December 2013: Russian Litigation Update

by Quinn Emanuel Urquhart & Sullivan, LLP

Russian Courts on Anti-Suit Injunctions. More than a year ago Anton Ivanov, the Chairman of the Supreme Arbitrazh Court, openly criticized foreign anti-suit injunctions affecting Russian proceedings as an example of “unfair competition” between judicial systems. In this context, it is interesting to consider the approach adopted in Russian case law to foreign anti-suit injunctions and to obtaining similar injunctions in Russian courts.

Foreign Anti-Suit Injunctions in the Russian Case Law. In the beginning, the attitude of Russian courts to anti-suit injunctions from foreign courts was rather hostile. In Roust Holdings Ltd. v. Cetelem SA (2005), the Russian court declared that the English anti-suit injunction obtained by Cetelem SA in support of an ICC injunction in London violated the constitutional right for judicial protection and could not be enforced in Russia. The court requested that the parties pursue the case in Russia and noted that any actions to the contrary would be regarded as contempt of court. Shortly afterwards, the parties settled the dispute.

Subsequently, Russian courts adopted a more measured approach to foreign anti-suit injunctions. In JFC Group Ltd. v. Star Reefers Pool Inc. (2010), JFC Group Ltd. filed a motion to stay Russian proceedings on the basis of the anti-suit injunction issued by the High Court of Justice (England). The court granted the motion and ordered JFC Group Ltd. to notify the court of any changes relating to anti-suit injunction. Interestingly, a year later JFC Group Ltd. notified the Russian court that the anti-suit injunction was still in place, but this time the Russian court resumed proceedings and continued with merits of the case, though JFC Group Ltd. could not take part in the proceedings because of the injunction.

A relatively measured approach to foreign anti-suit injunctions was taken in Ingosstrakh Investments v. BNP Paribas SA and OJSC Russian Machines. BNP Paribas brought an LCIA case against Oleg Deripaska’s Russian Machines seeking enforcement of a guarantee issued by Russian Machines to BNP Paribas. After that, a minority shareholder of Russian Machines, represented by its trustee Ingosstrakh Investments, initiated Russian proceedings against BNP Paribas and Russian Machines, seeking invalidation of the guarantee. BNP Paribas obtained an anti-suit injunction prohibiting Russian Machines and Ingosstrakh Investments from pursuing the claim in Russia. By the time the injunction was granted, the Russian court had already delivered a judgment and declared the validity of the guarantee, and Ingosstrakh Investments had already appealed that judgment. In these circumstances, Ingosstrakh Investments and Russian Machines moved for a hearing in absentia in the Russian appellate court, which affirmed the validity of the guarantee in their absence. The defeated party lodged a cassation appeal. In the cassation hearing BNP Paribas tried to challenge the jurisdiction of the court based on an active interim order against the parties. The Russian cassation court rejected this argument, proceeded to consider the case with BNP Paribas being the only party in attendance, and also affirmed the validity of the guarantee.

On July 9, 2013, the Presidium of the Supreme Arbitrazh Court of the Russian Federation (the “Presidium”) issued Clarifications on the court practice on cases involving foreign parties. The BNP Paribas case served as a basis for clarification. The Presidium stated that “anti-suit injunctions issued by a foreign court cannot prevent a case from being considered by a Russian court that has jurisdiction to hear the case.”

The key conclusions drawn by the Presidium are the following:

• all states are equal and sovereign, and a court of one state cannot impose restrictions on a court of a different state;
• an anti-suit injunction issued by a foreign court does not prevent a Russian court from considering the case and does not have other legal effects in Russia; and
• anti-suit injunction, however, binds the parties, and they should weigh the risks and implications of non-compliance with the anti-suit injunction

At the same time the Supreme Arbitrazh Court has not expressed a view on anti-suit injunctions from Russian courts. We will consider this issue below.

Anti-Suit Injunctions by Russian Courts. Russian law does not specifically provide for anti-suit injunctions. A Russian court, however, may grant injunctive relief provided that:

• the interim relief sought is related to and corresponds to the subject-matter of the dispute; and
• failure to apply the interim relief may impede or render impossible the enforcement of future judgment, or is likely to inflict substantial harm to the applicant.

The issue of the anti-suit injunction had already arisen in Russian proceedings. In August 2012, the Arbitrazh Court of the City of Moscow considered an application for anti-suit injunction in a case between Novolipetsk Metallurgical Plant and Mr. Nikolay Maximov and his JSC Maxi-Group. Dismissing the application, the court ruled that the injunction sought was not related to the subject matter of the dispute and that denying the injunction would not prevent enforcement of a future judgment. Although the court dismissed the application on formal grounds, it did not rule, as a matter of principle, on the power of Russian courts to issue anti-suit injunctions.

In summary, since July 9, 2013, Russian courts have been given guidance on how to deal with foreign anti-suit injunctions. Time will tell how this guidance will be applied in practice. Meanwhile, other parties will attempt to obtain anti-suit injunctions from Russian courts. Whether they will be successful is a question yet to be answered.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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