![Corporate-people-crowd-walk-walker-office-business-center](https://www.nortonrosefulbright.com/-/media/images/nrf/hero/corporate-people-crowd-walk-walker-office-business-center.jpg?w=265&revision=3d04236d-6ad6-4a07-850d-1f6b56a234e9&revision=5249001779897387904&hash=02AF8A7E35F1B67A8E90E42D1EA1AE7D)
Publication
Keeping your dawn raid guidance current
Unannounced inspections or ‘dawn raids’ are used by antitrust authorities to obtain evidence when there are suspicions that individuals or businesses have infringed the antitrust rules.
Global | Publication | December 2018
The English High Court’s judgment in Nori Holding and others v Public Joint-Stock Company Bank Otkritie Financial Corporation [2018] EWHC 1343 (Comm) (Nori Holdings) provides an important reminder of the court’s approach to antisuit injunctions. The case reaffirmed the ECJ’s decision in Allianz SpA (formerly Riunione Adriatica di Sicurta SpA) v West Tankers Inc (Case C-185/07) [2009] AC 1138 (West Tankers) that the court of an EU member state lacks the power to grant an anti-suit injunction restraining court proceedings commenced in another EU member state. This is the first reported decision on the issue since the Recast Brussels Regulation took effect.
The underlying dispute in this case concerned a number of pledge and loan agreements, and related termination agreements, entered into between the claimants and the defendant bank. Most of these contained London-seated LCIA arbitration agreements. Upon termination of the loan and pledge agreements, a restructuring resulted in the bank purchasing US$600 million of long-term unsecured bonds issued by a company within the claimant’s group.
Several weeks after the restructuring, the Central Bank of Russia appointed a temporary administrator over the defendant. The administrator and the defendant commenced proceedings in the Russian and Cypriot courts respectively, seeking to invalidate the restructuring and reinstate the loan and pledge agreements.
The claimants sought anti-suit injunctions from the English High Court for the purposes of restraining the defendant from continuing the Russian and Cypriot court proceedings. The action was brought on the basis that such proceedings had been commenced in breach of the relevant arbitration agreements which provided that any disputes related to the termination agreements should be referred to a London-seated arbitration subject to the LCIA rules.
The High Court granted an anti-suit injunction ordering the defendant to discontinue proceedings in the Russian courts. Males J refused the claimants’ application to do the same, however, in respect of the Cypriot court proceedings.
The ruling in West Tankers fell under the old Brussels regime. The ECJ held that granting an intra-EU anti-suit injunction would undermine the effectiveness of the 2001 Brussels Regulation by restricting the court of an EU member state from determining for itself whether or not it has jurisdiction. This was in spite of the exclusion of arbitration proceedings within the 2001 Brussels Regulation.
The Recast Brussels Regulation in some respects reinforces the arbitration exception. For example, the ruling in West Tankers restricted the courts of EU states from deciding on the validity of an arbitration agreement prior to the conclusion of concurrent proceedings in another EU member state court. The new legislation overturned this part of the ruling. The present case, however, confirms that it has not changed the position in respect of intra-EU antisuit injunctions. Males J commented that if the Recast Brussels Regulation intended to permit intra-EU anti-suit injunctions then this would be clear from the drafting of the legislation.
This leaves the question of what steps can a party take to restrain proceedings in an EU member state where it considers the relevant EU court has no jurisdiction? As Males J made clear in his judgment, the claimants had the option to seek an anti-suit injunction from the arbitral tribunal which could then be enforced by the relevant EU court under the New York Convention.
Arbitral tribunals are frequently able and willing to issue anti-suit injunctions. It is advisable for the party making the application to obtain an award, rather than any other instrument such as an order, for an anti-suit injunction, so as to avoid any jurisdictional issues. Subject to limited exceptions, parties to the New York Convention are bound to enforce arbitral awards handed down in any other signatory state and treat them as though the award were a judgment made by the local courts of its own jurisdiction. New York Convention signatory courts are allowed the right to deny enforcement of foreign awards on public policy grounds, however this has a narrow scope and would be unlikely to extend to the enforcement of an anti-suit injunction.
It is yet to be seen whether, following Brexit, English courts will be able to grant anti-suit injunctions against the courts of EU member states. The position may depend on whether or not the UK adopts a law mirroring the effect of the Recast Brussels Regulation. At least until then, the decision in West Tankers continues to hold, leaving arbitral tribunals alone the power to grant intra-EU anti-suit injunctions.
Publication
Unannounced inspections or ‘dawn raids’ are used by antitrust authorities to obtain evidence when there are suspicions that individuals or businesses have infringed the antitrust rules.
Subscribe and stay up to date with the latest legal news, information and events . . .
© Norton Rose Fulbright LLP 2023