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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> JP Morgan Securities PLC & Ors v VTB Bank PJSC (Rev1) [2025] EWHC 1368 (Comm) (05 June 2025) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2025/1368.html Cite as: [2025] EWHC 1368 (Comm) |
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CL-2024-000672 |
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
JP MORGAN SECURITIES PLC & ORS JPMORGAN CHASE BANK, N.A., LONDON BRANCH & ORS |
Claimants / Respondents |
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- and - |
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Defendant / Applicant |
____________________
Justin Fenwick KC and Anthony Jones (instructed by PCB Byrne LLP) for the Defendant
Hearing dates: 13 May 2025
Draft to the parties: 21 May 2025
____________________
Crown Copyright ©
Mr Justice Foxton:
A INTRODUCTION
i) In CL-2024-000671, the anti-suit injunction was granted on the application of JP Morgan Securities Plc and others ("JPMS plc").
ii) In CL-2024-000672, the anti-suit injunction was granted on the application of "JPMorgan Chase Bank, N.A., London Branch" and others.
i) The Claimants ask for the Interim ASIs to be made final.
ii) The other JPM entities, save for JP Morgan Bank International OOO CB ("JPM Russia"), seek final anti-suit relief in their own right.
iii) Those claimants seeking anti-suit relief also seek anti-enforcement injunctions.
iv) VTB
seeks to set aside the service of the claims, a declaration that the court does not have and/or should not exercise jurisdiction and the discharge of the Interim ASIs.
The parties
The Claimants
i) I accept that a branch of a bank in a particular jurisdiction does not, by reason of its branch identity alone, constitute a separate legal entity. It would be different if the branch business was conducted by an incorporated subsidiary.
ii) However, the location of a branch is of obvious importance for regulatory purposes, different branches in different jurisdictions being subject to different national regulatory regimes, which assess their solvency, regulatory capital requirements etc in many respects on a "stand alone" basis.
iii) For that reason, it is very common for proceedings concerning the business of a particular branch of a bank to reflect that fact in the title.
A quick database search revealed nearly 100 examples of a "London branch" of a bank being named as claimant or defendant.
iv) In this case, there can be no doubt that the proceedings were commenced by the legal entity JPMCB, in respect of business conducted through its London branch.
v) In any event, JPMCB has now been named as a claimant without a branch designation.
i) JPM Russia is a company incorporated in Russia, and the fourth claimant in both claims.
ii) JP Morgan Chase & Co is the fifth claimant in both claims and has its address in New York.
iii) J.P. Morgan Capital Holdings Limited is the sixth claimant in both claims and has its address in London.
iv) J.P. Morgan Limited is the seventh claimant in both claims and has its address in London.
v) J.P. Morgan International Finance Limited is the eighth claimant in both claims and has its address in Delaware.
vi) JPMorgan Emerging Europe, Middle East and Africa Securities Plc is the ninth claimant in both claims and has its address in London.
"In such circumstances it may be necessary to consider whether the injunction should be discharged or varied, so the claimant cannot simply be allowed to discontinue without having such issues sorted out. Such issues do not arise where the claimant wishes only to discontinue a part of its claim which falls outside the scope of the injunction."
The evidence
i) for the Claimants, from Drew Holiner, who practises from Monckton Chambers and has been qualified and admitted to practice law as an advocate in Russia since 2002; and
ii) for VTB,
from Professor Mikhail Zinovievich Schwartz, Professor and Head of the Department of Civil Procedure at Saint Petersburg State University.
B THE CONTRACTS
The UMAA
"Arbitration. Any dispute arising out of or in connection with this agreement, including any question regarding its existence validity or termination, shall be referred to and finally resolved by arbitration under the rules of the London Court of International Arbitrators, which rules are deemed to be incorporated into this clause".
"This agreement sets out the terms under which we will provide those services to you and the arrangements which will apply in connection with those services".
The Client Agreement
"Where the Client has entered into Terms of Business with JPMSL, this Agreement, rather than the Terms of Business, shall govern the Client's relationship with JPMSL for the execution and/or clearing of exchange listed or OTC cleared products and options accounts at JPMSL. However, the Terms of Business shall continue to govern all other investment business with JPMSL as defined by FSMA. In the event of any conflict between the clauses of this Agreement and the Terms of Business, the clauses of this Agreement shall prevail. This is a 'Specific Product Contract' for the purposes of the Terms of Business".
"The parties to this Agreement agree that any dispute arising out of or connected with this Agreement including a dispute as to the validity or existence of this Agreement and/or this clause or any non-contractual obligations arising out of or relating to this Agreement shall be resolved in accordance with the Rules of the London Court of International Arbitration … The Arbitration Rules are deemed to be incorporated by reference into this clause"
("the CA Arbitration Agreement").
i) The terms of clause 31 are clear and mandatory.
ii) Clause 33 does not contain a general right to opt to refer a dispute to court, only a right to do so "pursuant to clause 31". As there is no such right, this goes nowhere.
iii) The extensive overlap between clauses 31 and 33, the "misdirection" to clause 31 in clause 33, and the fact that it is clear from the 2011 Terms (see [42] below) that JPM at one time adopted English court jurisdiction as its preferred choice of forum, make it clear that clause 33 is legacy drafting, and reflects an error in the drafting process. This is one of those cases where the court is driven to the conclusion that "something must have gone wrong with the language" (Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101, [14]-[15]). There is other evidence indicative of drafts having been unhappily combined (for example the overlap and inconsistency between clauses 35 and 36), providing reason to suppose a Malapropian drafting influence (Scottish Power UK plc v BP Exploration Operating Company Limited [2005] EWHC 2658 (Comm), [80]).
iv) Clause 33 has not been engaged in any event, because there has been no attempt by either party to refer a dispute to arbitration. These proceedings are concerned with alleged breaches of the negative covenant in clause 31 not to pursue proceedings elsewhere than in the permitted forum.
The ISDA Master Agreement
"A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement but this does not affect any right or remedy that exists or is available apart from that act."
"Any dispute (a 'Dispute') arising out of or in connection with this Agreement and any Transaction (including any question regarding the existence, validity or termination of this Agreement or the consequences of its nullity) shall be referred to and finally resolved by arbitration under the Arbitration Rules of the London Court of International Arbitration …"
("the ISDA Arbitration Agreement").
The Terms
"Any Affiliate may enforce and rely on any provision of these Terms conferring a benefit on it to the same extent as if it were a party to these Terms or any transactions hereunder.
Save as aforesaid, a person who is not a party to these Terms has no rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any provision of these Terms."
"Without limiting the application of these Terms to transactions entered into, or deemed to be entered into, under these Terms, or services received, or deemed to be received, under these Terms, these Terms are without prejudice to and shall not supersede or amend any other contract(s) entered into by you … and JP Morgan (whether prior to or after our despatch of these Terms to you (each a 'Product Contract') including, without limitation, any contract(s) relating to specific, or specific types of, products, services or transactions … In the event of any conflict between any Product Contract(s) and these Terms, the provisions of the Product Contract(s) shall prevail."
i) An agreement to the exclusive jurisdiction of the English courts in respect of "any dispute, difference or other question arising in any way out of or in connection with these Terms, any agreement to which these Terms relate, any agreement or transaction executed in connection with any services provided to you … under these Terms by JP Morgan or any Affiliate … or any other aspect of our relationship … " (clause 30.2).
ii) A agreement that either party was entitled to serve a notice requiring the Dispute to be referred to arbitration prior to the service of any defence, the dispute to be referred in that eventuality to LCIA Arbitration (clause 30.3).
"any dispute, controversy or claim (including, without limitation, (1) any contractual, pre-contractual or non-contractual right, obligations or liabilities arising in any way out of, in relation to or in connection with our relationship, and (2) any issue as to the existence, validity or termination of these Terms or any related or connected agreement) (a 'Dispute') shall be referred to and finally resolved by arbitration under the Arbitration Rules … of the London Court of International Arbitration … which are deemed to be incorporated by reference into this Clause 32.2"
("the 2017 Terms Arbitration Agreement").
i) Mr Riem for VTB
effectively put the Claimants to proof that either version of the Terms had been provided to
VTB,
and stated that
VTB's
legal team had investigated and "found no evidence that these terms were ever sent to
VTB".
No details of the investigation were provided.
ii) On the evidence before the court, there was an update to JPMS plc's terms in 2011 after the FCA gave approval for it to become a credit institution. A letter to VTB's
Head of Compliance dated 26 April 2011 has been produced which explains the important context to the updating of the Terms. Given that context, and the existence of the letter, I am satisfied that the 2011 Terms were sent to
VTB.
In any event, an internal note records that
VTB
featured in the process undertaken to distribute the 2011 Terms, and that there was evidence of DHL delivery of the relevant correspondence dated 21 June 2011 (although the documents referred to have not been located). There is also a statement that delivery of the 2011 Terms at
VTB's
office was acknowledged by "A Buford" on 9 May 2011. It has been suggested that this was a public holiday in Russia. I am willing to assume that is the case, but the overall effect of this material is very strongly to suggest the 2011 Terms were sent to
VTB,
and I so find on the balance of probabilities.
iii) In the face of this evidence, I am unable to attach any significance to the evidence Mr Riem gives from unidentified individuals at VTB
as to what records have been found on the basis of unparticularised searches.
iv) Clause 1.2 of the 2011 Terms provided that they were accepted by giving instructions to the JPM. In this case, VTB
had active banking relations with the JPM entities on whose behalf the 2011 Terms were distributed and thereby accepted them.
v) Significantly, clause 24.1 provided that the relevant JPM entities "have a right to amend these Terms at any time by sending you either a notice of amendment in writing or a revised Terms of Business."
i) An email of 16 November 2017 shows the 2017 Terms being emailed to Mr Dmitry Zaykov and that the email was read. A log entry records that the terms were sent to Mr Zaykov's VTB
Capital email.
ii) The letter to Mr Zaykov made it clear that the terms were intended for a number of VTB
entities, including
VTB
Capital plc and
VTB.
This was obviously an important communication, and one which Mr Zaykov is likely to have ensured came to the attention of the relevant
VTB
personnel even if he was not one of them.
iii) An internal JPM email of 23 November 2017 records that "VTB
Capital" had sent a letter regarding acceptance of the 2017 Terms and that "according to the letter we are likely to be dealing in bonds with them" (once again the letter referred to has not been located). Further internal JPM emails suggest direct contact was made using contact information provided by
VTB,
and an email from
VTB
Capital to JPM of 15 December 2017 refers to JPM having provided its Terms of Business.
iv) JPM's "Xceptor" log records the despatch of the 2017 Terms on 16 November 2018, and a "read receipt" in response. An entry for 2 January refers to "rebuttal sent for VTB
Capital PLC … as client says '17.4, 17.5 and 17.6 of Our Terms.'"
v) VTB
submits that Mr Zaykov had no authority to receive the 2017 Terms on its behalf. However, Mr Zaykov was one of
VTB's
authorised signatories for correspondent accounts in 2017, able to "sign documents and correspondence on behalf of"
VTB,
which supports the contention that he acted in some respects on behalf of
VTB.
Further,
VTB
Capital plc was authorised to accept service of proceedings at
VTB
Capital plc's London office, which is consistent with them being an authorised and reliable conduit of information to
VTB,
and individuals from
VTB
Capital Inc (in particular Mr Ivanov) were involved on
VTB's
side in the termination of the ISDA Master Agreement. It is clear that information sent to Mr Zaykov in relation to the 2017 Terms had elicited a substantive response on
VTB's
behalf, which, uncontradicted by evidence from
VTB,
suggests that either Mr Zaykov was indeed authorised to receive the 2017 Terms on
VTB's
behalf, or he passed them on to someone who was. It should be noted that Mr Zaykov only needed to have authority to receive the 2017 Terms on behalf of
VTB:
that receipt is sufficient to give them contractual effect because of the term to that effect in the 2011 Terms.
vi) Finally, Mr Fenwick KC also submitted that the log entry showed a "counter-offer" (although VTB
has itself adduced no evidence as to what this related to). However, by virtue of clause 24.1 of the 2011 Terms,
VTB
had already bound itself to the amendments made by the 2017 Terms by receiving them. In any event, given the obvious importance of the communication sending the 2017 Terms, against the MiFID II background, it seems to me improbable that the issue regarding the 2017 Terms would have been left in some form of limbo over a period of years, while JPM and
VTB's
relationship continued on a significant scale. I would have required considerably more by way of evidence and engagement from
VTB
to rebut the obvious inference that the terms – and certainly the essential terms of law and jurisdiction – were agreed in the terms in which they appeared in the 2017 Terms.
The Correspondent Bank Account
C THE BACKGROUND
The dispute emerges
i) JPMS plc notified VTB
that it had calculated the amount outstanding from
VTB
under the ISDA Master Agreement as USD 11,975,725, providing supporting material, and stated that it was exercising a right of set-off in relation to this amount.
ii) VTB
notified JPMS plc of its calculation of EUR 108,636,829.56 in its favour, providing supporting material.
Proceedings in the Russian courts
i) The claim referred to the Client Agreement and to the transfer of the balance into a blocked account and stated "thus Defendant 1 unilaterally disposed of the Claimant's property in the absence of any instructions from the Defendant." It is alleged that JPMS plc "committed unlawful actions in respect of the Claimant's property, including failing to transfer (retaining) the monies that were due".
ii) It is alleged that "the other co-defendants in turn have failed to act and have made no attempt to assist Defendant 1 in settling the debt".
iii) The articles of the Russian Civil Code relied upon are Articles 1064(1), 1080, 1082 and Article 15(1). They will be familiar to those who have been involved in Russian litigation in the Commercial Court. Article 1064 imposes liability of someone who causes harm to the person or property of another, and is clearly a liability in tort. As Hamblen J noted in OJSC VTB
Bank v Parline Limited [2015] EWHC 1135 (Comm), [8], this article "provides a general basis of tortious liability for causing harm". Article 1082 obliges the person who has caused harm to compensate for the losses caused. Article 15(1) provides for the payment of compensation for losses caused by invasions of legal rights more generally, including for breach of contract as well as in tort. Article 1080 provides for the joint and several liability of tortfeasors.
iv) The claim against JPMS plc is pleaded as a tort claim, the substance of which is the failure to pay the balance due under the Client Agreement and the retention of the same.
v) The claim against the remaining JPM entities is as joint and several tortfeasors in that alleged wrong.
vi) In addition to general provisions of the Russian Civil Code, the claim refers to various principles of law developed by the Russian courts in response to sanctions imposed on Russian entities and individuals by foreign states, referring to post-sanctions decisions involving Citibank, ING Bank NV and Nordea Bank which appear to involve the imposition of joint and several liability on all the companies in the same corporate group.
vii) So far as JPMB Russia is concerned, reference is made to a principle of "de facto representation" which is once again said to permit the separate legal personality of companies in the same corporate group to be ignored. Reference is made to "an approach … developed in Russian jurisprudence whereby the actions of subsidiaries and indirect subsidiaries of a foreign group of companies are interpreted by the courts as an abuse of a legal entity's formal independence", such that all the companies in a single economic unit are liable. This refers to post-sanctions decisions of the Russian courts involving Google, Siemens, Citibank and Linde.
viii) The claim asserts the application of Russian law on the basis that the harm alleged is said to have been suffered in the territory of the Russian Federation and because the application of foreign law would be contrary to Russian public policy.
ix) Finally, jurisdiction was asserted on the basis of the now notorious Article 248.1 of the Arbitrazh Civil Code, which gives that court exclusive jurisdiction over disputes involving sanctioned Russian individuals or entities or which concern such sanctions, regardless of any choice-of-forum agreement.
x) The amount claimed is USD 81,333,185.01 – i.e. JPMS plc's calculation of the net balance due to VTB
under the Client Agreement having deducted the amount due from
VTB
under the ISDA Master Agreement.
i) It pleads the conclusion of the UMAA between VTB
and JPMCB through its London branch, and the termination of the UMAA.
ii) It pleads that the balance of the precious metal accounts had not been repaid to VTB,
notwithstanding its demand.
iii) It pleads that JPMCB's failure to transfer the balance, and the failure of the other JPM entities to take measures to restore VTB's
rights, constituted an abuse of rights (a Russian law tort).
iv) Claims are advanced on the basis of the same articles of the Russian Civil Code and the same Russian case law developments as in the Client Agreement Claim, and also under Article 10(1) (the tort of abuse of rights).
v) The applicable law and jurisdiction contentions were the same as those in the Client Agreement Claim.
i) VTB
was prohibited from taking any steps to pursue, prosecute or progress its claims against the various JPM entities in the Client Agreement and UMAA Claims.
ii) VTB
was prohibited from taking any step to pursue, prosecute or progress "any other proceedings in any court or tribunal concerning any dispute arising out of or in connection with" the Client Agreement and the UMAA "otherwise than through LCIA arbitration" in accordance with the terms of the CA and UMAA Arbitration Agreements.
iii) VTB
was prohibited from "seeking any interim or conservatory order or relief or remedy or measure" inconsistent with the relevant Arbitration Agreement or the Claimants' steps to enforce that agreement.
D THE "WHOLLY CONTRACTUAL" ANTI-SUIT CLAIMS
The UMAA and the Client Agreement
i) The UMAA is for the operation of accounts for precious metals, with a running balance and provision for transfer, and a right on JPMCB's part not to act on a transfer instruction which might be contrary to any applicable law. The obligations survive termination (clause 10.3). The arrangements for transferring any balance on the closure of the accounts had to be acceptable to JPMCB London branch. Clearly, therefore, the UMAA addressed issues of entitlement to payment of any undisputed balance. There is a dispute as to whether JPMCB has acted wrongfully in not making the transfer. That clearly has a close connection with the UMAA.
ii) The Client Agreement also provides for the liquidation of the open positions to generate a single sum payable to one or other party, for the circumstance in which money received from VTB
or generated from trading conducted on its behalf can be released to
VTB,
and for the circumstances in which JPMS plc is relieved from performing its obligations. Clause 37 confirms the continuation of the Client Agreement after termination until all business is wound-up.
iii) More generally, the suggestion that a dispute as to the transfer of money or property when a contract is terminated does not engage the terms of the contract under which the money was due, or the property held, but rather unspecified "general principles of law" (in this case, apparently, Russian law as the person demanding transfer is a Russian entity seeking to receive them there) is hopeless. If a bank account is closed with a credit due to the account holder, the obligation to pay the debt will arise under the terms of the contract governing the account, and, in any event, a dispute about a failure to pay that debt will fall within the dispute resolution agreement in that contract and be governed by its applicable law.
iv) Even if the claimant relies on a property right (and I think it highly doubtful that VTB
has a proprietary right in specific gold or silver, as opposed to a contractual right under the UMAA to delivery of a particular quantity of gold and silver or its value), a dispute about whether JPMCB was obliged to transfer such property falls within the arbitration agreement in the UMAA, just as a dispute about whether a shipowner was obliged to deliver cargo to its owner or a warehouse to redeliver goods to the bailor would fall within a dispute resolution clause in the contract of carriage or warehousing terms.
"To the extent necessary, the Claimants will argue that the Second to Ninth Claimants may also enforce the UMAA Arbitration Agreement pursuant to the Contracts (Rights of Third Parties) Act 1999".
The 2017 Terms
i) which of the JPM Entities are entitled to enforce the 2017 Terms Arbitration Agreement; and
ii) the effect of the contractual hierarchy provisions on the status of the 2017 Terms Arbitration Agreement in relation to the various claims brought by VTB.
Which of the JPM Entities are entitled to enforce the 2017 Terms Arbitration Agreement?
i) Section 8 of the 1999 Act provides for the operation of arbitration agreements in relation to third party beneficiaries in two instances.
ii) First, under s.8(1), where the third party is given a right under s.1 of the 1999 Act to enforce a term (which it will have if the contract expressly so provides or "the term purports to confer a benefit on him") and the enforcement of that term is itself subject to a term providing for the submission of disputes to arbitration. In this case, the arbitration agreement takes effect not as a benefit in itself, but as a condition of the term which is intended to benefit the third party (see Mustill & Boyd, [3.87]).
iii) Second, under s.8(2), where the right which the third party is entitled to enforce under s.1 is the right to arbitrate disputes with the promisor, in which case the third party can exercise the right to arbitrate, and, if it does so, is treated as a party to the arbitration agreement "in relation to the matter with respect to which the right is exercised" (ibid, [3.89]).
iv) So far as s.8(1) is concerned, there are a number of provisions of the 2017 Terms which expressly confer benefits on Affiliates. By way of a non-exhaustive list: clause 7.1 (which confers a right of indemnity); clause 7.2 (which exclude liabilities in certain circumstances); clause 8.9 (rights relating to "own account" trading); clause 8.19 (the sufficiency and effect of any confirmation); clause 8.13 (the exclusion of an advisory duty); clause 8.16 (the provision as to trading venues); clause 10.7 (various provisions about the effect, and non-effect, of statements); clauses 10.9 and 11 (addressing potential conflicts of interest); clause 16 (contractual liens, charges and rights of set-off); clause 18.1 (exclusion of liability) and clause 29 (force majeure).
v) However, the argument before me was not advanced on a s.8(1) basis, but on the basis that the right to enforce the arbitration agreement was itself a benefit intended to be conferred on Affiliates. It is clear that the essentially procedural right to arbitrate can be conferred on a third party under the 1999 Act. The question is whether the 2017 Terms do so.
vi) On balance, I am satisfied that they do. Specially, clause 32.5 of the 2017 Terms, which appears in the same clause as the 2017 Terms Arbitration Agreement, provides:
"Without prejudice to any other remedy, you (and/or, where applicable, any principal or principals on whose behalf you are acting) will indemnify us, any Affiliate and any of our or its respective directors, officers, employees or representatives against any costs, loss, liability or expense whatsoever which may be suffered or incurred by us and/or them directly or indirectly in connection with or as a result of any suit, action, proceeding or any step in any suit, action or proceeding taken by you (and/or, where applicable, your principal or principals) and/or any person connected or affiliated with you (and/or, where applicable, your principal or principals) otherwise than in accordance with this Clause 32 or in accordance with the MiFIR Election Letter where applicable."
vii) It seems implicit in that clause that Affiliates have a contractual right that claims will not be brought "arising out of, in relation to or in connection with our relationship" otherwise than in accordance with clause 32, and that this is a benefit conferred on Affiliates (and therefore enforceable under clause 36.1).
viii) It is not necessary for present purposes to determine the width of any right to arbitrate conferred on Affiliates. However, I am persuaded that the negative covenant in any arbitration agreement is a benefit which the 2017 Terms confer on Affiliates, and that it would be open to the Affiliates to commence an arbitration to enforce the clause 32.5 indemnity and the negative covenant.
What is the effect of the contractual hierarchy provisions on the status of the 2017 Terms Arbitration Agreement in relation to the various claims brought by VTB?
i) Clause 1.3 of the 2017 Terms:
"These Terms are without prejudice to and shall not supersede or amend any other contract(s) entered into by you … and JP Morgan (whether prior to or after our despatch of these Terms to you (each a 'Product Contract') including, without limitation, any contract(s) relating to specific, or specific types of, products, services or transactions … In the event of any conflict between any Product Contract(s) and these Terms, the provisions of the Product Contract(s) shall prevail."
ii) The second Recital to the Client Agreement:
"Where the Client has entered into Terms of Business with JPMSL, this Agreement, rather than the Terms of Business, shall govern the Client's relationship with JPMSL for the execution and/or clearing of exchange listed or OTC cleared products and options accounts at JPMSL. However, the Terms of Business shall continue to govern all other investment business with JPMSL a defined by FSMA. In the event of any conflict between the clauses of this Agreement and the Terms of Business, the clauses of this Agreement shall prevail. This is a 'Specific Product Contract' for the purposes of the Terms of Business".
i) the UMAA Arbitration Agreement so far as claims relating to the UMAA against JPMCB are concerned;;
ii) the CA Arbitration Agreement so far as claims relating to the Client Agreement against JPMS plc are concerned; and
iii) the ISDA Arbitration Agreement so far as claims relating to the ISDA Master Agreement against JPMS plc are concerned.
i) In Pagnan SpA v Tradax Ocean Transportation SA [1987] 2 Lloyd's Rep 342, 350, Bingham LJ noted that "it is not enough if one term qualifies or modifies the effect of another; to be inconsistent a term must contradict another term or be in conflict with it, such that effect cannot fairly be given to both clauses." Dillon LJ (at p.353) held "there is inconsistency where two clauses cannot sensibly be read together, but can it really be said that there is inconsistency wherever one clause in a document qualifies another?" (answering his rhetorical question in the negative).
ii) In Alexander v West Bromwich Mortgage Co [2016] EWCA Civ 496, [62], Hamblen LJ said "one way of testing whether clauses can be 'fairly' or 'sensibly' read together is by seeking to put them together in a single clause".
iii) In Septo Trading Inc v Tinetrade Ltd (The NouNou) [2021] EWCA Civ 718, [28], Males LJ stated that "the question is whether the two clauses can be read together fairly and sensibly so as to give effect to both," a question to "be approached practically, having regard to business common sense, and is not a literal or mechanical exercise."
The ISDA Master Agreement
i) by reference to the CA Arbitration Agreements; and
ii) on the "vexation and oppression" basis.
i) The JPM Entities claim that the ISDA Master Agreement was terminated for VTB's
default, the relevant event of default being a "cross-default" under the Client Agreement. While it is common ground that the ISDA Master Agreement has been terminated, it is
VTB's
case that it was terminated by reason of an illegality affecting JPMS plc. Those differing contentions manifested themselves in different calculations in correspondence of the net balance.
ii) JPMS plc calculated a balance due to it of USD 11,975,725. JPMS plc set-off that figure against amounts payable to VTB
under the Client Agreement, relying on the right of set-off granted by Section 6(f) of the ISDA Master Agreement (JPMS plc's letter of 24 March 2022).
iii) VTB
calculated a balance due to it of EUR 108,636,829.56.
"The approach to construction in this situation was summarised by Hamblen LJ in BNP Paribas SA v Trattamentio Rifiuti Metropolitani SpA:
i) The starting point is that a jurisdiction clause in one contract was probably not intended to capture disputes more naturally seen as arising under a related contract.
ii) A broad, purposive and commercially-minded approach is to be followed.
iii) Where the jurisdiction clauses are part of a series of agreements they should be interpreted in the light of the transaction as a whole, taking into account the overall scheme of the agreements and reading sentences and phrases in the context of that overall scheme.
iv) Sensible business people are unlikely to intend that similar claims should be the subject of inconsistent jurisdiction clauses.
v) The starting presumption will therefore be that competing jurisdiction clauses are to be interpreted on the basis that each deals exclusively with its own subject matter and they are not overlapping, provided the language and surrounding circumstances so allow.
vi) The language and surrounding circumstances may, however, make it clear that a dispute falls within the ambit of both clauses. In that event the result may be that either clause can apply rather than one clause to the exclusion of the other."
E THE APPLICATION BY A CONTRACTING PARTY TO RESTRAIN CLAIMS AGAINST NON-CONTRACTING PARTIES AS A MATTER OF CONTRACT
The legal context
Contractual promises not to sue third parties
i) Where there is an EJC, and the issue arises whether as a matter of interpretation or implication it restrains proceedings by one party against a third party, a distinction can be drawn between an obligation not to sue a third party at all, and the rather less onerous obligation not to sue the third party in a different forum to the agreed forum. While that still leaves open the possibility of there being no jurisdiction over the third party in the chosen jurisdiction (cf Team Y&R Holdings Hong Kong Ltd v Ghossoub [2017] 2401 (Comm), [82(5)]), this is likely to be an infrequent occurrence, particularly when there is a close connection between the two claims (the very context in which some limit on the ability to sue the third party elsewhere will be most important). The risk that the claim which a contracting party wishes to bring against a non-party may not be available in the chosen forum remains.
ii) Where there is an arbitration agreement, an implied obligation not to sue the third party other than in the arbitration will, in the vast majority of cases, amount to an obligation not to bring that claim at all. There is a possible exception where, as here, the arbitration is on the LCIA Rules, because Article 22.1(x) provides for "forced joinder" of non-parties to the arbitration agreement in certain circumstances. However, this is an "institution-specific" provision, and one which depends both on the third party's consent and the willingness of the arbitral tribunal to exercise its power of joinder.
"Counsel referred to the fact that MachinoImport and Sberbank were not party to the arbitration agreement and so any claim against them would have to be advanced elsewhere. That is true but the tortious, non-contractual claim brought against the Refinery for being party to an unlawful means conspiracy clearly arises out of or in connection with the pre-payment agreements and off-take contracts. The claim is therefore very clearly caught by the arbitration clause."
"I accept Mr Johnson's submissions, and have come to the clear conclusion that it would be wrong to grant the stay requested. In reaching this conclusion I am influenced in particular by the desirability of a single trial taking place, in public, at which the strong prima facie case of fraud and conspiracy against the three human defendants can be fully investigated and determined. DAG's invocation of the arbitration clause, presumably at the instance of Mr Gibson, has prevented the claim against DAG from being determined in the same forum as the claim against Mr Gibson. DAG is fully entitled to take that step, but I can see no good reason why Mr Gibson too should be permitted to take advantage of the arbitration clause, or to hold up the English action while the arbitration proceeds."
Cases where a third party seeks to enforce a contractual right which is subject to an arbitration agreement
i) The English court has chosen not to treat applications for anti-suit relief in these circumstances as turning on the general jurisdiction to grant relief where the proceedings to be injuncted are vexatious and oppressive ([13]).
ii) The English court applies the same decision-making framework as for "wholly contractual" anti-suit injunctions, in effect according the right not to be sued for the enforcement of a contractual right otherwise than in accordance with the dispute resolution procedure conditioning that right the same status as a promise by a contracting party only to bring proceedings in the agreed forum ([16]-[20]).
iii) For the purposes of exercising its jurisdiction to grant anti-suit relief, the court will classify the right asserted in the non-contractual forum by reference to English conflict of law principles, looking at the position as a matter of substance. The characterisation of the right as a matter of the relevant foreign law is not determinative ([23]-[27]). This is consistent with the approach adopted generally when determining whether foreign law claims fall within a jurisdiction of arbitration clause: Nori Holding Ltd v PJSC Bank Otkritie Financial Corpn [2018] EWHC 1343 (Comm), [63].
i) Establishing that the foreign proceedings are vexatious and oppressive has been held to involve "a more onerous and more nuanced test" (Times Trading Corp v National Bank of Fujairah [2020] EWHC 1078 (Comm), [42]), with issues of comity weighing more heavily against granting relief (SAS Institute Inc v World Programming Ltd [2020] EWCA Civ 599, [91]).
ii) There may be more difficulty in establishing the court's jurisdiction, the view having been expressed that one of contractual gateways is available in a "conditional benefit" cases (QBE, [22]). By contrast, it has been held (by reference to an older version of the service out gateways) that there is no gateway for vexatious and oppressive anti-suit injunctions (Navig8 Pte Ltd v Al-Riyadh Co for Vegetable Oil Industry [2013] EWHC 328 (Comm)).
iii) Finally, depending on where the law ends up in this area after the hearing in the Supreme Court, it is possible that the correct classification may affect the court's ability to award relief by way of equitable compensation (cf Kingdom of Spain v The London Steam-Ship Owners' Mutual Insurance Association Limited [2024] EWCA Civ 1536).
The special status of arbitration agreements under English law
The authorities
"… it seems to me to be far-fetched to regard 'any disputes' as covering disputes between MLC and any one other than MLC's contract partner under the purchase agreements, namely CS Europe. Clause 5.2 is part of a bilateral agreement between a seller and a buyer, and the disputes to which such an agreement may give rise are prima facie bilateral disputes. Indeed, it is I would have thought axiomatic that, at any rate in the absence of plain language to the contrary, a contract seeks neither to benefit nor to prejudice non-parties: even where such plain language is used, it is black-letter law that the non-party can himself neither take the benefit nor suffer the burden of the contract. In the present case there is nothing in the language of cl. 5.2 to suggest that it is intended to have an ambit beyond the parties to the purchase agreements themselves. While it is true that the agreements mention CS affiliates, there is nothing in the express language of cl. 5.2 to suggest that the clause is intended to bind MLC as to where it is entitled to sue such affiliates…."
"There is a point of construction of the exclusive jurisdiction clause that it is convenient to deal with at this point. It is accepted that the clause is not restricted to contractual claims. A claim for damages for, for example, fraudulent misrepresentation inducing an agreement containing an exclusive jurisdiction clause in the same form as that with which this case is concerned would, as a matter of ordinary language, be a claim in tort that arose 'out of or in connection with' the agreement. If the alleged fraudulent misrepresentation had been made by two individuals jointly, of whom one was and the other was not a party to the agreement, the claim would still be of the same character, although only the party to the agreement would be entitled to the benefit of the exclusive jurisdiction clause. The commencement of the claim against the two alleged tortfeasors elsewhere than in England would represent a breach of the clause. The defendant tortfeasor who was a party to the agreement would, absent strong reasons to the contrary, be entitled to an injunction restraining the continuance of the foreign proceedings. He would be entitled to an injunction restraining the continuance of the proceedings not only against himself but also against his co-defendant. The exclusive jurisdiction clause is expressed to cover 'any dispute which may arise out of or in connection with' the agreement. It is not limited to 'any claim against' the party to the agreement. To give the clause that limited construction would very substantially reduce the protection afforded by the clause to the party to the agreement. The non-party, if he remained alone as a defendant in the foreign proceedings, would be entitled to claim from his co-tortfeasor a contribution to any damages awarded. He could join the co-tortfeasor, the party entitled to the protection of the exclusive jurisdiction clause, in third party proceedings for that purpose. The position would be no different if the claim were to be commenced in the foreign court with only the tortfeasor who was not a party to the exclusive jurisdiction clause as a defendant. He would be able, and well advised, to commence third party proceedings against his co-tortfeasor, the party to the exclusive jurisdiction clause.
... In my opinion, an exclusive jurisdiction clause in the wide terms of that with which this case is concerned is broken if any proceedings within the scope of the clause are commenced in a foreign jurisdiction, whether or not the person entitled to the protection of the clause is joined as defendant to the proceedings. An injunction restraining the continuance of the proceedings would not, of course, be granted unless the party seeking the injunction, being someone entitled to the benefit of the clause, had a sufficient interest in obtaining the injunction. It would, I think, be necessary for him to show that the claim being prosecuted in the foreign jurisdiction was one which, if it succeeded, would involve him in some consequential liability. It would certainly, in my opinion, suffice to show that if the claim succeeded he would incur a liability as a joint tortfeasor to contribute to the damages awarded by the foreign court."
(emphasis in italics added, emphasis in bold in original).
"(1) Whether an exclusive jurisdiction clause should be understood to oblige a contractual party to bring claims relating to the contract in the chosen forum even if the claim is one against a non-contracting party, requires a consideration of the contract as a whole including not just the language used in the exclusive jurisdiction clause but also all other terms in the contract that may shed light on what the parties are likely to have intended.
(2) The principle that rational businessmen are likely to have intended that all disputes arising out of or connected with the relationship into which they had entered would be decided by the same court cannot apply with the same force when considering claims brought by or against non-contracting third parties. More particularly, whist it is well established that the language of an exclusive jurisdiction clause is to be interpreted in a wide and generous manner, the starting position in considering whether disputes involving a non-contracting third party might come within the scope of the clause must be that, absent plain language to the contrary, the contracting parties are likely to have intended neither to benefit nor prejudice non-contracting third parties.
(3) Where it is clear from the express terms that the contracting parties have turned their minds to the position of third parties and more particularly whether such third parties are to benefit or bear the burden of rights and obligations agreed between the contracting parties, the absence of any express language in the exclusive jurisdiction clause that provides for the application of that term in relation to claims brought by or against third parties may be an indication that the clause was not intended either to benefit or prejudice such third parties.
(4) Where the exclusive jurisdiction clause is silent on the question, the fact that any provision in the contract dealing with third parties indicates an intention that third parties should not acquire rights as against the contracting parties by virtue of the contract, may be a further indication that the clause was not intended either to benefit or prejudice such third parties.
(5) Where a particular interpretation of the exclusive jurisdiction clause produces a material contractual imbalance because for example it results in one party to a dispute relating to the contract being subjected to an obligation to bring proceedings in the chosen jurisdiction in circumstances where the other party to the dispute is not similarly obliged, or where that interpretation would require a claim against a non-contracting third party to be brought in the agreed jurisdiction even where the chosen forum may not actually have jurisdiction over such a claim against that party, this too may be an indication that the clause was not intended to so apply because such a result is unlikely to be what the contracting parties as rational businessmen would have agreed.
(6) The fact that there is nothing in the contract that might indicate a rational limit in terms of the identity of non-contracting third parties whose rights and interests might be affected by the application of an exclusive jurisdiction clause might provide a further indication that the clause was only intended to affect the rights and interests of the contracting parties.
(7) It follows that where contracting parties intend that any claim relating to the contract be subject to the exclusive jurisdiction clause even where it is one brought by or against a non-contracting party, clear words should be used expressly setting out this intention, the parties to be affected and, if relevant, the manner in which submission of any non-contracting parties to the jurisdiction of the chosen court is to be ensured."
"… [T]here is a further aspect of the law before me that is not so straightforward (although it was the application of the relevant legal principles, rather than the principles themselves, that appeared to divide the parties). This is the extent to which an exclusive jurisdiction clause in a contract (between A and B) can be enforced (by B against A) by an anti-suit injunction so as to prevent tort proceedings against a third party (i.e. by A against C) (assuming that, subject to this third party point, the tort proceedings would otherwise by covered by the jurisdiction clause)."
"(i) It is a matter for the interpretation of the jurisdiction clause whether the clause extends to cover the tort proceedings against the third party. Applying the general law of contract, the correct approach to that question of interpretation requires the application of the modern contextual and objective approach. One must ask what the clause, viewed in the light of the whole contract, would mean to a reasonable person having all the relevant background knowledge reasonably available to the parties at the time the contract was made (excluding the previous negotiations of the parties and their declarations of subjective intent). Business common sense and the purpose of the term (which appear to be very similar ideas) may also be relevant …
(ii) If, as a matter of interpretation, the jurisdiction clause does extend to cover the tort proceedings against the third party, the contractual basis for an anti-suit injunction applies so that, as regards an application by the contracting party (B), the injunction will be granted unless there are strong reasons not to do so.
(iii) Applying privity of contract, only the contracting party (B) and not the third party (C) can enforce the jurisdiction clause (against A) by an anti-suit injunction on the contractual basis (unless an exception to privity of contract applies). But the jurisdiction clause may be a relevant factor in granting the third party (C) an anti-suit injunction on the alternative basis that the foreign proceedings are vexatious or oppressive. (It is also presumably possible in certain circumstances that the jurisdiction clause, even though not contractually enforceable by the contracting party (B) in favour of the third party (C), may be a relevant factor in granting the contracting party (B) an anti-suit injunction against the other contracting party (A) on the basis that the foreign proceedings are vexatious or oppressive.)".
"Absent express words as to the jurisdiction clause extending to claims against non-parties, the starting point in interpreting a jurisdiction clause (covering, let us say, 'all disputes arising out of the contract') will be that only the parties to the contract are covered. But I also agree with Lord Scott in the Donohue case that, where one has an alleged joint tort committed in relation to a contract by a contracting party and a non-contracting party, the objective interpretation of the jurisdiction clause (covering all disputes 'arising out of the contract') will tend to include a tort claim against the non-party because this will help to prevent forum-fragmentation on essentially the same issues."
"This raises the interesting question of interpretation discussed in paragraphs 20 to 24 above. The exclusive jurisdiction clause is in the Clearlake charter … The question is whether the reference in the exclusive jurisdiction clause to disputes arising out of the charter, on its correct interpretation, can apply to the claims by Xiang Da against Gunvor for tortious misrepresentation …
I have set out, in paragraph 23 above, the correct approach to this question of interpreting the jurisdiction clause in the Clearlake charter. In this case, the application of that law (i.e. the question of contractual interpretation raised) does not admit of an easy answer. At root, one is asking whether Clearlake and Xiang Da objectively intended that Xiang Da's tortious misrepresentation claims against Gunvor should be covered by that jurisdiction clause. The starting point in answering that is that, not least because there is no express reference to Gunvor, the clause does not extend to cover (tort) claims against Gunvor. But as against that there are the following five factors:
(i) The misrepresentation claims against Gunvor may be said to constitute 'a dispute arising out of this charter'. The alleged misrepresentations arose in relation to the performance of the Clearlake charter.
(ii) There is nothing in the Clearlake charterparty expressly indicating that the jurisdiction clause should not apply in relation to Xiang Da's tort claims against Gunvor.
(iii) There is a close relationship between Clearlake and Gunvor. Both are part of the Gunvor Group and Clearlake is the chartering arm of the group. In that role, it had a long-term contract of affreightment with Gunvor and it was pursuant to that contract that the Gunvor sub-charter was entered into.
(iv) It is clear that, had Clearlake been sued by Xiang Da for the tort of misrepresentation in relation to the Clearlake charter, that would have been caught by the exclusive jurisdiction clause. Similarly, had Xiang Da sued both Clearlake and Gunvor for the (same) misrepresentations, it would appear that the jurisdiction clause would have applied not only as regards Clearlake but also as regards Gunvor. If that is correct, it is not clear that it can make a significant difference that Xiang Da has chosen to sue only Gunvor for misrepresentation and not Clearlake.
(v) Clearlake has an interest in the proceedings by Xiang Da against Gunvor. This is because, for at least two reasons, there is potential prejudice to Clearlake if the claim by Xiang Da against Gunvor goes ahead in Singapore. First, if Gunvor is found liable to Xiang Da, there is a realistic prospect of Gunvor having a contribution (or indemnity) claim against Clearlake as a joint and several tortfeasor. It is therefore of importance to Clearlake that the English courts make the determination of Gunvor's tort liability to Xiang Da. Secondly, I have decided on issue (1) above (see paragraphs 27-32) that Xiang Da's claims against Clearlake based on the re-documentation letter of indemnity should be heard in England not Singapore. There is a close link between those claims and the tort claim brought by Xiang Da against Gunvor and it is in the interests of Clearlake to avoid forum-fragmentation (and the waste of resources involved) by having all third party proceedings (by Xiang Da against Clearlake and Gunvor) heard in the same jurisdiction (i.e. England)."
" … EuroChem NW and Tecnimont agreed to refer to arbitration '[a]ny Dispute arising between [EuroChem NW] and [Tecnimont] in relation to this Contract or in any way connected therewith'. 'Dispute' was defined as 'any question, dispute or difference arising out of or in connection with this Contract including any dispute as to its existence, validity, interpretation, performance, breach or termination or the consequences of its nullity (each a 'Dispute')'. The clauses are thus drafted very broadly, and in any event are to be construed widely.
It is common ground that any cause of action between EuroChem NW and the Appellants concerning the enforceability of the Bonds falls within the scope of the London arbitration clauses (to which EuroChem NW and Tecnimont were bound). It appeared during the course of the appeal hearing also to be common ground that the ownership/control issue (centrally) in dispute between Tecnimont and EuroChem NW in the Arbitration and Bank Proceedings was also (centrally) in dispute between Tecnimont and EuroChem Agro in the Italian Proceedings.
The definition of 'Dispute' makes it clear that a 'Dispute' is not limited to separate formal proceedings or claims, but extends to mere questions or differences between the parties. The ownership/control issue is such a question or difference. Its outcome concerns, amongst other things, whether the Banks are liable to pay under the Bonds. Put simply, the 'Dispute' arises between EuroChem NW and Tecnimont in relation to or in connection with the Contracts. The fact that EuroChem NW was not party to the Italian Proceedings does not mean that EuroChem NW and Tecnimont are not to be taken as having agreed that the ownership/control issue (which relates to EuroChem AG and its subsidiaries) was to be litigated only in accordance with the London arbitration clauses, and not otherwise.
…
The conclusion sits entirely comfortably with the notion that these commercial parties would not have intended the same issue to be litigated here and abroad in different tribunals. As the Judge put it at [43], such proliferation of proceedings would be inimical to Tecnimont's agreement to resolve its disputes with EuroChem NW solely by means of London arbitration. It is to be remembered that the sole reason provided for Tecnimont's participation in the Italian Proceedings was its involvement in the Arbitration and Bank Proceedings. At the fundamental core, Tecnimont was seeking to litigate in Italy the very issue that it had agreed with EuroChem NW to address exclusively in London arbitration proceedings."
"On the second of these questions there is, I accept, more room for doubt. Although the ownership/control issue is the same in the Italian proceedings as in the Arbitration Proceedings, it could be said that in the Arbitration Proceedings the issue arises as between Tecnimont and EuroChem NW, whereas in the Italian Proceedings it arises as between Tecnimont and EuroChem Agro. Tecnimont agreed to arbitrate its disputes with EuroChem NW. It made no such agreement in respect of its disputes with EuroChem Agro. But that very strict interpretation of the arbitration agreement ignores the underlying reality. There is no evidence that Tecnimont has any real dispute with EuroChem Agro. Its position in the Italian proceedings is no more than a cover or façade for the real dispute which is between it and EuroChem NW. The Italian Proceedings are no more than a vehicle by which it hopes to engage in a proxy war with EuroChem NW. In my judgment the scope of the ASI was justified."
The reasons for his conclusion have echoes of the types of consideration frequently invoked in applications for anti-suit injunctions on vexatious and oppressive grounds.
" The fundamental difficulty in the way of this line of argument, in my view, is that it requires the court to imply a negative obligation into the terms of the agreements which is simply not there. It may well be that, considered with hindsight, it would have been preferable (certainly from the Appellant's point of view) if the parties had agreed to include such a term in their agreement but the fundamental problem is that they did not. As is well-established, the function of the court is to construe the agreement which the parties have in fact reached rather than to impose an agreement upon them which it might have been better, particularly with hindsight, for them to reach."
Singh LJ then went on to address the possibility of anti-suit relief on the vexatious and oppressive basis, a subject with which I deal below.
"Although the Respondents characterise those proceedings as involving an independent claim between Russian companies under Russian tort laws, closer examination suggests that this characterisation is at best incomplete. The supposedly wrongful conduct on which the Russian claims are founded appears to be the failure of the companies within the Renaissance group to procure the transfer of the assets held by the Appellant to a Russian entity within the group which would not be subject to western (including UK) sanctions. But the Appellant could not have effected such a transfer without breaching those sanctions. In other words, the Respondents' essential complaint is that the Appellant failed to act in a way which would itself have involved a breach of sanctions (i.e. would have been illegal under English law), and that this somehow gives rise to joint and several liability on the part of other companies within the group.
This may be a valid claim under Russian law. I am prepared to assume that it is. But its artificiality, viewed as a matter of English law, which is the law applicable to the relationship between the parties, is obvious. Its only purpose is to circumvent the parties' arbitration clause. It seems to me to be at least arguable in these rather distinctive circumstances that it is necessary for business efficacy, and is so obvious that it goes without saying, to imply a term that the Respondents would not circumvent the arbitration clause in this way. The Judge concluded at para 40 that the arbitration clause does not apply to claims against either party by a non-party. But the issue here is whether the clauses apply to artificial claims against one party's affiliate by the other party, whose only purpose is to circumvent the obligation to arbitrate. That is a rather different issue. However, as resolution of this issue cannot affect my decision that no injunction should be granted for the reason already stated, I would prefer to leave this point open for decision, if it arises, in a case where it will be decisive."
The construction argument
i) In the UMAA, the confidentiality clause with its reference to associated companies (clause 6); the clause regulating assignment (clause 13.3) and the entire agreement clause (clause 13.6).
ii) In the Client Agreement, the references to affiliates in various clauses but not the arbitration agreement; the scope of the general exclusion (clause 24); the clauses precluding assignment (clauses 35 and 36) and the exclusion of the 1999 Act (clause 35).
An implied term
i) The width of the concepts of "circumventing" an arbitration agreement or the "artificiality" of a claim are inherently disputatious. A litigating party may carefully choose which claims to advance in court proceedings in an effort to avoid a s.9 stay application. There are many species of claim which involve bringing proceedings against someone who is not the natural defendant – "parent trap" cases, or those rare cases in which a corporate veil can be pierced, or where a director can be made liable for the torts of a company.
ii) The attempt to use the purpose of the foreign proceedings, and in particular a requirement of "sole" purpose, to determine which claims against third parties can and cannot be pursued presents a number of potential difficulties, particularly when other credible reasons can be offered for the desire to sue the third party including deeper and more readily accessible pockets or a more favourable applicable law. Mr Fenwick KC advanced a number of similar arguments here.
iii) It is very difficult within an implied term analysis to allow for the extent to which the basis of liability in the foreign proceedings is or is not consistent with generally accepted principles of civil liability, and yet the court's sense of this matter is likely to be a significant factor in framing its response.
iv) The concept of who and who does not constitute an "affiliate" (if that is to be an element in the implied term) is also inherently disputatious, and may also overreach where different companies in the same group are performing different functions and there are legitimate criticisms to be made of each (e.g. where one corporate group includes a marketing entity which makes pre-contractual statements but other entities who sell products or provide services).
v) There is also the complexity of how the implied term operates in the context of agreements to arbitrate on arbitral institution rules which include "forced joinder" provisions. Are there implied obligations on the parties to seek to facilitate the joinder to the arbitration of their affiliates against whom the other party wishes to claim?
F THE APPLICATION TO RESTRAIN CLAIMS ON THE "VEXATIOUS AND OPPRESSIVE" BASIS
The relevant principles
i) The basic principle is that the jurisdiction is to be exercised "when the ends of justice require it".
ii) Established categories of case where an injunction may be appropriate (which may overlap) include cases where an injunction is necessary to protect the jurisdiction of the English court and cases where the pursuit of foreign proceedings is regarded as vexatious or oppressive, but the jurisdiction is not confined to these categories and must be applied flexibly.
iii) Great caution must be exercised before such an injunction is granted, at any rate in cases where the injunction is not sought in order to enforce an arbitration or exclusive jurisdiction clause, because of the requirements of comity.
iv) When an anti-suit injunction is sought on grounds which do not involve a breach of contract, comity, telling against interference with the process of a foreign court, will always require careful consideration.
v) Comity requires that in order for an anti-suit injunction to be granted, the English court must have "a sufficient interest" in the matter in question. Often that sufficient interest will exist by reason of the fact that the English court is the natural forum for the determination of the parties' dispute. In a case where the injunction is sought in order to protect the jurisdiction or process of the English courts, the existence of a sufficient interest will generally be self-evident.
i) to protect the integrity of the arbitral process;
ii) to protect the integrity of the orders made by courts of this jurisdiction, in particular the anti-suit injunctions made by of Dias J and Henshaw J; and
iii) to protect the public policy of the United Kingdom in having the sanctions regime which it does.
"It might have been said on behalf of the defendants or Sovcombank at any rate that commencing proceedings in England deprives them of a legitimate juridical advantage because the Russian courts will disregard as a matter of public policy the sanctions laws imposed by English law. If and to the extent that is relied upon then, in my judgment, it is a proposition to be rejected. The parties having agreed English law, to attempt to litigate in a foreign jurisdiction where full effect is not given to English law including therefore sanctions law is not to seek to obtain a legitimate juridical advantage but, on the contrary, is to seek to obtain an illegitimate juridical advantage, a point which has been recognised in the case law as a reason for treating a claim brought in such a jurisdiction as vexatious and oppressive."
The UMAA and Client Agreement Claims
i) It is necessary to consider the claims asserted in the UMAA and Client Agreement Claims as a matter of substance, categorising them as a matter of English law by analogy with the cases referred to at [110] above. So analysed, they are attempts to recover amounts said to be due under contracts governed by English law. In their substance, the Russian law tort claims are an attempt to enforce inherently contractual obligations in an inherently contractual way.
ii) I am satisfied that the pursuit of those claims in Russia is intended to circumvent the UMAA and CA Arbitration Agreements, the rules of English law which would apply in that context, and more generally the English law sanctions regime. In doing so, VTB
is seeking to obtain an illegitimate juridical advantage (namely avoiding the laws of England and Wales including the UK sanctions regime) and is undermining the efficacy of that regime. Mr Fenwick KC suggested that, taken as a general proposition, Singh LJ's reference to the significance of any circumvention of the English law sanctions regime "cannot stand because to circumvent the sanctions regime of this country is something which is either a breach of the sanctions regime or not". However, I accept that such a circumvention is a relevant factor which forms part of the overall assessment of whether a claim is vexatious and oppressive, even though there is no absolute rule that such claims are always vexatious and oppressive. The ability to take a factor into account without making it determinative is one of the benefits of approaching this issue on the basis of the "vexatious and oppressive" jurisdiction rather than as an implied term.
iii) The provisions of Russian law used to impose liability on non-parties to the UMAA and Client Agreement do not accord with generally recognised principles of civil law. The claim in tort for failure to pay a debt and a tortious obligation imposed on all companies in the same corporate group regardless of any involvement in the transaction to take steps to require a debtor to pay are an unnatural form of liability as a matter of general principles of civil law. Further, the claims involve the wholesale disregard of corporate personality and contractual privity, by reference to special legal principles developed in response to international sanctions. As a result, the inevitable consequence of the pursuit of the Russian proceedings is the application of an "unnatural law" to these trading relationships governed by English law.
iv) The effect of the Russian legal principles developed in response to sanctions is to purport to make a significant retrospective change to English law obligations, in particular as to the identity of the parties to those obligations, but also as to the circumstances in which payment is required.
v) The matters in (ii) to (iv) establish a sufficient interest of the courts of England and Wales for the purposes of granting anti-suit relief.
vi) Taking account of all of these factors, I have come to the conclusion that the UMAA and Client Agreement claims are vexatious and oppressive both as regards JPMS plc and JPMCB, and also as regards the other JPM Entities joined to them. In particular, it is vexatious and oppressive to JPMS plc and JPMCB to pursue an affiliate such as JPM Russia, in the circumstances I have outlined, bringing what are in substance claims to enforce obligations arising under agreements to which JPMS pls and JPMCB are parties, but otherwise than in accordance with the applicable law and dispute resolution provisions and as a means of circumventing sanctions which apply to the amounts payable in connection with the UMAA and Client Agreement.
The ISDA Claim
i) JPMS plc notified VTB
of the close out of the ISDA Master Agreement and its intention to set-off the balance as early as 28 February 2022, providing its calculations on 24 March 2022.
ii) On 24 March 2022, VTB
notified JPMS plc of its calculation of EUR 108,636,829.56 in its favour, providing supporting material. However, in responding to JPMS plc's calculations of the net balance due under the Client Agreement of 20 April 2022 (arrived at using JPMS plc's ISDA calculation),
VTB
assumed the correctness of JPMS plc's ISDA figure and its reducing effect on the Client Agreement Claim (letter of 25 May 2022).
iii) Thereafter VTB
took no steps to indicate it was challenging JPMS plc's ISDA calculation.
iv) The Client Agreement Claim commenced by VTB
still assumed the correctness of JPMS plc's ISDA calculation (if
VTB
had been maintaining its own calculation, there would have been no net balance for JPMS plc to deduct).
v) In the face of that apparent acceptance of JPMS plc's ISDA calculation, it is not surprising that the anti-suit relief sought by JPMS plc and JPMCB from this court did not expressly refer to the ISDA Master Agreement. However, the court's order was expressed in terms, prohibiting VTB
from taking any step to pursue, prosecute or progress "any other proceedings in any court or tribunal concerning any dispute arising out of or in connection with" the Client Agreement and the UMAA "otherwise than through LCIA arbitration" and from "seeking any interim or conservatory order of relief or remedy or measure" inconsistent with the relevant Arbitration Agreement or the Claimant's steps to enforce that agreement.
vi) On 11 March 2025, VTB's
solicitor Mr Riem confirmed that "
VTB
does not dispute the calculation of the sums held on its behalf by JPMS and JPMCB" and did not dispute JPMS plc's calculations or the set-off.
vii) Three days later, the ISDA Claim was begun. By asserting that there was a balance due in VTB's
favour in relation to the ISDA Master Agreement,
VTB
was necessarily challenging JPMS plc's position that the Client Agreement balance fell to be reduced by an USD 11.7m credit in JPMS plc's favour. It is not necessary to decide whether there was a breach of the injunctions made by this court, but the commencement of those proceedings at that time and in those circumstances was contrary to the spirit of the court's order.
i) In the circumstances referred to in the previous paragraph, the claim appears to involve an opportunistic volte face by VTB
in circumstances in which its previous approach to the ISDA Master Agreement was to suggest that there was no live dispute as to the amount due.
ii) I am satisfied that an injunction is necessary to maintain the integrity of the orders of Andrew Baker J and Calver J.
iii) Once again, I am satisfied that the claims asserted in the ISDA Claim are, in substance, attempts to recover amounts said to be due under a contract governed by English law.
iv) The pursuit of those claims in Russia is intended to circumvent the rules of English law which apply to claims under the ISDA Master Agreement and to obtain an illegitimate juridical advantage (namely avoiding the UK sanctions regime), and undermine the efficacy of that regime.
v) The provisions of Russian law used to impose liability on non-parties to the ISDA Master Agreement do not accord with generally recognised principles of civil law for the reasons I have already given.
vi) Once again, the effect of the Russian legal principles developed in response to sanctions is to purport to make a significant retrospective change to English law obligations, in particular as to the identity of the parties to those obligations, but also as to the circumstances in which payment is required.
vii) The matters in (ii) to (iv) and (vi) establish a sufficient interest of the courts of England and Wales for the purposes of granting anti-suit relief.
G SHOULD THE COURT REFUSE TO MAKE THE INJUNCTION IN THE EXERCISE OF ITS DISCRETION?
i) So far as the JPM Entities are concerned, with the exception of JPM Russia for all claims and JPMS plc's claim in respect of the pursuit of the ISDA Claim against it, primarily on a "wholly contractual" basis, with an alternative finding on the "vexation and oppression" basis.
ii) So far as JPM Russia and JPMS plc's claim in respect of the pursuit of the ISDA Claim against it are concerned, on the "vexation and oppression" basis.
i) Those are separate proceedings, concerning a different relationship centred on an account with a New York branch of JPM subject to New York law and jurisdiction.
ii) JPMCB obtained anti-suit relief in respect of the Correspondent Account Claim, which was brought and is being pursued in breach of contract, but JPMCB was forced by an order obtained by VTB
from the Russian court in breach of the promises it had made to discharge the New York court's order. As District Judge Lorna G Schofield's order of 15 August 2024 recites, the "plaintiff represented that it was coerced into filing a motion to discontinue".
iii) Only JPM Russia (which had little alternative) has submitted to the jurisdiction of the Russian court, as VTB
accepts.
iv) Given their separate subject-matter, and the discreditable circumstances in which they have come to be issued and remain in being, the fact of these proceedings provides no reason not to give relief in relation to three separate sets of proceedings subsequently commenced by VTB
in relation to three different contracts with different applicable law and dispute resolution clauses.
v) In any event, one consequence of the parties having separate jurisdiction clauses for the Correspondent Account and the contracts in issue here with different forum selection clauses was that disputes relating to these different relationships were always going to be tried separately, and the parties clearly contemplated and accepted this (albeit they contemplated those different tribunals would be the New York courts and LCIA arbitration). In these circumstances, ex-post "dispute fragmentation" concerns carry little weight.
i) The UMAA and Client Agreement Claims were issued on 7 October 2024.
ii) On 11 October 2024, JPM Russia made a further attempt to appeal the order dismissing its counterclaim, by way of an appeal to the Court of Cassation (i.e. a second appeal). That application did not in any way relate to the UMAA and Client Agreement Claims, and is of no relevance to the issue of whether JPMCB and JPMS plc responded promptly to those claims. It did not involve the progression of the claims which are the subject of these anti-suit applications.
iii) On 24 October 2024, judgment on the merits was entered against the various JPM entities in the Correspondent Account Claim and on 25 November 2024, various of the JPM entities, including JPMCB, JPM Russia and JPMS plc, filed an appeal against that judgment. Once again that application did not in any way relate to the UMAA and Client Agreement Claims, and is of no relevance to the issue of whether JPMCB and JPMS plc responded promptly to those claims.
iv) These applications were brought on 12 December 2024, by which date there had been no preliminary hearing in either the UMAA or Client Agreement Claims.
i) Criticism is made of the fact that none of the JPM Entities has commenced arbitration against VTB.
However, these are contractual applications to enforce the negative covenant in the arbitration agreements not to issue proceedings elsewhere, or to restrain the vexatious and oppressive pursuit of litigation elsewhere. There is no requirement for the JPM Entities themselves to commence arbitration (see in the former context Ust-Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk Hydropower Plant LL [2013] 1 WLR 1889, [48]).
ii) It is said that VTB
would be deprived of the interim conservatory orders obtained from the Russian courts. However, the fact that, in addition to commencing proceedings in breach of contract or vexatiously or oppressively,
VTB
has obtained orders from the Russian courts on the basis of those proceedings, does not provide a reason to refuse injunctive relief. That is one of the illegitimate judicial benefits
VTB
has wrongfully obtained.
iii) It is said that there was a looming time bar under the ISDA Claim. Assuming that to be the case, VTB
could have sought a voluntary suspension of the period, and, if necessary, asked this court to make that a condition of the continuation of the injunctions. In any event, it would seem that the time bar referred to is a Russian law time bar in respect of Russian law tort claims, in which case it can be no answer to commencing proceedings wrongfully that it was necessary to satisfy a limitation requirement only applicable to such wrongful proceedings.
iv) It is said that the position of JPM Russia is unattractive because it briefly sought injunctive relief, discontinued that application but still stands to benefit from the injunctions sought by others. However, I have found that the pursuit of the claims against JPM Russia are themselves vexatious and oppressive so far as JPMCB and JPMS plc are concerned. Those entities having their own independent legitimate interest in obtaining anti-suit relief, there is no reason why that interest should not be protected by an order of this court. It is not particularly surprising that an entity located in Russia may have been wary of seeking anti-suit relief, or perceived difficulties arising from its own actions in the Russian proceedings in doing so.
i) It is said that the true nature of the Russian law claims was not made clear (i.e. that they were claims in tort). However, for reasons I have explained above, it is the substance of the claims as a matter of English law categorisation which matters. In any event the legal provisions relied upon were summarised in Dogra 1 and in Holiner 1 paras. 70 to 72 where they are described as "claims in tort". The claims are referred to in the skeleton as "tortious claims" (paragraph 43) and were described in oral submissions as a "tort claim" on a number of occasions.
ii) It is said that JPMCB and JPMS plc failed sufficiently to draw the hierarchy clauses so far as the 2017 Terms were concerned to the court's attention. However, the interrelationship between the UMAA, Client Agreement and 2017 Terms was addressed at Dogra 1 paragraphs 14 to 18; Dogra 2 paragraphs 13-17 and in the skeleton argument (at paragraphs 5 and 44-45). The Judge referred to the hierarchy issue in oral argument.
iii) It is said that the application was wrongly presented to the court as urgent and one that had to be made on a "without notice" basis because of a risk that the Russian court would proceed immediately to determine the claim on the merits. However, against the background of the anti-anti-suit obtained in the Correspondent Account proceedings, there was an obvious risk of VTB
taking steps to preclude an anti-suit application if given notice. Further, on the evidence of Mr Holiner, there was a risk the Russian court might refuse to adjourn the upcoming preliminary hearings, although he thought that unlikely. That risk was fairly presented to the court. There is clearly room for legitimate differences of opinion in evaluating that risk, as there would appear to be between Mr Holiner and Professor Schwarz. In any event, this would not provide a sufficient reason for setting aside any order.
iv) It is said that delay was inadequately explained. However I am satisfied that the Claimants' position was explained at the without notice hearing, including in oral argument, in essentially the same terms as at this hearing, which explanation I have found to be satisfactory.
v) It is said the JPM Entities did not explain that they did not themselves intend to commence arbitration. However, there being no requirement that they do so, no explanation was required.
vi) It is said that there was a failure to explain the similarities between the UMAA and Client Agreement Claims on the one hand, and the Correspondent Account Claim on the other. However, beyond the fact that VTB
was relying on the same Russian "anti-sanctions" provisions in each, there was no such similarity. In any event, the history of the Correspondent Account proceedings was set out in some detail.
vii) It was at one point said that Mr Justice Andrew Baker was not told about the interim measures ordered by the Russian courts. However, they are addressed in at Dogra 1 paragraph 65 and Dogra 2 paragraph 56 and in the Claimants' skeleton (paragraph 50). This complaint was not pursued in VTB's
skeleton.
H THE CLAIM FOR AN ANTI-ENFORCEMENT INJUNCTION
I VTB'S
CHALLENGE TO JURISDICTION
Gateway
Forum non conveniens
i) At [179], forum conveniens was not relevant to the application to enforce the arbitration agreement because "by agreeing to arbitrate in London the parties were agreeing to submit to the supervisory and supporting jurisdiction of the English courts, including its jurisdiction to grant anti-suit injunctions."
ii) At [184], that "forum conveniens considerations are irrelevant and comity has little if any role to play."
Alternative service
J CONCLUSION
i) VTB's challenge to the court's jurisdiction and its application to set aside the Interim ASIs are dismissed.
ii) Final anti-suit injunctions and anti-enforcement injunctions are granted to the Claimants, save for JPM Russia.
iii) Permission for alternative service is granted.