Author: Syedur Rahman
6 October 2020
2 min read
Syedur Rahman of Rahman Ravelli considers how a court dealt with the issue of foreign ‘avoidance’ claims and the interplay between civil litigation and arbitration on the international stage.
The case of RiverRock Securities Limited v International Bank of St. Petersburg (Joint Stock Company)  EWHC 2483 (Comm), which was heard in the London Commercial Court last month, led to a judgement that explores the extent of the court’s jurisdiction in dealing with foreign ‘avoidance’ claims and the international interaction that exists between civil litigation and arbitration.
The judgement was the result of RiverRock Securities (the claimant) applying for an interim anti-suit injunction to support London Court of International Arbitration (LCIA) proceedings against action commenced by the International Bank of St Petersburg (the defendant) in the St. Petersburg arbitration court.
The defendant, IBSP, was a large retail bank incorporated in Russia. The claimant, RSL, is a corporate investment company incorporated in England and Wales and regulated by the Financial Conduct Authority. The claimant and the defendant had entered into contracts that contained an express choice of English law as the governing law and LCIA arbitration with an English seat for any dispute. The defendant was declared insolvent in September 2019 and t The Russian State Corporation Deposit Insurance Agency (the DIA) was appointed as its official receiver in bankruptcy.
Following investigations by the official receiver into the financial affairs of IBSP, IBSP commenced proceedings before the arbitrazh court in St. Petersburg against RSL to invalidate the contracts, further to accusations that RSL had siphoned off assets from the failed bank. RSL asked for the St. Petersburg arbitration to be withdrawn - claiming that any dispute had to be brought in LCIA arbitration and that the St. Petersburg court did not have jurisdiction - and later lodged the anti-suit injunction application.
The main issues to be decided at the hearing were:
IBSP argued against the claimant’s anti-suit injunction, claiming that the St. Petersburg action should be allowed to continue to run due to the following:
On considering the above points, Foxton J was satisfied in respect of (i) and (ii), that there was a high probability of RSL satisfying that there was a breach of the LCIA arbitration agreements in pursuing the action in St. Petersburg. Further, in respect of (iii), Foxton J held that there were no “strong reasons” to justify the refusal of the claimant’s anti-suit injunction to enforce the parties’ arbitral agreement.
Accordingly, Foxton J granted RSL’s application for an interim injunction, ruling the companies had contractually agreed to arbitrate disputes in the UK. The defendant’s Part 11 application was also dismissed. The judgment, therefore, prevented the liquidators for IBSP from pursuing an insolvency claim in Russia, at least for the moment.
Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, civil recovery, cryptocurrency and high-stakes commercial disputes.