THE UK's highest court has upheld a decision that England has the right to block a Gazprom unit's Russian lawsuit against Italian bank UniCredit.

RUSCHEMALLIANCE (RCA), a subsidiary of Russian giant Gazprom, is suing Italian bank UniCredit in the Arbitrazh Court of St Petersburg and the Leningrad Region.

RCA is a special purpose company for the construction project for a gas processing plant within Russia. This saw the involvement of UniCredit as it issued seven on-demand bonds in favour of RCA.

However, the construction of the gas plant hit a hurdle after the Russians invaded Ukraine. The contractor of the plant was not allowed to continue due to EU sanctions.

RCA went on to issue proceedings against UniCredit at the Russian court as it sought recovery of £387m under the bonds UniCredit alleges that this legal challenge was in breach of the arbitration agreements in the bonds, as the bonds are governed by English law and disputes are for the Paris arbitration seat. The Court of Appeal allowed UniCredit's appeal and granted an injunction requiring RCA to discontinue the Russian proceedings.

(c) 2024 City A.M., source Newspaper