West Tankers: Online Symposium

by Gilles Cuniberti on February 10, 2009

The European Court of Justice has delivered its judgment in the West Tankers case.

This decision was much awaited. It raises critical issues, in particular in respect of the actual scope of European civil procedure, the consequences of the principle of mutual trust and the tolerance of the European Union with regard common law procedural devices.

In the days to come, Conflict of Laws will organize an online symposium on this case. Leading scholars from a variety of European jurisdictions will share with us their first reaction to the judgment. We hope that this will be an occasion for debate, and we invite all interested readers to contribute by using the comment section which will be available after each post, or by contacting us. Contributions to the symposium from those leading scholars will be listed here, so that you can see at a glance all of the debates on West Tankers.

Contributions to the Symposium:

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April 11, 2009 at 10:37 am

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Adrian Briggs February 10, 2009 at 5:47 pm

Hardly worth debate, which is presumably why there is nothing here. If you are allowed to do A, forbidden to to B, and are aware that you will bring about B by doing A in the cirsumstances in which you propose to do A, there does not seem to be much wrong with the conclusion that you may not do A after all. Most first year criminal lawyers will recognise the reasoning. I’m not sure that there is much to discuss. As nothing in this affects the arbitration in London, who cares ? And, if you think that you require an injunction to ensure that the proceedings in Italy make no discernible progress, you probably need to get out more… Now let’s get on with something important. As to whether the judgment is one which will make superior courts in other jurisdictions gasp in amazement, it is better to smile and say nothing.

Anna Quiñones February 10, 2009 at 7:21 pm

I think about the case Tankers that: 1) The choice between an arbiter and a judge is out of Regulation (EC) No 44/2001 of 22 December 2000 on JURISDICTION and the recognition and enforcement of judgments in civil and commercial matters. The title says “jurisdiction” (repartition within courts or limits exercise sovereign power), and 2) The arbiter (or the State seat of arbitration) should decide on the arbitration clause to ensure the good faith and uniform solutions.-AQE

Kyriaki Noussia February 11, 2009 at 1:20 pm

The ECJ’s choice to disregard the arguments of the House of Lords regarding the practical reality of arbitration proceedings may very well be perceived as undermining the right of parties to refer their disputes to arbitration and their effort to invoke the jurisdiction of the Italian court (which was exactly what was agreed in the arbitration clause) via the issuing of the said anti-suit injunction. True, the issuing of the said anti-suit injunction may have had consequences which would undermine the effectiveness of Regulation 44/2001, however the practical necessities that anti-suit injunctions are called to serve should not be disregarded.
In reconsidering the function and use of anti-suit injunctions, we should also examine how the judgment ties up with arbitration law principles? What about “komptenz-kompetenz”? Although the NYC is cited in support of the decision, it can also be seen as running counter to the NYC insofar as it permits arbitrations to be held up while they are stuck in labyrinthine legal processes in other jurisdictions. The judgment supports the continental law point of view whereby the institutional value of harmony between courts is prevailing over the dominance of individual justice. However, the answer to the question about the future of anti-suit injunctions will be determined according to which of the two above mentioned parameters, i.e. the institutional value of harmony between courts or the more personal value of justice in the individual case, will prevail in conjunction with the assessment of other parameters such as practical and market realities and necessities.
As to the impact of the judgment on the market and London’s eminent arbitral stand, there is a lot to be said. Personally, I see no reason why the absence of anti-suit relief would affect London’s position. Admittedly, common law lawyers might at first glance think hard about going to a jurisdiction where the arbitration could be thwarted by spurious foreign proceedings and many might argue that jurisdictions like Singapore and Hong Kong which are desperate to become international and neutral arbitration centres will see the judgment as a “gift” offered to them. However, one should not forget counter arguments such as the fact that the judgment only affects EU cases and that it has been established nowhere that parties, in choosing an arbitral seat, consider whether the courts of that arbitral seat eagerly issue anti-suit injunctions or not.

NURIA BOUZA February 11, 2009 at 7:36 pm

The European Communities Court of Justice judgement increases the risk of parallel and contradictory arbitral awards and national court judgements in the European Union.
In my opinion the interest of the ECCJ judgement goes far beyond of the decision that declares incompatible with Regulation 44/2001 the anti-suit injunctions adopted by member states courts with the purpose to oblige one of the parties to respect the arbitration agreement , even if it is acknowledges that this decision takes aside the Marc Rich judgement according to which the Brussels Convention (now Regulation 44/2001) is not applicable to judicial procedures in matter of arbitration .
The true interest of the ECCJ judgement consists in the consequences following from the inclusion in Regulation 44/2001 the incidental question of the validity of an arbitrations agreement when is pleaded by a litigant in order to contest the jurisdiction of the court before which is being sued pursuant to the Regulation 44/2001 (points 26 and 27). If this national court considers that the agreement is void or inapplicable and enters to examine the merits of the case, his decision has to be recognised and executed in other members states according to Regulation 44/2001. This is an unsatisfactory outcome because it places the requested state in an embarrassing situation. If a court of the requested state considers that the arbitration agreement is valid and applicable to the case it will be obliged , in one hand, to recognise and to execute the national judgement pronouncement in a member state ( Regulation 44/2001) and, in other hand, to recognise and execute the arbitral award ( 1958 New York Convention)
To introduce order in this chaos I suggest that it would be more judicious that the ECCJ would had only declared the anti- suit injunctions incompatible with Regulation 44/2001 without going further . Meanwhile that there not exists a members states agreement on the guidelines to be followed to avoid contradictory parallel decisions I suggest that the judge of the requested state had not be obliged to refuse the recognition and execution of an arbitral award dictated in other member state when considers , differing from the court of origin, that the arbitration agreement is valid and applicable to the case . In order to improve the present situation I do not consider necessary to introduce in Regulation 44/2001 an exclusive jurisdictional ground in favour of courts of the arbitration seat state on the matters of the validity of the arbitration agreement. It would be enough that all the member states would apply the rule kompetenz/kompetenz as it is stated in article VI.3 of the 1961 Geneva Convention , according to which if the procedure of arbitration has began , the national court subsequently asked to deal with the same subject-matter between the same parties or with the question whether the arbitration agreement was non-existent or null and void or had lapsed, shall stay their ruling on the arbitrator’s jurisdiction until the arbitral award is made, unless they have good and substantial reasons to the contrary

Song LU May 20, 2009 at 3:10 am

1. Under current international law, each sovereign state is entitle to assert its own judicial jurisdiction in civil and commercial matters, subject to limited exceptions, e.g. jurisdictional immunities enjoyed by diplomats, heads of state and government, state itself and its assets (with exceptions), international organizations under treaties. Hence the conflict of jurisdictions a frequent phenomenon.
2. One approach towards these conflicts, a Civil-law approach, is that each country merely exercises, or in some circumstance, self-restrains from exercising, its own jurisdiction pursuant to international law and its national law, respecting the same attitude and practice adhered by other countries, and thereby creating a “balance”. The other approach, a Common-law one, is while exercising its own competence, a country will aggressively restrict other countries from exercising their jurisdictions and therefore break that “balance”. The EJC decision on West Tankers demonstrates the distinction between these approaches and also openly indicates the Court’s preference.
3. The key of an anti-suit injunction issued on the ground of an arbitration agreement is not arbitration per se but the judicial jurisdiction of the relevant country. The essence of such injunctions is to impose the view of the court issuing the injunction on the court seized of the action in respect of the issue of whether jurisdiction should be asserted by the latter court.
4. It is a strong argument that the anti-suit injunction is incompatible with New York Convention which empowers the court seized of the action with the presence of an arbitration agreement to determine its own substantive jurisdiction based on its judgment on whether that agreement is null and void, inoperative or incapable of being performed.
5. After West Tankers, anti-suit injunction is barred entirely pursuant to EC law against the EC member states, most of which are with Civil-law tradition. The outcome of the ECJ decision, accordingly, may not fall outside the expectation of UK, though with some hope of miracle, which outcome it should have anticipated when joining the EC years ago.
6. Now UK argued that anti-suit injunction remain a valid and useful weapon outside EC, which is true. The question remains how other countries my react towards these measures? One possible reaction may be the refusal of service of an anti-suit injunction to the party by a contracting state on the basis of Article 13 of the 1965 Hague Service Convention. Infringement of sovereignty of the addressed state can be found easily based upon the analysis of the ECJ on West Tankers. Then it turns to the English courts to determine whether natural justice has been served in case of non-service of an anti-suit injunction to the defendant pursuant to that convention.
7. It is hard to envisage that countries with Civil-law tradition will adopt anti-suit injunction mechanism. But more circumstances may be included in the law where contempt of court order is applicable.
8. In many areas people do not say what they really want to say. They hide their real intention under rhetoric arguments and beautiful language. That is the rule of the game which worth respecting.

lusong99@gmail.com

A G Guest July 17, 2009 at 3:56 pm

The following is the draft of a entry in the proposed First Supplement to Chitty on Contracts, 30th edition, Volume 2, Chapter 32
[Add new paragraph 32-046A after paragraph 32-046: page [131]]
Allianz SpA v West Tankers Inc
32-046A In West Tankers Inc v RAS Riunione Adriatica di Sicurta [2007] UKHL 4, [2007] 1 Lloyd’s Rep. 391, the House of Lords referred to the European Court of Justice the following question –
“Is it consistent with EC Regulation 44/201 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 ?”
The Court has answered that question in the negative: Case C-185/07, [2009] 1 Lloyd’s Rep.413 (see also the opinion of Advocate-General Kokott in the reference: [2008] 2 Lloyd’s Rep. 661) sub.nom. Allianz SpA v West Tankers Inc. While, therefore, it is no longer open to an English court to issue an anti-suit injunction to restrain a party from commencing or continuing proceedings in another Member State ( including a Lugano Convention State) in breach of an arbitration agreement, it is clear that this ruling does not prevent the issue of an anti-suit injunction where the proceedings are in a non-Member State.
32-046B The question nevertheless arises as to what course an arbitral tribunal should take where the arbitration is seated in England and one of the parties commences or continues proceedings in another Member State in breach of the arbitration agreement. It is submitted that the tribunal is under no obligation to terminate or suspend the arbitral proceedings. Indeed, it would seem that the tribunal is not obliged by the Regulation even to recognise a judgment given in parallel proceedings in a Member State, either on the substantive claim, e.g. for damages for breach of contract, or as to the validity or applicability of the arbitration agreement. This is so even if a United Kingdom court would be so obliged, because Regulation 44/2001 does not apply to an arbitral tribunal: CMA CGMSA v Hyundai Mipo Dockyard Co Ltd [2008] EWHC 279 (Comm), [2009] 1 Lloyd’s Rep. 213 at [43] – [46]. It could, however, be argued that, if English law applies to the substance of the dispute, then if English law requires recognition of the foreign court’s judgment, the arbitral tribunal in applying English law must recognise that judgment. But this argument was rejected by Burton J. in CMA CGMSA v Hyundai Mipo Dockyard Ltd, above, at [46] on the ground that “it does not differentiate between substantial and procedural law”, the tribunal not being bound by the procedural requirement of recognition. As a result, if the arbitral tribunal continues the arbitral proceedings and proceeds to make an award, there is risk of conflict between the award and the judgment of the foreign court. This possibility was referred to by Advocate-General Kokott in her opinion, above, at [70].
32-046C. On the other hand, an English court is prima facie bound by arts.32 and 33 of Regulation 44/2001 to recognise a judgment given in proceedings in another Member State on the substantive claim even if those proceedings have been brought in breach of an arbitration agreement. The fact that the proceedings are in breach of an arbitration agreement does not enable the “arbitration exception” in art. 1 (2) (d) of the Regulation to be invoked ( see DHL GBS (UK) Ltd v Fallimento Finmatica SpA [2009] EWHC 291 (Comm), [2009] 1 Lloyd.s Rep. 430 at [21]). Nor can the exception be invoked on the ground that, in the proceedings on the substantive claim in the foreign court, the foreign court made a determination on a preliminary or incidental issue as to the validity or applicability of the arbitration agreement: Allianz SpA v West Tankers Inc, above, at [26],[31]; DHL GBS (UK) Ltd v Fallimento Finmatica, above, at [21]. Moreover, an English court cannot refuse recognition of the foreign court’s judgment on the substantive claim on the ground that the foreign court came to an erroneous decision on the validity or applicability of the arbitration agreement and wrongly assumed jurisdiction. Art.35 of the Regulation provides that the jurisdiction of a court of a Member State cannot be reviewed by a court of another Member State: see the Allianz case at [29]. It could, however, be argued that, at least in certain circumstances, recognition of a judgment obtained in a court of a Member State in breach of an arbitration agreement may properly be refused by an English court on the ground that such recognition would be “manifestly contrary to public policy” (art.34 of the Regulation) in England: see Waller J. in Phillip Alexander Securities and Futures Ltd v Bamberger [1997] 1 L.Pr.730 at [14]; CMA CGMSA v Hyundai Mipo Dockyard C Ltd, above, at [35]; DHL GBS (UK) Ltd v Fallimento Finmatica SpA, above, [23]. But it is doubtful whether that argument would succeed or, in any event, whether circumstances would in practice exist (e.g., a “blatant disregard” of the arbitration agreement) for the application of this exception to be justified.
30-046D. The final question arises whether an English court, as the court of the seat of the arbitration, in (for example) proceedings under ss.32or 67 of the Arbitration Act 1996 questioning the jurisdiction of the arbitral tribunal, would be bound to recognise a prior decision of a court of a Member State as to the validity or applicability of the arbitration agreement. This point is by no means beyond doubt having regard to the thrust of the decision of the ECJ in the Allianz case and the absence of any express ruling by that Court in Marc Rich & Co AG v Soc Italiana Impianti PA, Case C – 1980/89 , [1991] ECR.I -3835. It is submitted that it is not so bound. Arts.27 and 28 of the Regulation are inapplicable as they deal with conflicts of jurisdiction between the national courts of Member States and the situation falls within the “arbitration exception”: Through TransportMutual Insurance (Eurasia) Ltd v New India Assurance Co Ltd [2004] EWCA Civ 1598, [2005] 1 Lloyd’s Rep. 67. Thus if an application is made under s.67 to set aside an arbitral award on the ground that the arbitral tribunal lacked jurisdiction because the arbitration agreement was invalid or inapplicable, the court could uphold the agreement, the jurisdiction of the tribunal and the award notwithstanding that the court of another Member State had previously held the arbitration agreement to be invalid or inapplicable. Likewise, and more seriously, if an application is made under s.66 or 101 of the 1996 Act to enforce the award, an English court is entitled to find that the arbitration agreement was valid and applicable (notwithstanding the decision to the contrary of the foreign court) and to order that the award be enforced as a judgment. Unfortunately this opens up the possibility of two disparate English judgments on the substance of the claim: the one enforcing the arbitral award and the other the judgment of the foreign court. That result is unwelcome. In the Through Transport case, above, it was suggested {at [51]] that questions of recognition and enforcement of conflicting judgments “are best left for decision when and if they arise”. At present, this may well be the best (and only) counsel in the circumstances.

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