How English Courts can secure jurisdiction over foreign parties

The English High Court has seen a number of recent cases arising out of, or affected by, the Russian invasion of Ukraine in 2022. 

In particular, there have been a number of procedural jurisdictional battles, particularly those which have been prompted by the passing of Russian Federal Law No. 171-FZ, the so-called “Lugovoy Law” (now Article 248 of the Arbitrazh Procedure Code). This law gives the Russian Arbitrazh courts exclusive jurisdiction over disputes which involve: (a) Russian citizens and legal entities subject to foreign sanctions; or (b) disputes which arise from foreign sanctions imposed on Russian citizens or legal entities.

Article 248 and its implications

In addition, if the dispute involves a contract or treaty which confers jurisdiction on a court or arbitral panel outside of Russia, a sanctioned person can seek to refer the dispute to the Russian court seeking relief to the effect that the agreement is "unenforceable" as a result of sanctions preventing them from "access to justice".

Essentially, Article 248 allows Russian litigants whose position is affected by Western sanctions to seek to have their matter resolved before the Russian courts and to seek anti-suit relief in those courts. 

Unsurprisingly, this legislation has seen a rise in entities who have Russian counterparties under contracts with English court jurisdiction provisions seeking to use the tools of the English courts to hold Russian parties to their contractual agreed bargain, notwithstanding the significant geopolitical shifts in the intervening period. While these developments have arisen out of ‘Russian’ cases, the tolls are, of course, available to all litigants in England. 

Anti-suit injunctions, well used tools of the English court commonly used to restrain breaches of jurisdiction clauses contained in commercial contracts, have often been granted in response to Russian parties making use of Article 248. In simple terms, where a contract contains provisions which confer exclusive jurisdiction on the English courts, the English courts are able to grant injunctive relief restraining the prosecution of foreign court proceedings in breach of contract.

The rise of anti-enforcement injunctions

Last year’s High Court decision in Barclays Bank PLC v PJSC Sovcombank & Anor [2024] EWHC 1338 (Comm) saw Mr Justice Foxton grant a less common remedy, an “anti-enforcement injunction,” against the two Respondents.  In Foxton J’s own words, this relief “at one stage… a relatively rate beast in English civil procedure, although it is fair to say reports of sightings have significantly increased against the background of ongoing events arising from the Russian/Ukraine conflict.” 

Indeed, in its hearing of SAS Institute Inc v World Programming Limited [2020] EWCA Civ 599, the Court of Appeal was taken to only two cases where anti-enforcement injunctions had been granted in the past. SAS pre-dated the Russian invasion of Ukraine, but the Courts have granted more than three anti-enforcement injunctions since February 2022 – seemingly (at least) as many in two years as in the previous 100.

While its more familiar cousin the anti-suit injunction restrains a party from bringing proceedings in another jurisdiction or forum, the anti-enforcement injunction is focussed on what happens should such proceedings be concluded and restrains their enforcement within England and Wales. Broadly such an order is appropriate in circumstances where there is a concern that an anti-suit injunction may not be complied with by the relevant party or may be ignored by the foreign Court. 

While there is no jurisdictional requirement of ‘exceptionality’ over and above the reasons for granting an anti-suit injunction (as noted by Foxton J in Sovcombank and by the Court of Appeal in SAS), it is clear that practically it will remain rare for a court to be persuaded to grant an anti-enforcement injunction, given the need for the court to be persuaded of those additional matters beyond those required the grant of an anti-suit injunction. The courts, both in Sovcombank and SAS, have confirmed that it will be more challenging to persuade the court to grant an anti-enforcement injunction after the foreign judgment has been handed down rather than before, for reasons of comity. 

Article 248 also raises the possibility of competing anti-suit relief being sought before the Russian Arbitrazh courts, engaging a further weapon in the armoury of the English High Court – the anti-anti-suit injunction. Mr Justice Bright noted, in Magomedov and Others v PJSC Transneft and Others [2024] EWHC 1176 (Comm) that there “are relatively few English cases involving [anti-anti-suit injunctions]. They all apply the same general principles as the rather more numerous cases involving [anti-suit injunctions]. However, it seems right to be more cautious about granting [anti-anti-suit injunctions] than [anti-suit injunctions], because they represent a greater interference with the work of foreign courts.”

Navigating jurisdictional tools in English courts

The English courts continue to make use of these tools on a case-by-case basis, applying long established legal principles to the challenging factual situations that come before them in light of the invasion of Ukraine and the significant impact that has had on trade with Russia, much of which was conducted through contractual arrangements using English law and/or with English jurisdiction. 

There are several key points that can be drawn out from these recent cases, with these looking ever-more pertinent given that the current climate in Ukraine is set to continue. 

Firstly, any party contemplating new contractual arrangements, or party to existing contractual arrangements, with Russian counterparties (particularly those which are subject to sanctions or could foreseeably be so in the future) should be mindful of the risks associated with Article 248 when it comes to enforcing the terms of their contractual bargain.

Secondly, the English courts do have an array of judicial tools open to them to ensure that the parties’ bargain as to the jurisdiction of their disputes is respected, and have indicated that it is at least feasible that events arising out of the invasion of Ukraine do reach the level of exceptionality needed for those tools to be appropriate; and

Thirdly, while the recent cases have been driven by events in Ukraine, other parties to contracts with English Court jurisdiction clauses should be mindful that the English courts do have tools to assist them in ensuring that disputes are resolved in the proper forum, and should take English legal advice on the point in circumstances where their counterparty seeks to press on with legal proceedings in another jurisdiction.