Update on USTR - US to implement substantial fees on vessels calling at US ports
Find out more
The power to vary or revoke a final anti-suit injunction: UniCredit Bank GmbH v RusChemAlliance LLC
UniCredit Bank GmbH ("UniCredit") returned to the English courts in February to ask for an anti-suit injunction, granted at its own application against RusChemAlliance LLC ("RusChem"), to be varied or discharged. In unusual circumstances, and against the backdrop of UK and EU sanctions against Russia, the English court found that it had sufficient power to vary its own final order.
Background
UniCredit, a German company, and RusChem, a Russian company, are parties to multiple bonds entered in 2021 (the "Bond Contracts"). The Bond Contracts are each governed by English law and provide for arbitration in Paris. When UniCredit refused to pay RusChem the contractual sums, arguing EU sanctions against Russia prohibited the payment, RusChem commenced proceedings before the Russian courts. RusChem relied on a Russian law that confers exclusive jurisdiction to the Russian courts over any dispute between foreign and Russian entities arising out of foreign sanctions and renders inoperable any clause providing for arbitration outside the Russian Federation. UniCredit applied to the English courts for a final anti-suit injunction to restrain the Russian proceedings. The issue went to the Supreme Court, which granted a final anti-suit injunction in September 2024 (the "Injunction").
However, on 28 December 2024, RusChem obtained a ruling (the "Ruling") from the St Petersburg court that:
- prohibits UniCredit from initiating arbitrations or court proceedings against RusChem, except in the Russian courts, in respect of the Bond Contracts;
- prohibits UniCredit from continuing any proceedings or enforcing any judgments, except in the Russian courts, against RusChem in respect of the Bond Contracts;
- obliges UniCredit to take all measures within its control to cancel the effect of the Injunction within two weeks of the Ruling coming into legal force; and
- provides that, should UniCredit fail to comply with the Ruling, it would have to pay RusChem €250 million.
UniCredit decided that English contempt proceedings would be unlikely to have practical effect against RusChem, given that it has no assets outside Russia and its officers do not travel outside of Russia. As a result, in February 2025, UniCredit applied to the English Court of Appeal to revoke or vary the Injunction.
Judgment
Males LJ ordered that UniCredit's application be heard in open court, given that it raised important issues of principle. Nothing had occurred since the Injunction was granted to suggest it was wrongly granted. The court therefore had to consider whether it had the power to revoke a final injunction and whether it should do so in circumstances where the Ruling appeared to be contrary to Russia's international obligations under the New York Convention.
The court's power to make such an order relied on the following authorities:
- Its general powers of management under CPR 3.1, including a power to make an order to vary or revoke an order.
- The carve-out in CPR 52.30 that provides the Court of Appeal or High Court will not reopen a final determination of any appeal unless it is necessary to do so in order to avoid real injustice, the circumstances are exceptional and make it appropriate to reopen the appeal and there is no alternative effective remedy.
- A claimant's power under CPR 38.2 to discontinue all or part of a claim against a defendant, provided it has the permission of the court in cases where the court has granted an interim injunction or where any party has given an undertaking to the court.
The court found that it had the power to revoke or vary the Injunction after considering the following five issues:
1. Was UniCredit actually at risk of being forced to pay a penalty?
UniCredit argued that, should the court refuse to exercise its power to vary or revoke the Injunction, UniCredit was at risk of breaching the Ruling and facing draconian financial consequences. Furthermore, UniCredit stated that compliance with the Ruling required an order of the English court, not just UniCredit's application.
The court found that the Ruling depended on UniCredit's own conduct and, therefore, the Ruling did not seem to go beyond requiring UniCredit to apply to the English court. However, the risk of the St Petersburg Court imposing penalties if the application was rejected could not be discounted, given that the court could not predict how the St Petersburg Court would judge UniCredit's efforts to cancel the Injunction. Therefore, though it was not conclusive in deciding to discharge or vary the Injunction, the risk was a factor to take into account.
2. Did the court have power to revoke or vary a final order for an anti-suit injunction?
The court considered the leading authorities on the revocation of final orders, which outlined that the special circumstances supporting a revocation (or alteration) must be significant enough to overcome the deadweight of the finality principle on the other side of the scales. No party identified any cases that dealt with the discharge of final injunctions, but the court found that it did have requisite power to revoke or vary an anti-suit final injunction as:
- This was private litigation between commercial parties, so it would be strange if a party, facing a change in circumstances, could never return to the court and ask for an injunction to be discharged.
- In the special situation of an anti-suit injunction, it is common for competing orders to be made against parties in different jurisdictions. It would be strange if the parties obtaining the 'losing' anti-suit injunction could ask for it to be discharged.
- In the case of anti-suit injunctions, there is not as much logic in the distinction between interim and final orders as in other cases. If final anti-suit injunctions could not be discharged, it would create commercial confusion and uncertainty.
3. Had UniCredit been coerced into making the application, and if so, did that weigh against acceding to it?
The court observed that an anti-suit injunction is a coercive remedy wherever it is granted, as its objective is to require a defendant to litigate against its will in one jurisdiction rather than another. The Ruling clearly applied commercial pressure on UniCredit to apply to revoke the Injunction. However, though the threatened penalties were eye-watering, no cases were identified where coercion and duress vitiated a contract. The court factored in that UniCredit is a major bank, capable of making its own decisions when its board decides something is in its own commercial interest. Therefore, the court found that the coercion of UniCredit was not, in the unusual circumstances of the case, a weighty factor to add to the balance.
4. Were there English public policy reasons for refusing the application, and, if so, how strongly did they militate in favour of refusing it?
Though it would be a great concern if pressure was applied to an English court by a foreign court, the court was satisfied here that the Ruling was not made against the English courts and operated directly against UniCredit. The St Petersburg Court made a strong order enforcing its own laws, conflicting with the approach of the English courts, and the court was happy to mark its disapproval of RusChem's approach. However, this did not add up to a strong public policy reason for the English court to refuse UniCredit's application, made in its own commercial interests.
5. Should the application be allowed and, if so, should the order granting the Injunction be revoked or varied?
After conducting a balancing exercise, the court decided to grant UniCredit's application for four reasons:
- UniCredit is a commercial party acting in its own interests and is entitled to tell the court it no longer needs or wants the Injunction;
- The fact that UniCredit acted under commercial pressure was not a weighty enough factor to refuse the order sought;
- The public policy reasons for rejecting the application did not weigh heavily in the balance; and
- It would be unjust and unfair to force UniCredit to risk massive penalties in Russia that may be avoidable if the Injunction was discharged or varied.
The court opted to vary the order granting the Injunction, rather than discharge the Injunction. This allowed the parts of the order reflecting the decisions of the English courts to remain in place, given that the courts did have jurisdiction to make their determinations. Therefore, only the injunctive parts of the order were discharged.
Conclusion
This case provides an interesting analysis of the extent of an English court's power when faced with a request to revoke or vary its own final orders. The extent of a court's power could not be decided in isolation: the Court of Appeal had to weigh up the commercial practicalities of the applicant's position and the significance of a foreign court's actions. The decision to vary the Injunction illustrates a degree of flexibility possessed by English courts when informed of a significant change of circumstance.