Final but Flexible: Injunctions in Commercial Disputes

The commercial saga between UniCredit Bank GmbH (‘UniCredit’), a German bank, and RusChemAlliance LLC (‘RCA’), a Russian corporation, marked by a series of overlapping suits that cast the courts as tools in ongoing legal manoeuvring, appears to have concluded, with one party conceding and a court injunction that had previously been in their favour ultimately amended.

While a previous post on the Oxford Business Law Blog explored how a dispute that was meant to be resolved through arbitration in Paris instead escalated into litigation between Russia and the United Kingdom, this post focuses on what unfolded afterward, particularly the question of how final anti suit injunctions (‘ASI’) can be.

The Dispute and Initial Injunctions 

The dispute concerned bonds, a type of debt instrument issued by an entity to raise capital, with UniCredit issuing the bonds to RCA in this case and subsequently failing to make the required payments when demanded by RCA. RCA then initiated proceedings in Russia, despite the bonds being governed by English law and stipulating arbitration in Paris (for a detailed understanding of arbitration agreements and governing law, please refer to the previous post).

In response, UniCredit initiated proceedings in England, seeking a without-notice interim ASI to restrain the Russian proceedings. RCA challenged the jurisdiction of the English court. However, as confirmed by the Court of Appeal and later upheld by the UK Supreme Court, the English court had jurisdiction over UniCredit’s claims and issued a final ASI. In retaliation, RCA obtained anti ASIs from the Arbitrazh Court of Saint Petersburg and Leningrad (‘St Petersburg Court’), ordering UniCredit to take all necessary steps to neutralize the effect of the English ASIs, under threat of very significant financial penalties (for a detailed understanding of ASIs, kindly refer to the previous post). 

In light of these developments, UniCredit applied to the Court of Appeal to have the English ASIs set aside, citing ‘changed circumstances.’

Can Final ASIs Be Varied or Revoked? The English Court’s Powers

Under English law, courts adhere to the Civil Procedure Rules (CPR). CPR Part 3.1(7) specifies that the court’s authority to make an order includes the power to vary or revoke that order. In tandem, CPR Part 52.30 establishes that a final determination of an appeal will not be reopened unless ‘(a) it is necessary to do so in order to avoid real injustice; (b) the circumstances are exceptional and make it appropriate to reopen the appeal; and (c) there is no alternative effective remedy.’ 

Further, in Vodafone Group plc v IPCom GmbH & Co KG ([2023] EWCA Civ 113, [2023] RPC 10), it was noted that there is no authority that absolutely precludes the invocation of CPR Part 3.1(7) with respect to final orders. However, as observed in Terry v BCS Corporate Acceptances ([2018] EWCA Civ 2422), reliance on CPR 3.1(7) to vary or revoke a final order is ‘likely to be very rare, given the importance of finality.’ In IC Ltd v Federal Airports Authority of Nigeria ([2022] UKSC 16, [2022] 1 WLR 3223), it was clarified that the decision should hinge on whether the factors favouring reopening the order, in combination, are sufficient to outweigh the principle of finality and any other considerations supporting the original order.

Accordingly, the Court of Appeal ruled that courts should have the power to discharge final ASIs, particularly in cases involving ‘jurisdictional battles’ where competing orders are issued in different jurisdictions. To prevent this flexibility would risk creating significant commercial confusion and uncertainty. In private commercial disputes, it is only reasonable that parties who have obtained a final injunction should be able to return to court and seek its discharge if, following the grant of the injunction, circumstances change or if the parties reach a new commercial agreement that alters the rights involved.

Changed Circumstances: What Prompted UniCredit’s Application

The St. Petersburg Court’s ruling required UniCredit to ‘take all measures within its control’ to cancel the effect of the ASI. While it was reasonable to interpret this as UniCredit filing the application, which was within its control, there remained a risk of the St. Petersburg Court imposing a financial penalty if the English court did not accede. This uncertainty arose from the fact that it was unpredictable how the Russian court would assess whether UniCredit had taken all necessary steps.

The question of whether UniCredit was coerced into seeking to revoke or vary the ASIs was not a significant factor in the court’s reasoning. An ASI, by its nature, is a coercive remedy, designed to compel the defendant to litigate in a specific jurisdiction. While the Russian ruling did apply commercial pressure on UniCredit to seek a discharge or variation of the English ASI order, this did not carry much weight in the court’s decision. Moreover, UniCredit, as a major bank, was presumed to be acting in its own commercial interest, and the court was not in a position to second-guess its commercial decisions.

Public Policy Considerations and International Comity 

There are English public policy considerations against revoking or varying ASIs, but these did not outweigh the application for a discharge. The Russian courts were not exerting pressure on the English courts, as the judgment was directed at UniCredit, not the English courts themselves. Moreover, the penalty imposed by the Russian court did not breach Russia’s international obligations, given that UniCredit appeared to have waived its right to arbitration. Finally, RCA’s refusal to comply with the ASIs and its contempt of court in one jurisdiction was a common occurrence in jurisdictional disputes. Notably, RCA was in a factually better position, as it had no assets in England, while UniCredit held assets in Russia.

The Balancing Exercise: Between Principle and Practicality

The Court of Appeal’s decision to vary rather than discharge the order represents a nuanced and pragmatic approach, balancing jurisdictional authority with the commercial realities of international disputes. While the Court agreed to discharge the injunctive parts of the ASI order, it refused to discharge the provisions reaffirming the jurisdictional determinations of both the Court of Appeal and the UK Supreme Court. These rulings, grounded in English law, establish a clear precedent that English courts maintain the authority to grant ASIs within their jurisdiction.

This approach highlights a key commercial principle: UniCredit, as a commercial entity, is entitled to seek the variation or discharge of an injunction it originally requested, particularly when facing potentially catastrophic financial penalties in a foreign jurisdiction. The Court’s recognition of UniCredit’s autonomy to protect its commercial interests reflects a broader understanding of the dynamics that influence decision-making in the private sector.

While jurisdictional finality is important, the effectiveness of ASIs is brought into question when a party is exposed to substantial penalties in a foreign jurisdiction due to the non-compliance of a counterparty. The balance of power in such cases can be precarious, especially when a foreign court’s orders conflict with those of English courts. Additionally, the application of ASIs was interpreted as a waiver of arbitration obligations. In the end, UniCredit appears to have been placed in a vulnerable position, as the mere threat of financial penalties stripped it of any real control over dispute resolution, whether through arbitration or court proceedings in its chosen jurisdiction.

Esha Rathi is an Associate at Cyril Amarchand Mangaldas.

Disclosure: Cyril Amarchand Mangaldas is not directly or indirectly involved in this litigation.