The UK’s highest court has upheld a decision that England has the right to block a Gazprom unit’s Russian lawsuit against Italian bank UniCredit.
RusChemAlliance (RCA), a subsidiary of Russian energy giant Gazprom, is suing Italian bank UniCredit in the Arbitrazh Court of St Petersburg and the Leningrad Region.
RCA is a special purpose company for implementation of the construction project for a gas processing plant within Russia. This saw the involvement of UniCredit as it issued seven on-demand bonds in favour of RCA to a total value of approximately €420m.
However, the construction of the gas plant hit a hurdle after the Russians invaded Ukraine, resulting in a swarm of sanctions against the county. The contractor of the plant was not allowed to continue due to EU sanctions.
RCA went on to issue proceedings against UniCredit, as well other banks, at the Russian court as it sought recovery of €448m (£387m) under the bonds
The Italian bank alleges that this legal challenge was in breach of the arbitration agreements in the bonds, as the bonds are governed by English law and disputes are for the Paris arbitration seat.
The bank sought, among other things, an anti-suit injunction requiring RCA to discontinue the Russian proceedings. Initially, the High Court declared it had no jurisdiction to hear the claim on the grounds that the arbitration agreements were governed by French law.
However, the Court of Appeal allowed UniCredit’s appeal and granted an injunction requiring RCA to discontinue the Russian proceedings.
The Russian energy company took that ruling to the Supreme Court. On Tuesday, at a two minute hearing, Lord Robert Reed disclosed that despite the court now being in a position to issue a full judgment, he could revealed that the court was dismissing the claim.
Lord Reed noted that his “gratitude” to the Russian court which was currently adjourned until 6 May as it was awaiting the Supreme Court’s ruling. He stated that this is why the court was disclosing its decision today, while it awaits a full judgment to be handed down detailing its reasons.
By dismissing RCA’s appeal, the Court of Appeal ruling still stands which ordered RCA to terminate the Russian proceedings.
UniCredit and RusChemAlliance were contacted for a comment.