2019

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Arbitration Clauses and Third Parties: Limits of Protection (Renaissance Securities v ILLC Chlodwig Enterprises)

Arbitration analysis: In this decision, the Court of Appeal dismissed an appeal seeking an anti-suit injunction (‘ASI’) restraining Russian proceedings brought against affiliates of the appellant. Although the relevant agreements on which part of the dispute was founded contained London-seated LCIA arbitration clauses governed by English law, the court held that these agreements to arbitrate did not extend to third-party affiliates. The court also rejected the argument that the arbitration clauses implied a negative obligation not to litigate related claims elsewhere. Further, while recognising the Russian proceedings may be vexatious and/or designed to circumvent arbitration clauses and applicable sanctions, the court declined to grant an ASI on discretionary grounds: it found that the appellant failed to provide full and frank disclosure of its corporate relationship with the affiliates following their sale. This lack of transparency undermined the request for relief. This decision underscores that English courts will not extend the scope of an agreement to arbitrate to affiliates without clear contractual language and will carefully scrutinise parties seeking equitable relief where material facts are withheld. The decision also reaffirms the English court’s willingness to intervene in foreign proceedings where necessary to protect arbitration, but only where that intervention can be properly justified. Written by Oliver Browne, partner at Paul Hastings (Europe) LLP.

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