The Supreme Court recently ruled that the English Courts have jurisdiction to restrain foreign proceedings which are brought in violation of a clause in a contract which provided for arbitration in England under English law – even where neither of the parties to the contract had started, or intended starting, arbitration proceedings.

In this case, the defendant was the owner and the claimant was the operator of hydroelectric facilities in Kazakhstan. They were both parties to a 25-year concession agreement which had been entered into by the previous owners of the facility. The agreement was governed by Kazakh law but contained an arbitration clause providing for arbitration in London under English law.

In 2004 the Republic of Kazakhstan, as the previous owner and grantor of the concession, obtained a ruling from the Kazakh Supreme Court that the arbitration clause was invalid. The defendant, as the current owner, subsequently brought proceedings against the claimant in a court in Kazakhstan and that court accepted jurisdiction. The claimant then issued proceedings in England seeking the declaration and anti-suit injunction.

The Court ruled that an agreement to arbitrate disputes had positive and negative aspects. The agreement was that any arbitration would be undertaken in England and under English law. The unsaid, but nevertheless valid implication, of this is that neither party could seek arbitration in any other Country or Court.

David Gillibrand comments ““Our clients are frequently involved in international transactions and we have always been able to advise and assist with them. This line of case law assists in doing so and is most welcome.”

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