English Court Blocks Russian Proceedings in Spat on Nonpayment Due to Sanctions

A U.K. appeals court last week granted an injunction blocking a Gazprom subsidiary from suing its lenders in a Russian court over an abandoned gas project. The England and Wales Court of Appeal said it was the proper place to bring RusChemAlliance's claim against Germany-based Deutsche Bank, adding that there was no good reason not to impose the injunction.

The case stemmed from a September 2021 contract between RusChem, which is partly owned by Russian gas company Gazprom, and German construction firm Linde GmbH for the construction of a liquefied natural gas plant in Russia. The contract allowed for advance payments to Linde and for an advance payment guarantee to RusChem, one of which was issued by Deutsche Bank. RusChem sued after Linde stopped work on the project and both Linde and Deutsche Bank declined to give RusChem refunds or pay its claim under the guarantee, saying they were barred by the sanctions.

In the English Court of Appeal, Deutsche Bank sought an anti-suit injunction against RusChem's Russian proceedings, which was granted Oct. 11. The court said Deutsche Bank had to establish a "serious issue to be tried on the merits," an arguable case that the claim is within "one of the relevant gateways," and that England is the "proper place in which to bring the claim."

The court said Deutsche Bank met the first two points but said the third required "more consideration." It said "[t]he English court, faced with an English law governed contract containing a promise by a party not to do something and a threat by that party to do the very thing he has promised not to do, will readily and usually enforce that promise by injunction."

The only claim here is for interim injunctive relief, which is rooted in English law. This relief can only be obtained in England and not France, the court noted.