Anti-suit injunctions: The limits of anti-suit relief against third parties in contract disputes

Key Takeaways

1. Arbitration agreements and third parties: English law arbitration agreements generally apply only to the parties who signed the contract containing the clause. If disputes involving affiliated or third parties are intended to be included, then express wording is usually required, although the Court may imply such an intention from analysis of the wider contract and how third parties are dealt with elsewhere in it.
2. Limits on anti-suit relief: The effect of this is to limit the circumstances in which the English Court will grant anti-suit injunctions (“ASIs”) to restrain foreign proceedings involving third parties to the contract in dispute. ASIs in such cases will only be available if such claims expressly or impliedly fall within the scope of the arbitration agreement, or if they are vexatious or oppressive.
3. Drafting for dispute containment: To avoid the risk of fragmentation of disputes across multiple jurisdictions, parties to contracts should consider at the outset whether disputes involving affiliates or third parties are foreseeable, and, if so, include express wording in the relevant agreement to deal with them.

Facts of the Case

The claimant, a Cypriot financial services provider (“C”), entered into a series of investment service agreements (“ISA”) with the Russian defendant companies (the “Ds”). The ISAs were governed by English law and contained arbitration agreements in favour of the London Court of International Arbitration (“LCIA”) (the “Arbitration Agreements”).

C later froze the Ds’ assets, asserting that sanctions applied against Ds’ alleged ultimate beneficial owners (“UBOs”), such that the Ds were also subject to UK asset freezes and US blocking restrictions. Whilst some of the defendant companies were directly captured by US blocking restrictions, the question of whether all were subject to UK and US sanctions turned on whether the UBO is Mr Andrey Guryev (who is a UK designated person and subject to US blocking restrictions), or whether the UBO is in fact his daughter. This issue was not determined in these applications, but the Court found that C had established a realistically arguable case which was sufficient for the purpose of the applications.

The Ds sued C and its affiliates (the “Affiliates”) in the Russian Courts on the basis of Russian delictual law, alleging wrongful conduct in relation to the frozen assets. In response, C obtained ASIs from the English Court, restraining the Ds from pursuing their Russian claims against C and requiring them to be resolved by LCIA arbitration.

Subsequently, the Ds’ claims in the Russian proceedings evolved to include standalone claims against the Affiliates (the “Standalone Claims”). C applied to extend the ASIs to cover these claims against the Affiliates, arguing that those claims were (i) a collateral attack on the Arbitration Agreements, (ii) vexatious or oppressive, and (iii) an attempt to evade sanctions through Russian court proceedings.

The Ds resisted on the basis that the Standalone Claims were independent and based on Russian law, and not subject to the Arbitration Agreements as the Affiliates were not parties to the ISAs, such that the English Court lacked jurisdiction to restrain those proceedings.

The Decision

HHJ Pelling KC analysed C’s application under two principal frameworks: (i) contractual grounds tied to the Arbitration Agreements; and (ii) whether the claims against the Affiliates were abusive or oppressive conduct.

As regards contractual grounds, the Judge concluded that the Arbitration Agreements did not cover the claims against the Affiliates:

• Properly construed, the Arbitration Agreements applied only to disputes between C and the Ds as contracting parties. There was no express contractual intention to cover third parties;
• Such an intention could not be implied into the Arbitration Agreements through analysis of the rest of the ISAs. The ISAs expressly excluded third party rights under the Contracts (Rights of Third Parties) Act 1999 and other parts of the ISAs (e.g. set off and indemnity clauses) demonstrated that when the parties intended to involve third parties they did so expressly; and
• Expanding the Arbitration Agreements to cover third parties would contravene the principle of privity of contract and require clear language, which was absent here.

The Judge also rejected C’s argument that the Standalone Claims were vexatious or oppressive. He found that those claims were distinct from the Ds’ claims against C and separate from claims under the ISAs, and there was no evidence of collusion, bad faith, a deliberate attempt to undermine the Arbitration Agreements, or to evade sanctions. The Standalone Claims were legitimate under Russian law and properly brought in the Russian Courts.

The Judge emphasised that intervening in the Russian proceedings by extending the ASIs would unjustifiably infringe upon the jurisdiction of the Russian Courts. This would undermine the principle of comity, which requires mutual respect for the authority of foreign courts. Accordingly, the Judge dismissed C’s application, finding that the English Court lacked jurisdiction to extend the ASIs to cover the Ds’ claims against the Affiliates in the Russian Courts.

The Court’s decision was appealed to the Court of Appeal but dismissed on 3 April 2025.