Uni Credit Bank GmbH v Rus Chem Alliance LLC [2024] UKSC 30

Full Case Name: UniCredit Bank GmbH (Respondent) v RusChemAlliance LLC (Appellant)

Citation: [2024] UKSC 30

Previous Court Citations:

• Court of Appeal: [2024] EWCA Civ 64
• High Court: [2023] EWHC 2365 (Comm)

Court: Supreme Court of the United Kingdom

Bench Composition:

• Lord Reed, President
• Lord Hodge
• Lord Briggs
• Lord Leggatt (delivered the judgment)
• Lord Burrows

Nature of Bench: Five-judge bench (unanimous decision)

Judgment Delivered By: Lord Leggatt, with whom all other justices agreed

Hearing Dates: 17-18 April 2024

Decision Announced: 23 April 2024 (oral announcement)

Full Reasoned Judgment Delivered: 18 September 2024

Parties Involved: 

Appellant: RusChemAlliance LLC (“RusChem”)

• A Russian company incorporated under Russian law
• Engaged in liquefied natural gas and gas processing operations
• Connected to Gazprom (state interest)

Respondent: UniCredit Bank GmbH (“UniCredit”)

• A German banking institution
• Issued performance bonds in favour of RusChem
• Had assets in Russia

Representation:

• For RusChem, by, Alexander Gunning KC and Alexander Brown (instructed by Enyo Law LLP)
• For UniCredit, by, Stephen Houseman KC, Jonathan Harris KC (Hon), and Stuart Cribb (instructed by Latham & Watkins (London) LLP)

Facts of the Case

In July and September 2021, RusChemAlliance LLC entered into two construction contracts with German companies (collectively referred to as “the Contractor,” comprising Linde GmbH and Renaissance Heavy Industries LLC) for the construction of liquefied natural gas and gas processing plants in Russia. The total contract value was approximately EUR 10 billion, which included advance payments of around EUR 2 billion that RusChem made to the Contractor.

To guarantee the Contractor’s performance obligations and secure the repayment of advance payments, UniCredit Bank GmbH issued seven on-demand bonds in favour of RusChem with a total value of approximately EUR 420 million. Four bonds guaranteed the Contractor’s performance, while three secured the repayment of advance payments.

Each bond contained two critical clauses. Clause 11 stated: “This Bond and all non-contractual or other obligations arising out of or in connection with it shall be construed under and governed by English law.” Clause 12 provided that disputes were to be resolved through International Chamber of Commerce (ICC) arbitration seated in Paris, with proceedings conducted in English.

Following Russia’s invasion of Ukraine in February 2022, the European Union imposed comprehensive sanctions on Russia pursuant to Council Regulation (EU) No 833/2014. In response to these sanctions, the German contractors notified RusChem that they could no longer perform their obligations. Consequently, RusChem terminated the contracts and demanded the return of the EUR 2 billion advance payments from the Contractor.

The Contractor refused to repay the advance payments, citing EU sanctions as prohibiting such transfers. RusChem then made demands on UniCredit for payment under the bonds. UniCredit similarly refused payment, relying on the EU sanctions regime, specifically Article 11 of Council Regulation (EU) No 833/2014, which it argued prevented it from making payments under the bonds.

On 5 August 2023, RusChem commenced legal proceedings in the Arbitrazh Court of St Petersburg and the Leningrad Region against UniCredit, claiming EUR 448 million under the bonds. RusChem relied on Article 248.1 of the Russian Arbitrazh Procedural Code, which grants Russian Arbitrazh courts exclusive jurisdiction over disputes between Russian and foreign parties arising from foreign sanctions imposed by “unfriendly states.”

UniCredit applied to the Russian Arbitrazh Court to dismiss RusChem’s claim on the ground that the parties had agreed to arbitrate disputes in Paris. On 1 November 2023, Judge SS Saltykova ruled that, by virtue of Article 248.1(2)(1) of the Arbitrazh Procedural Code, the dispute fell within the exclusive competence of the Russian Arbitrazh Courts, rendering the arbitration agreements unenforceable. However, the Russian court stayed the proceedings pending the outcome of the English court proceedings.

On 22 August 2023, UniCredit initiated proceedings in the English Commercial Court seeking injunctive and declaratory relief against RusChem for commencing and pursuing the Russian proceedings in breach of the arbitration agreements in the bonds. UniCredit obtained an interim anti-suit injunction (ASI) on a without-notice basis on 24 August 2023.

Issues Raised

The Supreme Court identified that the appeal turned on a single jurisdictional issue with two components:

1. Governing Law Issue: Are the arbitration agreements in the bonds governed by English law (the law of the main contract) or French law (the law of the arbitral seat)?
2. Proper Place Issue: Is England and Wales the proper place in which to bring the claim for an anti-suit injunction, or should the claim have been brought in France (the seat of arbitration)?

The resolution of these issues determined whether the English court had jurisdiction to grant the anti-suit injunction restraining RusChem from continuing the Russian proceedings.

Arguments of the Parties

Arguments of the Respondent (UniCredit)

On Governing Law: UniCredit argued the arbitration agreements were governed by English law, applying the principle established in Enka Insaat ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38. Since Clause 11 expressly chose English law for the bonds and “all non-contractual or other obligations arising out of or in connection with it,” this choice should be construed as applying to the arbitration agreement (Clause 12) as part of the overarching contractual bargain. The selection of Paris as the seat was insufficient to displace this general rule.

On Proper Forum: UniCredit contended that England was the proper forum because the claim was for the enforcement of an English-law governed contract (the arbitration agreement). Crucially, the French courts lacked the power to issue a coercive anti-suit injunction, and an order from the arbitral tribunal would be non-coercive. Therefore, only the English court could provide the effective remedy to uphold the parties’ contractual promise to arbitrate.

Arguments of the Appellant (RusChem)

On Governing Law: RusChem argued that the choice of Paris as the seat of arbitration represented an implicit choice of French law to govern the arbitration agreement, relying on the principle of separability. RusChem pointed to expert evidence suggesting that French courts would regard the arbitration agreement as governed by French law. This was an attempt to avoid the “contract gateway” for English jurisdiction, which required the contract to be governed by English law.

On Proper Forum: RusChem asserted that France, as the court of the seat, was the proper place due to its supervisory jurisdiction (lex arbitri). RusChem also argued that principles of international comity suggested deference to the Russian court’s assertion of jurisdiction and that England lacked sufficient connection to justify exercising such a powerful remedy.

Judgment / Final Decision

The Supreme Court unanimously dismissed RusChem’s appeal and upheld the Court of Appeal’s order granting a final anti-suit injunction requiring RusChem to discontinue the Russian court proceedings.

Principal Findings:

1. The arbitration agreements in the bonds were governed by English law.
2. England and Wales was the proper place to bring the claim for an anti-suit injunction.
3. The English court had jurisdiction to grant the ASI despite the Paris seat of arbitration.

Orders Made:

• RusChem was required to cease and discontinue the proceedings in the Russian Arbitrazh Court.
• The Court of Appeal’s mandatory injunction was upheld.
• RusChem’s appeal was dismissed with costs.

Legal Reasoning / Ratio Decidendi

On the Governing Law of the Arbitration Agreement

Lord Leggatt reaffirmed the core principle from Enka v Chubb: where parties have not expressly chosen a law to govern the arbitration agreement, the choice of law governing the main contract (English law, in this case) is generally construed as applying to the arbitration agreement as well.

The Court held that this rule provides a desirable degree of certainty and simplicity. It rejected RusChem’s argument that the choice of Paris as the seat should imply French law, noting that an approach relying on the conflict of laws rules of the seat would be “an elaborate process of reasoning which it is unrealistic to suppose that commercial parties would engage in.” Since the English law governing clause was widely drafted to cover all obligations “arising out of or in connection with” the bond, it naturally encompassed the arbitration agreement.

On England as the Proper Forum

On the issue of the proper place, the Court established that the issue was not a typical forum conveniens analysis, but rather the enforcement of a contractual right (the negative promise not to sue in court).

1. Enforcement of Contractual Bargain: The strong policy of English law is to secure compliance with the parties’ contractual bargain and the strong international policy of giving effect to agreements to arbitrate.
2. Lack of Coercive Remedy Elsewhere: The Court accepted UniCredit’s evidence that the French courts, as the courts of the seat, could not issue a coercive ASI. Furthermore, the Arbitral Tribunal could only issue a non-coercive award, which RusChem had already demonstrated a willingness to ignore.
3. Substantial Justice: Refusing the ASI would have left UniCredit without a remedy capable of achieving “substantial justice.”
4. Comity: The Court held that comity was not a relevant factor. Granting the ASI did not disrespect the Russian court but instead upheld a fundamental international obligation under the New York Convention to enforce arbitration agreements.

The Ratio Decidendi

The binding legal principles confirmed by this judgment are:

• The law of the main contract governs the arbitration agreement in the absence of an express choice to the contrary, even where the seat of arbitration is in a different jurisdiction (reaffirming Enka).
• English courts have jurisdiction to grant coercive anti-suit injunctions to restrain proceedings brought in breach of an English-law governed arbitration agreement, even where the seat of arbitration is foreign, provided that England is the proper forum to enforce the covenant.
• England is deemed the proper forum for an ASI claim where the courts of the arbitral seat are unable to grant an effective, coercive remedy.

Conclusion / Observations

Significance of the Judgment

The UniCredit case is a pivotal decision that solidifies the English court’s role as a vital supporter of international arbitration. By affirming the Enka principle and demonstrating a willingness to use its coercive powers (the ASI) for foreign-seated arbitrations, the Supreme Court has made English law a highly attractive choice for commercial parties seeking maximum security against judicial interference in their agreed dispute resolution process.

The judgment represents a decisive victory for the principle of party autonomy over unilateral assertions of jurisdiction by state courts, particularly in the context of geopolitical tensions and sanctions. The Supreme Court effectively countered Russia’s legislative attempt via Article 248.1 of its Arbitrazh Procedural Code to override binding arbitration clauses, sending a clear message that the English legal system will rigorously protect the integrity of the New York Convention.

Practical Implications and Critical Reflection

The decision, while robust in law, highlights the limits of judicial power in a politically fragmented world. The subsequent procedural history demonstrates this reality:

• The Saga Continues: Shortly after the Supreme Court’s ruling, a Russian court imposed a substantial penalty (a mirror injunction of approximately EUR 250 million) against UniCredit for its compliance with the English ASI. Facing a practical impossibility, complying with the English court risked enormous penalties in Russia, where UniCredit had assets, UniCredit returned to the English Court of Appeal.
• ASI Discharge: On 11 February 2025 (in UniCredit Bank GmbH v RusChemAlliance LLC [2025] EWCA Civ 99), the Court of Appeal discharged the injunctive parts of the ASI. The court acknowledged that the injunction was ultimately unenforceable and failed to provide any practical benefit, as RusChem had no assets or personnel outside Russia against whom the contempt power could be applied. This development underscores that legal perfection (the Supreme Court’s ruling) can sometimes clash with practical reality.
• Future Legislation: The case’s legal rule on governing law may be short-lived. The Arbitration Bill 2024, currently before the UK Parliament, proposes to reverse the Enka rule. If enacted, a new section 6A of the Arbitration Act 1996 would state that, absent an express choice, the law of the seat (French law, in the UniCredit facts) would govern the arbitration agreement. Had this provision been in force, UniCredit would likely have lost jurisdiction in the English courts through the contract gateway.

In conclusion, UniCredit v RusChemAlliance serves as a critical case study in international commercial law. It affirms the sanctity of the arbitration agreement and the proactive role of the English courts in global dispute resolution. However, the subsequent practical challenges reveal the limits of judicial enforcement when a contracting party operates beyond the effective reach of the court’s coercive powers and is backed by hostile state legislation. The case ultimately emphasizes that, especially in high-risk contracts, parties must now expressly choose the governing law of the arbitration agreement to avoid future jurisdictional uncertainty.

Reference(S):

Primary Sources (OSCOLA Style)

• UniCredit Bank GmbH v RusChemAlliance LLC [2024] UKSC 30
• UniCredit Bank GmbH v RusChemAlliance LLC [2024] EWCA Civ 64
• UniCredit Bank GmbH v RusChemAlliance LLC [2023] EWHC 2365 (Comm)
• UniCredit Bank GmbH v RusChemAlliance LLC [2025] EWCA Civ 99
• Enka Insaat ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38; [2020] 1 WLR 4117
• Kabab-Ji SAL v Kout Food Group [2021] UKSC 48
• Spiliada Maritime Corpn v Cansulex Ltd [1987] 1 AC 460
• Deutsche Bank AG v RusChemAlliance LLC [2023] EWCA Civ 1144

Legislation and Treaties

• Arbitrazh Procedural Code of the Russian Federation, Articles 248.1 and 248.2
• Council Regulation (EU) No 833/2014 of 31 July 2014
• Council Regulation (EU) 2024/3192 of 16 December 2024 (EU 15th Sanctions Package)
• New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958
• Arbitration Bill 2024 (UK)

Secondary Sources

• Mohamed Sadiq, ‘Case Note: The UK Supreme Court’s Decision in UniCredit Bank GmbH v RusChemAlliance LLC’ (Chartered Institute of Arbitrators, 2024)
• Faidon Varesis, ‘Is UniCredit the Final Frontier in Granting Anti-Suit Injunctions in England?’ (EAPIL Blog, 13 November 2024)
• ‘Giving Arbitration Teeth: The Supreme Court’s Judgment in UniCredit Bank GmbH v RusChemAlliance’ (Kluwer Arbitration Blog, 26 December 2024)
• ‘UniCredit Saga Ends with Banks Losing Jurisdictional Battle’ (EAPIL Blog, 11 March 2025)