Judgement Briefs

Alternative Dispute Resolution

Enka Insaat Ve Sanayi A.S. v. OOO Insurance Company Chubb

[2020] UKSC 38

Citation
[2020] UKSC 38
Court
UK Supreme Court
Date
9 October 2020
Bench
Lord Kerr, Lord Hamblen, Lord Leggatt, Lord Burrows and Lord Sales

Facts

  • [2020] UKSC 38
  • Enka, a Turkish engineering company, performed work on a power plant in Russia.
  • The construction contract contained:
  • an ICC arbitration clause;
  • London as the arbitral seat; and
  • no express governing law for the contract.
  • A fire occurred at the plant.
  • Chubb Russia, the insurer, paid the plant owner and acquired subrogated claims.
  • Chubb commenced proceedings against Enka in the Russian courts, alleging defective work.
  • Enka argued that the Russian claims fell within the London arbitration agreement.
  • It sought an anti-suit injunction from the English courts restraining Chubb from continuing the Russian proceedings.
  • The dispute required determination of the law governing the arbitration agreement because:
  • Russian law might interpret its scope differently;
  • English law strongly protected the arbitration clause; and
  • the contract contained no express general choice of law.

Issue

  • How the governing law of an arbitration agreement should be identified.
  • Whether the law of the substantive contract or law of the seat applied.
  • Whether an English anti-suit injunction should protect the London arbitration.

Rule

  • Under the common-law framework stated in Enka:
  • An express choice of law for the arbitration agreement governs.
  • If none exists, an express or implied choice for the main contract will generally extend to the arbitration agreement.
  • If no law is chosen for either, the arbitration agreement is governed by the law with which it is most closely connected, ordinarily the law of the seat.
  • The seat is a strong connecting factor because it supplies:
  • supervisory courts;
  • procedural law; and
  • the legal framework supporting arbitration.
  • English courts may grant anti-suit relief to restrain foreign litigation brought in breach of an English-seated arbitration agreement.

Application

  • The contract did not expressly choose Russian law or any other substantive governing law.
  • The fact that:
  • the project was in Russia;
  • contractual performance occurred there; and
  • Russian legal rules were relevant did not amount to a sufficiently clear implied choice.
  • There was therefore no main-contract law automatically extending to the arbitration clause.
  • London had been expressly selected as the seat.
  • The arbitration agreement was consequently most closely connected with English law.
  • Applying English law, the clause was broad enough to cover Chubb’s subrogated claims.
  • Chubb stepped into the insured’s position and could not acquire greater rights than the insured possessed.
  • If the insured had agreed to arbitrate disputes arising from the contract, the insurer’s derivative claim remained subject to that agreement.
  • The Russian proceedings threatened the parties’ chosen arbitral process.
  • The English court, as the court of the seat, was entitled to protect its jurisdiction through an anti-suit injunction.
  • The Court emphasised that an anti-suit injunction operates against the litigating party, not against the foreign court.
  • Enka generated complex debate because its default framework sometimes caused the main contract and arbitration agreement to be governed by different laws.
  • The UK Arbitration Act 2025 now provides a statutory rule that, unless the law of the arbitration agreement is expressly chosen, the law of the seat applies.
  • That reform replaces much of the common-law choice exercise for matters governed by the amended statute.
  • The case remains essential for understanding:
  • the earlier common-law method;
  • the distinction among applicable laws; and
  • the seat court’s protective jurisdiction.

Conclusion

  • The UK Supreme Court held that English law governed the arbitration agreement because no law had been chosen and London was the seat.
  • Chubb’s Russian proceedings breached the arbitration agreement.
  • The anti-suit injunction protecting the London arbitration was upheld.
  • Use this case for: absent a contractual choice, the law of the arbitral seat ordinarily governs the arbitration agreement under the pre-2025 English common-law framework.