Restraining third parties

BNP Paribas SA v Open Joint Stock Company Russian Machines and Anr [2011] EWHC 308 (Comm) raised the unusual question of whether an order seeking to protect an arbitration could be made against a third party as well as the defendant in the arbitration. The allegation was that the defendant and the third party had colluded in bringing judicial proceedings in Russia, in breach of the arbitration clause. Blair J explored at length the complex question of whether the English court actually has jurisdiction to give permission for the service of proceedings out in such circumstances, a matter on which there is inconclusive and conflicting case law.

BNP: the facts

The claimant bank made a loan to a subsidiary company of the defendant, OS, and in turn OS guaranteed the liabilities of the subsidiary to the bank. The guarantee was governed by English law, and contained an arbitration clause specifying arbitration in London under the rules of the London Court of International Arbitration before a sole arbitrator. The arbitration clause also provided that, before an arbitrator had been appointed, the bank could by notice in writing to OS require one or more disputes to be heard by the English courts. Under the agreement, OS appointed solicitors BC for service of process in England.