FH Holding Moscow Limited v AO Unicredit Bank & Anor

The principal issue in this appeal is whether proceedings in Moscow to levy execution against property mortgaged under a Mortgage Agreement, which was subject to Russian law and jurisdiction, were brought in breach of the arbitration clause in a separate Facility Agreement, which was governed by English law and provided for arbitration in Vienna. The appellant’s case is that before levying execution, the respondent banks were obliged to obtain an award from an arbitral tribunal in Vienna declaring that an Event of Default had occurred and that their failure to do so was a breach of the arbitration clause in the Facility Agreement.

It is not easy to see why this issue has anything to do with English law or the English court. Neither the Russian bank which is the claimant in the Moscow proceedings, nor the Cypriot company which is the defendant there, has any presence or conducts any business in this jurisdiction. The proceedings in Moscow are brought pursuant to a Russian law Mortgage Agreement which sets out the circumstances in which the lender is entitled to levy execution and provides that this may only be done in a judicial procedure in the Moscow court. The property in question is in Russia.

Whether the bank is entitled to levy execution without first obtaining an award in Vienna appears to me to be an issue for the Moscow court to determine, just as it would determine any other defence to the process of execution. It is an issue which depends upon interpreting what the Mortgage Agreement has to say about the circumstances in which the security may be enforced and about the jurisdiction of the Moscow court, both of which are matters of Russian law.

Moreover, the proceedings here are brought to enforce an arbitration agreement which is governed by Austrian and not English law. So (in contrast with the position in UniCredit Bank GmbH v RusChemAlliance LLC [2024] UKSC 30, [2025] AC 1177, where the arbitration clause was governed by English law) any interest of the English court in enforcing the Austrian law arbitration clause can only be derived from the fact that the underlying Facility Agreement, but not the arbitration clause with which the proceedings are concerned, is governed by English law. But that seems a shaky foundation for the grant of a remedy as serious as an anti-suit injunction.

However, the parties argued the issue before Mr Justice Henshaw, and in this court, as one to be determined applying English law principles of contract interpretation, perhaps on the basis that the applicable Russian and Austrian principles could be deemed to be the same as the equivalent English law principles. On that basis the judge concluded that the bringing of proceedings in Moscow was not a breach of the arbitration clause in the Facility Agreement. I agree with that conclusion, which means that the appeal must be dismissed. As a result it will not be necessary to decide the other issues discussed in submissions.

The appellant claimant is FH Holding Moscow Ltd (‘FHM’), a Cypriot company which operates solely in Russia, where it is tax resident. It is part of a group of companies, the ‘Fashion House’ group, which also operates in Poland, Romania, Belgium, and Luxembourg. It has no business in, or connection with, England and Wales.

The defendants and respondents are AO UniCredit Bank and UniCredit SpA (‘AO’ and ‘SPA’, together ‘the banks’). AO is a Russian bank which is a wholly owned subsidiary of SPA, a major Italian bank. SPA has, but AO does not have, a branch office in London.

FHM is the borrower under a term loan dated 2nd November 2018 (the ‘Facility Agreement’). The loan comprised:

SPA entered into the Facility Agreement as lender. AO entered into it as lender, but also as the Security Agent. As Security Agent, AO was the party to which FHM was required to make repayments as and when they fell due and was the only party entitled to enforce the lenders’ rights under the agreement (clause 27).

Clause 23 of the Facility Agreement lists numerous events or circumstances which constitute an Event of Default. One such event, as would be expected, is a failure by FHM to pay any amount which is payable on the due date and at the place and in the currency in which it is expressed to be payable, with only limited exceptions. One of the consequences of an Event of Default is that the Agent may accelerate all or part of the loans so that they become immediately due and payable.

The Facility Agreement is governed by English law and contains an arbitration clause in the following terms:

The effect of section 6A of the Arbitration Act 1996, inserted into the 1996 Act by the Arbitration Act 2025, is that this arbitration clause is governed by Austrian law, the law of the seat. Section 6A reverses the decision of the Supreme Court in Enka Insaat ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38, [2020] 1 WLR 417, which was applied and clarified in UniCredit v RusChemAlliance, according to which the default rule was that the law applicable to an arbitration agreement was the governing law of the underlying contract.

The Facility Agreement was entered into alongside a suite of associated agreements, which included a Mortgage Agreement executed on 6th November 2018 between FHM as mortgagor and AO as mortgagee. SPA was not a party. Various real estate assets in or near Moscow, all of which are fashion retail outlets owned by FHM, were provided as security for the loans provided under the Facility Agreement. The total value of the assets as at 31st December 2024 is said to have been about €42 million.

The purpose of the Mortgage Agreement was to provide security for the repayment of the amounts due under the Facility Agreement. It adopted the definitions used in the Facility Agreement, including the definition of an Event of Default, which was defined in the Mortgage Agreement as ‘any event or circumstance specified as such in Clause 23 (Events of Default)’ of the Facility Agreement.

Clause 9 of the Mortgage Agreement provided as follows:

The Mortgage Agreement was governed by Russian law and contained the following jurisdiction clause:

FHM’s position is that there has never been an Event of Default under the Facility Agreement, and that it has at all material times acted in good faith to discharge its payment obligations under the Facility Agreement. In summary, it says that it made payments in full until the start of the war in Ukraine in 2022, and continued to do so until Russian counter-sanctions made it unlawful under Russian law for it to pay the Euro debt to SPA. However, it continued to service the Euro debt to AO by paying the equivalent in roubles, and that tranche was fully repaid in December 2023. It says that the rouble debt was re-scheduled in June 2023, and again in July 2024 as a result of an exchange of emails, and that it continued to make rouble payments until February 2025 when AO, at SPA’s direction, refused to accept them. This is disputed by the banks.

On 24th March 2025 AO (but not SPA) filed a claim in the Arbitrazh Court of the Moscow Region seeking foreclosure of the secured assets. It is common ground that that is a ‘judicial procedure’ of the kind contemplated by clauses 9.1.3 and 9.1.5 of the Mortgage Agreement. The claim was that FHM had failed to make a payment, so that an Event of Default under the Facility Agreement had occurred, entitling AO to enforce its security. The debt which it seeks to enforce is the total of the outstanding loan facilities, namely about €18.4m of principal and €3.85m of interest, and about RUB 845 million of principal and RUB 56 million of interest.

FHM’s response put this in dispute and contended that the issue whether there had been an Event of Default was subject to VIAC arbitration. On 28th April 2025 it filed an application challenging the jurisdiction of the Moscow court. Neither party has started any arbitration.

Subsequently, FHM joined SPA to the Moscow proceedings as a third party, pursuant to an application made on 28th May 2025. In Russian procedure, a ‘third party’ is a person whose interests might be affected by the court judgment, but who is not a claimant or a respondent. Although joined as a party by FHM in this way, SPA itself has made no claim in the Moscow proceedings.

FHM’s case is that in commencing the Moscow proceedings AO was acting in accordance with directions given by its parent company, SPA, and that this amounts to a breach of the arbitration clause in the Facility Agreement by SPA as well as by AO.

On 7th August 2025 FHM issued its application for an anti-suit injunction against both banks. Following a without notice hearing on 11th August 2025, His Honour Judge Pelling KC granted permission to serve the application out of the jurisdiction on AO on three grounds:

The application came before Mr Justice Henshaw on 13th November 2025, together with a challenge by AO to the jurisdiction of the English court and an application by SPA for summary judgment. The judge was able to circulate his impressive judgment to the parties in draft only eight days later. He summarised his conclusions as follows:

As a result the judge set aside the permission for service out of the jurisdiction on AO and dismissed the claim against SPA.

FHM appeals on four grounds:

FHM has not pursued the argument which it made in the court below that, independent of any breach of the arbitration clause, an anti-suit injunction should be granted on the basis that the Moscow proceedings are vexatious and oppressive.

As well as defending the judge’s reasoning, AO contends that the gateways on which FHM relied in order to found jurisdiction against it are not available because CPR 62.5 is the exclusive route for service out of the jurisdiction of an arbitration claim form.

Before the judge it was the banks’ case that the words ‘arbitration court’ in clause 9.1.5 of the Mortgage Agreement (‘any court, arbitration court or state authority’) refer to an arbitral tribunal such as a VIAC tribunal constituted under the Facility Agreement. At the hearing FHM suggested for the first time that these words referred to a Russian arbitrazh court (i.e. a state body and not a private tribunal). The judge held that it would not be fair to allow FHM to take this point when the parties’ evidence had proceeded on the basis that the words referred to an arbitral tribunal.

This has led to an application by FHM to adduce fresh evidence on appeal consisting of an expert report by Victor Prokofiev on the translation of the words ‘arbitration court’, who opines that they refer to a Russian arbitrazh court. The banks oppose this application, but submit that if this new evidence is allowed, they should be allowed to adduce their own evidence of the meaning of these words.

This appeal was expedited with a view to a decision being given before the Moscow proceedings had reached their conclusion. In the event, however, the Moscow court gave judgment on 19th March 2026, 11 days before the hearing of the appeal. It decided that the dispute fell within the terms of clause 21 of the Mortgage Agreement, that the Mortgage Agreement did not require AO to obtain a decision as to the existence of an Event of Default from a VIAC tribunal before enforcing its security, and that an Event of Default had occurred. Nevertheless it dismissed AO’s claim because AO had not obtained permission from the Russian Central Bank or from the Government Commission for Control over Foreign Investment, permission which AO was required to obtain before foreclosing as a matter of Russian law.

The dismissal of AO’s claim in the Moscow court has removed much of the urgency of this appeal, but does not mean that it is academic. It is possible, if there is no injunction, that AO may appeal to a higher court (it has one month from the date of the judgment in which to do so) or that it may obtain the necessary permission and bring new proceedings.

It is apparent from the grounds of appeal that the question whether the Moscow proceedings were brought in breach of the arbitration clause in the Facility Agreement is potentially decisive. If there was no breach, the claim for an anti-suit injunction must fail, regardless of whether that is viewed as a matter of jurisdiction over AO or a decision on the merits so far as SPA is concerned.

It is plain that, as a matter of language, a dispute about whether there has been an Event of Default is capable of falling within both the arbitration clause in the Facility Agreement and the jurisdiction clause in the Mortgage Agreement. These can, therefore, be regarded as competing dispute resolution clauses.

The English law principles to be applied when there are apparently competing dispute resolution clauses were summarised by Lord Justice Hamblen in BNP Paribas SA v Trattamento Rifiuti Metropolitani SpA [2019] EWCA Civ 768, [2020] 1 All ER 762, para 68 (omitting citations):

These were the principles which the judge applied and there is no suggestion by FHM that he misdirected himself. Rather, FHM’s case is that he reached the wrong answer. The submissions advanced by Mr Rupert D’Cruz KC on behalf of FHM in this court were essentially the same as those he had advanced to the judge, who addressed comprehensively the issue whether the Moscow proceedings were brought in breach of the arbitration clause in the Facility Agreement. The judge said:

I agree with this analysis and there would be nothing to be gained in this one-off case by my attempting to repeat it in my own words (cf. Neumans LLP v Andronikou [2013] EWCA Civ 916, [2013] Bus LR 1152, paras 36 and 37). I add only five short points.

First, I have reached that conclusion applying the English law principles which FHM invited us to apply. But as explained at the outset of this judgment, when the issue depends on interpreting a Russian law contract including a Russian jurisdiction clause and an arbitration agreement governed by Austrian law, it is by no means obvious that this is the appropriate approach.

Second, in view of what the Moscow court has decided (see para 30 above), in order to accept FHM’s submissions we would have to conclude, applying English law, that the Moscow court’s interpretation of the Russian law Mortgage Agreement was wrong. That would be an ambitious conclusion.

Third, on both parties’ cases, there is a degree of fragmentation which cannot be avoided. On the banks’ case, there may need to be an arbitration in Vienna as well as proceedings in Moscow to enforce its security, for example if the security is insufficient to repay the outstanding debt and the banks seek an award against FHM. But on FHM’s case there is the certainty of duplication, as an award in Vienna would be a condition precedent to enforcement of the mortgage security. This seems artificial. A dispute about whether an Event of Default has occurred is exactly the sort of dispute which would be expected to arise in enforcement proceedings. There is nothing unnatural in a conclusion that such a dispute can be decided in a Moscow court when the terms of clause 21 of the Mortgage Agreement are clearly wide enough to include such a dispute; not least as it may be important to a lender, once an Event of Default has occurred, to take prompt steps to enforce its security, perhaps including the obtaining of interim relief. By interpreting ‘the occurrence of any Event of Default’ in clause 9.1.1 of the Mortgage Agreement as meaning ‘the determination by a Vienna arbitral tribunal that there has been an Event of Default’, FHM’s submission substantially negates the lenders’ ability to take such steps.

Fourth, as the judge explained, the meaning of the words ‘arbitration court’ in clause 9.1.5 of the Mortgage Agreement is not a significant issue. If these words are to be interpreted as referring to an arbitral tribunal, they provide support for (or as he put it, they bolster) the judge’s conclusion but are not critical to it. Even if they refer to an arbitrazh court, however, they still show that the parties intended that execution proceedings could be started immediately, with any disputes being resolved as part of those proceedings rather than extraneously to them. I would therefore refuse the application to admit new evidence on appeal. The Ladd v Marshall [1954] 1 WLR 1489 criteria are not satisfied, not only because the evidence could have been obtained for use at the trial, but also because it would not have an important influence on the result of the case. In any event, it would be difficult for this court to override the judge’s view that it would not be fair to allow FHM to ‘change tack’ on this issue.

My conclusion on ground 1 means that it is unnecessary to decide grounds 2 to 4 and I do not propose to do so.

However, it is worth pointing out the potentially wide-ranging impact of FHM’s argument on ground 2. Ground 2 is that the judge ought to have held that the English court had jurisdiction over AO because its claim for an anti-suit injunction was ‘in respect of’ the Facility Agreement, which is a contract governed by English law, even though the arbitration agreement in the Facility Agreement is governed by Austrian law and it is the arbitration agreement which the English proceedings seek to enforce.

In UniCredit v RusChemAlliance in the Court of Appeal the argument proceeded on the basis that, in equivalent circumstances, the relevant contract is the arbitration agreement and not the underlying contract of which it forms part ([2024] EWCA Civ 64, para 40). That is why the question whether the arbitration agreement was governed by English law was important. UniCredit did not argue that the claim was also ‘in respect of’ the underlying contract which was expressly governed by English law. However, when the case reached the Supreme Court, UniCredit did at least canvass the possibility that it could found jurisdiction under paragraph 3.1(6)(c) of Practice Direction 6B because the claim was ‘in respect of’ the underlying contract. The Supreme Court did not decide this issue, although it is fair to say that Lord Leggatt’s reaction to the argument was not encouraging:

In circumstances where anything we might say on this issue would be obiter, I do not think it would be helpful to express a view, although I note that the words ‘in respect of’ have generally been regarded as extremely wide words for the purpose of establishing a sufficient connection to the jurisdiction, and that there appears to be no reason in principle why a claim could not be ‘in respect of’ more than one contract. But if FHM’s argument is well-founded, it would mean that the contract gateway is available in a case such as the present, where the real connection with this jurisdiction is minimal.

It is similarly unnecessary to address the respondent’s notice, but here again I think it is worth saying something about it.

Ms Louise Hutton KC contended on behalf of AO that the gateways in Practice Direction 6B on which FHM relied in order to found jurisdiction against it are not available because CPR 62.5 is the exclusive route for service out of the jurisdiction of an arbitration claim form. The argument is that CPR Part 6 does not apply because CPR 62.5 ‘makes different provision’ for the service of arbitration claim forms, within the meaning of CPR 6.1. CPR 6.1 provides that:

A claim for an anti-suit injunction made on the basis that foreign proceedings have been brought in breach of an arbitration agreement is an ‘arbitration claim’ as defined in CPR 62.2 and must therefore be started by the issue of an arbitration claim form (CPR 62.3). So it might be expected that service of an arbitration claim form out of the jurisdiction would be governed by CPR 62.5, to the exclusion of CPR 6, because CPR 62.5 makes different provision for the service of such claim forms, containing as it does specific provisions about their service, just as Parts 54 and 55 contain specific provisions for judicial review and possession proceedings.

Ms Hutton’s argument seems to me to have considerable force, but it runs up against two decisions of the Supreme Court, AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC [2013] UKSC 35, [2013] 1 WLR 1889, para 51, and UniCredit v RusChemAlliance, both of which proceeded on the basis that the gateways in Practice Direction 6B can be relied on for service out of the jurisdiction of an arbitration claim form, although it does not appear that the contrary position was argued in either case. Indeed, RusChemAlliance includes an extended discussion of the test for satisfying the requirement that England and Wales is ‘the proper place in which to bring the claim’ in an arbitration case, a requirement which applies to service out under Part 6, but not under CPR 62.5. Lord Leggatt explained how that test should be applied in the context of an arbitration claim, although it might be thought that his discussion of the point also demonstrated that the ‘proper place’ test, which usually has to do with forum conveniens issues, is out of place in this context and is not really concerned with arbitration claims at all.

As can be seen from cases like RusChemAlliance and the present case, the question whether Part 6 is available to found jurisdiction for an anti-suit injunction claim when the arbitration agreement provides for a foreign seat has practical significance. CPR 62.5 would not have enabled FHM to found jurisdiction over AO (and likewise would not have enabled UniCredit to found jurisdiction in the RusChemAlliance case: see para 91 of the Supreme Court’s judgment). If Part 6 was not available, the only potential basis on which permission for service out of the jurisdiction could have been given was CPR 62.5(1)(c). This provides that:

However, this paragraph does not apply where the arbitration clause in question provides for a foreign seat, as in the present case and as in RusChemAlliance.

I note that in the only case cited to us which directly confronts the argument advanced by Ms Hutton in the present case, Shipowners’ Mutual Protection and Indemnity Association (Luxembourg) v Containerships Denizcilik Nakliyat ve Ticaret AS [2015] EWHC 258 (Comm), [2015] 1 All ER (Comm) 966, para 42, Mr Justice Teare considered that ‘it would be a bold step for a first instance judge to say that an observation of the Supreme Court was in error’. Much the same might be said about the Court of Appeal. It is, however, an issue which might usefully be considered by the Rules Committee, who would be best placed to answer the policy questions whether the Part 6 gateways should be available for service of arbitration claim forms out of the jurisdiction and in what circumstances such service should be permitted in the case of arbitrations with a foreign seat.

I agree.

I also agree.