The recent UK Supreme Court’s decision in Ust-Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk Hydropower Plant LLP 1 (“AES”) is undoubtedly up there with Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan 2 (“Dallah”) as one of the more important recent decisions in the world of international commercial arbitration. While there is much to commend on the court’s decision and reasoning—which, though uncontroversial, is analytically deep and sound—this case commentary focuses primarily on the court’s recognition of the negative aspect of an arbitration agreement. As a matter of principle, just as in the case of an exclusive jurisdiction agreement, it stands to reason that a party which promises to arbitrate its dispute at the same time promises not to resolve its dispute by any other means in any other forum. However, this seemingly obvious proposition, if not understood and applied correctly, may generate friction with existing established core principles of international commercial arbitration. Closer scrutiny is therefore warranted.

The respondent, AESUK, is the holder of a concession to operate a hydroelectric plant in Kazakhstan. The concession was granted by the Republic of Kazakhtstan (“ROK”). Under the concession agreement there is a clause providing for arbitration of disputes in London. In an action by ROK against AES in Kazakhstan, the Kazakh Supreme Court (“KSC”) ruled that the arbitration clause was invalid.