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Anti-anti suit injunctions against sanctioned Russian entities

Author: Nicola Sharp  4 June 2024
3 min read

Russian entities have been subject to sanctions since Russia’s invasion of Ukraine in 2022. Since then, there has been a rise in anti-suit injunctions. The main reason is that there is a Russian law which allows Russian courts to take exclusive jurisdiction over cases which involve sanctions. Russian companies, subject to sanctions, therefore begin proceedings in the Russian Courts as a matter of course.

There are also practical reasons why Russian companies prefer to begin proceedings in Russian Courts. They argue that their access to justice is hampered in foreign courts. The sanctions mean that it is often more difficult for Russian entities to get local legal representation, and to transfer the funds they need to pay their legal representatives.

The English Courts have intervened in these scenarios, notably in a trilogy of ASI cases involving RusChemAlliance. Those were cases in which the UK courts granted anti-suit injunctions (ASIs), and intervened to ensure that arbitration agreements were enforced.

The recent decision in Ziyavudin Magomedov & Ors v PJSC Transneft & Ors [2024] EWHC 1176 (Comm) is a slightly different suite of facts. It involves a sanctioned Russian entity, but it is a non-contractual claim for conspiracy to injure, and the request for a continuation of an anti-anti-suit injunction (AASI).

Brief facts

On 21 February 2024 Foxton J granted an anti-anti-suit injunction against Transneft. At the hearing on 21 May 2024 the relevant claimants sought to continue that injunction until the hearing of Transneft’s challenge to the jurisdiction of the High Court of England and Wales. 

The claimants also sought an anti-enforcement injunction (AEI) to prevent Transneft from enforcing anti-suit orders (made by a court in Russia) against them. 

Background on AASIs

There are relatively few English cases involving AASIs. In general terms, they apply the same principles as the cases involving ASIs. But, the UK court recognised that AASIs present greater interference with the work of foreign courts. 

In this case, the fact that the Moscow Court had granted ASIs in final form meant that no AASI granted by the UK court could serve any real purpose. That is why the claimants sought additional relief in the form of an AEI. 

The ‘natural forum’ in the context of AASIs

The central question for the court was whether, and if so, how, the normal ASI requirement that England is the natural forum should be applied in the AASI context. 

The claimants said that England was the natural forum. Transneft argued that Russia was the natural forum.

The question is a complex one, and subject to its own proceedings in Transneft’s jurisdictional challenge. The court decided that it did not have sufficient evidence at this stage to decide the natural forum. It would be decided in due course in the challenge to jurisdiction.

Are the foreign proceedings vexatious, oppressive or unconscionable?

Given that this was a non-contractual case, the claimants needed to show that the pursuit of foreign proceedings was vexatious, oppressive or unconscionable.

The Court considered that Transneft’s behaviour had been unconscionable. It had arranged matters so that the claimants had to choose between: (i) not resisting the Transneft jurisdictional challenge and so losing the chance to claim in the English Court, without any further contest; or (ii) resisting the jurisdictional challenge and facing the risk of having to pay (in total) US$7.5 billion as ordered by the Moscow Court.

Having held that Transneft’s behaviour was unconscionable, there were grounds to grant the AASI in principle.

The impact of the temporary nature of the AASI

The claimants sought to continue the AASI only until Transneft’s jurisdictional challenge could be heard in the UK Courts. It was a temporary continuation.

The limited duration of the AASI could be seen as a way to minimise the offence to the Moscow Court. 

In coming to this conclusion, Mr Justice Bright’s attention was drawn to Hemain injunctions, from the Family Division case Hemain v Hemain [1988] 2 FLR 388.

Hemain injunctions are interim ASIs of limited duration, which are intended not to bring the foreign proceedings to a permanent end, but only to make them pause while the English court deals with a jurisdictional challenge issued by the defendant in this country. 

Their purpose is to ensure that the parallel proceedings in the foreign jurisdiction, which have been commenced by that party as the claimant, do not ‘steal a march’ over the English proceedings. The objective is to make sure that the challenge to English jurisdiction is not used as a way of delaying matters in England to gain an unfair advantage. 

The decision

With those factors in mind, Mr Justice Bright continued the AASI granted by Foxton J, on an interim basis until the determination of Transneft’s jurisdictional challenge.

Mr Justice Bright also granted the AEI sought by the claimants, again on an interim basis until the determination of Transneft’s jurisdictional challenge.

Comment

There is a balance with ASIs and AASIs between preventing an injustice and impacting on comity. In this case the relief was ‘calibrated’ to minimise collateral damage to comity. The calibration lay in the temporary nature of the AASI and the fact that a hearing about jurisdiction and the ‘natural forum’ for the dispute was pending.

As sanctions continue over Russian entities, it is likely that we will see more of these cases in the UK Courts, which seek to restrain proceedings in Russia, which has claimed exclusive jurisdiction over cases involving sanctions. This case shows that the UK Courts are willing to intervene, but will tread carefully, and respectfully so as to uphold the principles of comity as far as possible.

Nicola Sharp C 09983

Nicola Sharp

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Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.

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