that it is therefore exclusively for that court to rule on that objection and on its own jurisdiction, pursuant to articles 1(2)(d) and 5(3) of the Regulation.
“32. It should be recalled that the court held in West Tankers ..., that an injunction issued by a court of a member state restraining a party from having recourse to proceedings other than arbitration and from continuing proceedings brought before a court of another member state, which has jurisdiction under Regulation No 44/2001, is not compatible with that Regulation.
33. An injunction issued by a court of a member state requiring a party to arbitration proceedings not to continue proceedings before a court of another member state is contrary to the general principle which emerges from the case law of the court that every court seised itself determines, under the applicable rules, whether it has jurisdiction to resolve the dispute before it. It should be borne in mind in that regard that Regulation No 44/2001, apart from a few limited exceptions, does not authorise the jurisdiction of a court of a member state to be reviewed by a court in another member state. That jurisdiction is determined directly by the rules laid down by that Regulation, including those relating to its scope. In the case is a court of one member state in a better decision to determine whether the court of another member state has jurisdiction: the West Tankers case, para 29.
34. The court has held in particular that obstructing, by means of such an injunction, the exercise by a court of a member state of the powers conferred on it by Regulation No 44/2001 runs counter to the trust which the member states accord to one another’s legal systems and judicial institutions and liable to bar an applicant who considers that an arbitration agreement is void, inoperative or incapable of being performed from access to the court before which he nevertheless brought proceedings: the West Tankers case ... paras 30 and 31.”
“(1) This Regulation should not apply to arbitration. Nothing in this Regulation should prevent the courts of a Member State, when seised of an action in a matter in respect of which the parties have entered into an arbitration agreement, from referring the parties to arbitration, from staying or dismissing the proceedings, or from examining whether the arbitration agreement is null and void, inoperative or incapable of being performed, in accordance with their national law.
(2) A ruling given by a court of a Member State as to whether or not an arbitration agreement is null and void, inoperative or incapable of being performed should not be subject to the rules of recognition and enforcement laid down in this Regulation, regardless of whether the court decided on this as a principal issue or as an incidental question.
(3) On the other hand, where a court of a Member State, exercising jurisdiction under this Regulation or under national law, has determined that an arbitration agreement is null and void, inoperative or incapable of being performed, this should not preclude that court’s judgment on the substance of the matter from being recognised or, as the case may be, enforced in accordance with this Regulation. This should be without prejudice to the competence of the courts of the Member States to decide on the recognition and enforcement of arbitral awards in accordance with [the New York Convention], which takes precedence over this Regulation.
(4) This Regulation should not apply to any action or ancillary proceedings relating to, in particular, the establishment of an arbitral tribunal, the powers of arbitrators, the conduct of an arbitration procedure or any other aspects of such a procedure, nor to any action or judgment concerning the annulment, review, appeal, recognition or enforcement of an arbitral award.”
“133. That means that, if the case which gave rise to the judgment in the West Tankers case had been brought under the regime of the Brussels I Regulation (recast), the Tribunale di Siracusa could have been seised on the substance of the case on the basis of that Regulation only from the time when it held that the arbitration agreement was null and void, inoperative or incapable of being performed (which is possible under article II (3) of the 1958 New York Convention).”
“24. If contracting parties agree to give a particular Court exclusive jurisdiction to rule on claims between those parties, and a claim falling within the scope of the agreement is made in proceedings in a forum other than that which the parties have agreed, the English Court will ordinarily exercise its discretion (whether by granting a stay of proceedings in England, or by restraining the prosecution of proceedings in the non-contractual forum abroad, or by such other procedural order as is appropriate in the circumstances) to secure compliance with the contractual bargain, unless the party suing in the non-contractual forum (the burden being on him) can show strong reasons for suing in that forum. I use the word ‘ordinarily’ to recognise that where an exercise of discretion is called for there can be no absolute or inflexible rule governing that exercise, and also that a party may lose his claim to equitable relief by dilatoriness or other unconscionable conduct. But the general rule is clear: where parties have bound themselves by an exclusive jurisdiction clause effect should ordinarily be given to that obligation in the absence of strong reasons for departing from it. Whether a party can show strong reasons, sufficient to displace the other party’s prima facie entitlement to enforce the contractual bargain, will depend on all the facts and circumstances of the particular case.”
“36. In my opinion, and subject to an important qualification, the ends of justice would be best served by a single composite trial in the only forum in which a single composite trial can be procured, which is New York, and accordingly I find strong reasons for not giving effect to the exclusive jurisdiction clause in favour of Mr Donohue. ...”
(1) The Bank must discontinue (or take whatever is the equivalent procedural step to terminate) the Russian proceedings as against the claimants.
(2) The Bank must not commence proceedings against the claimants seeking the same or equivalent relief in any court of a state which is not a member of the European Union or a party to the Lugano Convention.
(3) The claimants’ application for an injunction to restrain the pursuit of the Bank’s proceedings in Cyprus is dismissed.
(4) The claimants’ application for a declaration that they are entitled to be indemnified and/or for damages in respect of the Bank’s proceedings in Cyprus is deferred.
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