Few recent cases have generated as much comment as the decision handed down by the House of Lords on 21 February, 2007, in West Tankers v RAS Riunione Adriatica di Sicurta & Others. This may seem surprising given that the judgment itself did not decide anything; it simply referred a question of law to the European Court of Justice (ECJ). However, the concerns articulated by their Lordships in the judgment, as well as by lawyers and academics practising international arbitration in
The issue referred to the ECJ was: “Is it consistent with European Commission (EC) regulation 44/2001 for a court of a member state to make an order to restrain a person from commencing or continuing proceedings in another member state on the ground that such proceedings are in breach of an arbitration agreement?” EC regulation 44/2001 relates to jurisdiction and the recognition and enforcement of judgments in civil and commercial matters between European Union (EU) member states and has effectively superseded the mutual recognition regime established by the Brussels convention. The question referred was described by Lord Hoffman, who gave the leading judgment of the House, as one “of very considerable practical importance”, which it undoubtedly is.
In fact, it is a question that has exercised English lawyers since the ECJ decisions in two other well-known cases, Gasser GmbH v MISAT Srl and Turner v Grovit. Gasser established that a court of an EU member state on which exclusive jurisdiction had been conferred by agreement must nevertheless stay its own proceedings if the court of another member state had been first siesed. Turner v Grovit determined that a court of a member state could not issue an injunction restraining a party from pursuing proceedings in a court of another member state (a so-called anti-suit injunction), even in circumstances where those proceedings had been commenced in bad faith.
The effect of these two judgments was felt mainly in
The concerns expressed by lawyers and other arbitration practitioners about the possibility of the ECJ reaching the ‘wrong’ decision have focused on the possible detriment to the arbitration market in London if anti-suit injunctions were no longer available from the English court. In particular, their Lordships warned (in West Tankers) that the popularity of
Unfortunately, English lawyers should probably not raise their hopes about the prospects of obtaining a favourable ruling from the ECJ, notwithstanding the persuasive (indeed almost trenchant) opinion given by the House of Lords in West Tankers (“in case it should be of any assistance to” the ECJ, as Lord Hoffman diplomatically phrased it). In fact, the ECJ has arguably answered the question already in Turner v Grovit, which held that the Brussels convention, “is to be interpreted as precluding the grant of an injunction whereby a court of a contracting state prohibits a party to proceedings pending before it from commencing or continuing legal proceedings before a court of another contracting state, even where that party is acting in bad faith with a view to frustrating the existing proceedings”.
If one ignores the reference to a ‘party acting in bad faith’, which was a specific feature of Turner v Grovit, it is difficult to reconcile that decision with the kind of limitation proposed by the House of Lords in relation to cases involving arbitration agreements (or alleged arbitration agreements, since it cannot be guaranteed that arbitration will always be the ‘correct’ forum). The ECJ will have to identify what, if anything, distinguishes the situation in West Tankers from the circumstances covered by the broad and unqualified statement of principle established by Turner v Grovit. The
If, as appears to be the case, the only distinguishing feature relates to the motives for the granting of the injunction (the need to uphold an alleged arbitration clause), it is going to be difficult for the ECJ to hold this sufficient and to allow the English court to continue restraining legal proceedings in other member states. In particular, the problems that might emerge from such a decision could significantly affect the effectiveness of the mutual recognition scheme established by the EU regulation.
What, for example, would be the consequence of other European jurisdictions starting to provide remedies similar or analogous to the anti-suit injunction whenever their own courts believed that there was an arbitration agreement? Would the English court welcome parties to proceedings before it being restrained by injunction of a foreign court (say, for instance, the Greek court) because the foreign court had concluded — perhaps erroneously — that one of the parties to the proceedings was entitled to enforce an arbitration clause? For these, and other issues of policy, the ECJ is likely to conclude that the answer to the question referred to it by the House of Lords is an emphatic ‘no.’
David Foster is a partner at Watson Farley & Williams in
