On 17 July 2024 the Düsseldorf Higher Regional Court decided an immediate appeal (Beschluss vom 17.06.2024 – 26 W 7/24) in the matter of an anti-anti-suit injunction and thereby joined the ranks of many popular international court decisions regarding this powerful tool of procedural law in common law jurisdictions. The background of this dispute is a contract about gas supplies from Russia to Germany and the fact that the Russian party obtained an anti-suit injunction in Russia, despite contractually agreed arbitration clause in favour of SCC Stockholm.
If you’re looking for more resources on the subject matter of anti-suit injunctions, we gladly refer you to KDB.legal’s recent contributions:
- Ping-Pong decisions on jurisdiction – to arbitrate or not to arbitrate, that is the question
- ZASA 2024, 342 (available here)
Facts
Underlying are contractual disputes between the Applicant and the Opponent who are parties to a contract for gas supply. The contract is subject to Swiss law and contains an arbitration clause whereby contractual disputes would be solved by an arbitrational court in Sweden.
When the Applicant sought arbitrational proceedings in Sweden for damages due to cancelled gas supplies, the Opponent applied to a Russian commercial court to issue an anti-suit injunction equipped with a tall penalty clause in case of infringement which was granted and is immediately enforceable under Russian law.
Decisions such as this were made possible by recent legislation adopted by the Russian Federation in response to international sanctions against Russian businesses and entities. Art. 248.1 and 248.2 Russian Arbitration Procedure Code is form of procedural protectionism for sanctioned Russians which circumvents jurisdiction and litigation before foreign courts and serves as a legal foundation for anti-suit injunctions such as the one obtained by the opponent.
Please refer to my colleague’s article for more in-depth information on Russian legislation regarding anti-suit injunctions: Ping-Pong decisions on jurisdiction – to arbitrate or not to arbitrate, that is the question; ZASA 2024, 342 (available here)
Next to the appeal before the Russian commercial court, the Applicants in the present case sought legal remedy before the German courts claiming infringement of the right to justice under Arts. 2 (1), 19 (4), 20 (3) German Constitution which is rooted in the rule of law. The Applicant contended that an anti-anti-suit injunction issued by a German court on the grounds of infringement of the Right to Justice would be the only way to avoid execution of the Russian commercial court decision.
Reasoning
The court of first instance, the Regional Court Düsseldorf, dismissed the Applicant’s claim for an anti-anti-suit injunction on the grounds of international incompetence. In its reasoning the Regional Court relied on a highly controversial argument between German legal scholars which was swiftly rejected in the appellate instance. The arbitrational clause contractually agreed between the party was held to constitute a common intention not only to choose Sweden as a place of arbitration but also to exclude any German court to decide on disputes connected with the contract. The Regional Court thereby seemingly chose to ignore §§ 1025 (2), 1033 German Civil Procedural Code which seemingly explicitly state international competence for German court injunctions even if the place of arbitration is in another country.
The cause of legal controversy in Germany is § 1045 (3) German Civil Procedural Code which grants contractual autonomy to the parties in arbitration where there’s no imperative law. However, whether §§ 1025 (2) and 1033 German Civil Procedural Code constitute such imperative law remains undecided. The prevailing legal opinion which was later described by the Higher Regional Court to reject the argument of international incompetence doesn’t recognize §§ 1025 (2) and 1033 ZPO as imperative law, however, it requires explicitly stated common intention by the parties which was lacking in the contract at hand.
International competence was alternatively rejected by the Court of First Instance because a claim in tort could not be found. Even though the Higher Regional Court came to the same conclusion in its material reasoning, an argument for incompetence cannot be made under German procedural law on those grounds. To establish competence under § 32 ZPO conclusive assertion of a claim in tort is sufficient. Substantive law is typically not a matter of Admissibility.
In conclusion, the Higher Regional Court found International Competence because it rejected the idea that the statutory provisions in §§ 1025 (2), 1033 German Civil Procedural Code could be overruled by mere arbitrational clause and because it found that the Applicant had sufficiently asserted his claim in tort as follows: The anti-suit injunction equipped with monetary penalty is able to cause pecuniary loss for the Applicant at their place of business due to an unlawful act which constitutes infringement of their right to justice as guaranteed by the German Constitution. Consequentially, the fact that international competence of the German Courts is based on a possible claim in tort and not precluded by the arbitrational clause, restricts the claim to claims in tort, -contractual claims cannot be considered.
The Higher Regional Court also refrained from finding Inadmissibility on the grounds of legitimate interest. Where the Court of First Instance found that the anti-anti suit injunction could not provide global legal protection to the Claimant anyway, the Higher Regional Court ignored the question of legitimate interest in favour of its substantive reasoning in which it found the claim to be obviously unsubstantiated. However, the Regional Court made a fair point when it stated that the minor effect of an anti-anti-suit injunction globally would contradict the efficiency of the legal instrument of injunctions. Its concerns in relation to effectiveness especially regarding countries – other than German – which recognise the Russian judgement was well founded and previously touched by my colleagues in their articles.
Even though the Higher Regional Court provided a solid explanation, its ignorance of the fact that the Regional Court held illegitimate interest seems questionable from the perspective of the constitutionally granted Right to Justice. As the Higher Regional Court points out in its substantive reasoning the right to justice safeguards access to justice, the comprehensive and effective legal assessment of claims as well as access to justice. These are safeguards against the authority of the state, rather than safeguards that can be enforced between individuals. One might wonder if the reasoning of illegitimate interest given by the Regional Court to support inadmissibility of the claim could not in itself infringe the Right to Justice and whether the Higher Regional Court shouldn’t have used the opportunity of a case where the Right to Justice was central, to assess and weigh the need for effectiveness of an injunction and the Right to Justice against each other.
Substantively, the Higher Regional Court found that a claim in tort giving rise to an anti-anti suit injunction was not substantiated under German law. In its reasoning it followed to lines of argument.
1) The constitutionally guaranteed Right to Justice in Arts. 2 (1), 19 (4), 20 (3) German Constitution is not an absolute right such as property or a patent. It can especially not easily be relied upon in disputes between individuals. In German constitutional law the recognition of a constitutional provision as a right of defence that can be enforced against another individual is subject to strict requirements (so-called “Drittwirkung”).
On top of that it is questionable whether a foreign court decision (not recognized in Germany) in a matter subject to Swiss law which is primarily adjudicated by an arbitrational court in Sweden is even capable of constituting an infringement of a fundamental right such as the Right to Justice. It seems too far away to constitute impairment in the constitutional sense which would be necessary to find infringement of the Right of Justice and justify a claim in tort.
The mere execution equipped by a high monetary penalty itself cannot be sufficient. Firstly, it is unclear whether the Applicant will even be affected by the execution of the judgement as they are primarily located in Germany. Secondly, the execution of judgements, albeit unfair judgements, lies at the core of national sovereignty. Exertion of foreign influence would be an infringement of international law, especially of the territoriality principle. Reference is made to a judgement by the German Constitutional Court in which it was stated that the German state generally does not protect citizens engaged in international relations from liability in a foreign legal system (BVerfG, Beschluss vom 24.01.2007 – 2 BvR 1133/04, Rn. 10).
2) The second line of argument relies upon legal consequences recognized in German tort law and finds that anti-anti- suit injunctions are not one of them. Generally anti-suit injunctions are not an instrument of German procedural law but more so recognized in common law jurisdictions. In Germany anti-suit injunctions are considered an (indirect) infringement of the German judiciary and the right to justice itself and therefore typically considered inadmissible. Even though there have been exceptions (eg. OLG Hamm, Urt. v. 02.05.2023 – 9 W 15/23, EuZW 2023, 1062).