International Arbitration Clause Trumps Local Court Proceedings

A recent UK Supreme Court decision, Kamenogorsk Hydropower Plant JSC (Appellant) v AES Ust-Kamenogorsk Hydropower Plant LLP (Respondent) [2013] UKSC 35, may offer further protection for international arbitration. The decision supports the proposition that parties should be bound by their agreement to submit disputes to arbitration and may prevent parties pursuing claims through local courts.

The UK Supreme Court decision may offer parties a way to:

• avoid local court proceedings where there is an arbitration agreement; and
• resist enforcement of local court orders against assets held in the UK.

A party may be able to obtain an order for an "anti-suit injunction" from a UK court to stop the other party from continuing with local court proceedings - even if an arbitration has not started.