Background to the case
The dispute related to contracts governing the use of YouTube’s monetisation services and content distribution. Google had entered into agreements with defendants that included clauses providing for arbitration or the exclusive jurisdiction of English courts. The YouTube Terms of Service, applicable to all users, contained provisions allowing Google to suspend or terminate accounts to comply with legal obligations, including international sanctions. Since 2020, Google has restricted defendants’ access to their YouTube accounts on grounds of their relationship with sanctioned entities and individuals including oligarchs and the Russian Orthodox Church.
The Russian defendants commenced proceedings before the Russian courts against Google resulting in the penalties that Henshaw J described as ‘exorbitant’ and ‘extravagant, indeed other-worldly, sums of money of a penal nature (…) bearing no relationship to any measure of compensatory damages’.
Google challenged the enforcement of the judgments before the English courts and applied for an anti-enforcement injunction and ancillary anti-anti-suit injunction on the grounds that the arbitration and exclusive jurisdiction clauses were not respected by the Russian proceedings. Google contended that allowing enforcement of these judgments would undermine its contractual rights and set a dangerous precedent for international commercial agreements. The defendants countered that Google had voluntarily engaged with the Russian courts and had therefore submitted to their jurisdiction. They also argued that English courts should not intervene in foreign judicial processes, particularly given the geopolitical context involving sanctions.
Decision of the English High Court
Henshaw J decided in favour of Google, granting final anti-enforcement injunctive relief. The Court found that the defendants’ claims had been improperly brought in Russian courts in violation of the contractual dispute resolution clauses. Henshaw J added that Google’s participation in the Russian proceedings did not amount to a waiver of its contractual rights but was a necessary defensive step taken to challenge the claims and mitigate potential damages. The Court also determined that Google had acted with appropriate promptness in seeking relief and that there was no undue delay that would preclude injunctive relief.
A curious aspect of the Court’s reasoning related to the broader geopolitical context, including the impact of Western sanctions on Russian entities, following the latter’s invasion of Ukraine, and the legislative changes in Russia that facilitated claims against foreign companies. The Russian court had relied on a provision in Russian law (Article 248.1 of the Arbitrazh Procedural Code) that granted exclusive jurisdiction to Russian courts in cases involving sanctioned Russian entities, effectively rendering foreign jurisdiction clauses unenforceable. However, the English Court held that such Russian mandatory law did not displace the freely negotiated jurisdiction and arbitration agreements.
By issuing anti-enforcement injunctions, the English court prevented the defendants from pursuing enforcement of the Russian judgments outside Russia, which were pending in several jurisdictions. In addition to the anti-enforcement injunctions, the English High Court also granted the ancillary anti-suit injunctions. These injunctions prevent the defendants from initiating proceedings in Russia that would counteract or undermine the Court's orders.
Comment
This case emphasises the importance of exclusive jurisdiction and arbitration clauses in contracts and reaffirms the English courts’ willingness to intervene when such obligations are being breached.
The case is also another one in a string of English cases related to sanctions imposed on Russia following the invasion of Ukraine such as the seminal 'UniCredit Bank GmbH v RusChemAlliance LLC [2024] UKSC 30 and Barclays Bank plc v VEB.RF [2024] EWHC 2981 (Comm)' or, in the context of 'force majeure' clauses, 'MUR Shipping BV v RTI Ltd' [2024] UKSC 18. The judgment sheds light on the growing and concerning trend of Russian entities turning to the Russian courts in response to international sanctions regardless of contractual provisions.