In Sulamerica CIA Nacional de Seguros SA & Ors v Enesa Engenharia SA & Ors [2012] EWHC 42 (Comm), Mr Justice Cooke held that an anti-suit injunction restraining the defendant insureds from pursuing proceedings in Brazil in breach of an arbitration clause would be continued.

The substantive dispute between the claimant insurers (Sulamerica) and the defendant insureds (Enesa) related to claims made by Enesa under certain insurance policies (the Policies) for physical damage to a hydroelectric facility in Brazil. Sulamerica had commenced arbitration proceedings in London for a declaration of non-liability under the policy on 29 November 2011. Enesa commenced proceedings in Brazil and as a result, Sulamerica sought an interim anti-suit injunction from the English courts, which was granted on 13 December 2011. On 16 December 2011, the Brazilian court granted an order restraining Sulamerica proceeding against Enesa in arbitration until the Brazilian court had determined whether the parties were bound to arbitrate disputes which had arisen between them.

In the present action, Sulamerica sought the continuation of the interim anti-suit injunction which restrained Enesa from pursuing the proceedings which it had commenced in Brazil. The Policies contained both a Brazilian law and jurisdiction clause, and an arbitration clause which designated the seat of any arbitration to be London. The principal issue before Cooke J related to the incorporation of the arbitration clause into the Policies and the interaction of the jurisdiction and arbitration clauses.

Cooke J held that the arbitration agreement was to be governed by English law. Although the main contract contained a Brazilian choice of law clause, he held that the the choice of England as the seat of arbitration was akin to an exclusive jurisdiction clause and that accordingly the law with the closest connection to the agreement to arbitrate was the law of England. Cooke J went on to hold that the arbitration clause took precedence over the Brazilian jurisdiction clause, such that the commencement of proceedings in Brazil by Enesa was in breach of the arbitration agreement. Therefore, the Court held that the anti-suit injunction was to be continued.

This case clarifies that the choice of seat of an arbitration will, in most cases, be determinative as to the governing law of the arbitration clause, even where the main agreement is explicitly stated to be governed by another system of law. It also highlights that where an agreement contains both an arbitration clause and an exclusive jurisdiction clause, the arbitration clause will tend to “trump” the jurisdiction clause.