The Second Opinion: Arbitration Clauses Have "Super" Powers, UK Supreme Court Rules

What should prevail – an already commenced foreign court proceeding or an unexercised arbitration clause?  The answer, according to the UK Supreme Court, may surprise you.  In a recent ruling of relevance to Canadian practitioners and business, the UK Supreme Court granted an injunction to prevent the continuance of a foreign court proceeding (a so-called "anti-suit injunction") on the basis of an arbitration clause which had not been invoked.  In other words, a foreign court proceeding was enjoined even though there was no competing domestic arbitral proceeding underway.

The key facts of the decision in Ust-Kamenogorsk Hydropower Plant JSC (Appellant) v AES Ust-Kamenogorsk Hydropower Plant LLP (Respondent) [2013] UKSC 35 are as follows.  JSC is the owner of a hydroelectric power plant in Kazakhstan.  AESUK is the current operator of the plant.  JSC and AESUK entered into an agreement regarding the operation of the plant (the "Agreement").  The Agreement was