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I am grateful to Gian Paolo Romano, Production Editor of the Yearbook of Private International Law, for providing this presentation of the new volume of the YPIL. Volume X (2008) of the Yearbook of Private International Law, edited by Prof. Andrea Bonomi and Prof. Paul Volken, and published by
The current issue (Vol. 73, No. 1, January 2009) of the
Law.com just posted a good article on the follow-on litigation after the Supreme Court’s decision in Intel Corp. v. Advanced Micro Systems, Inc., 542 U.S. 241 (2004). That decision, in short, held that 28 U.S.C. 1782–which empowers federal district courts to compel discovery “for use in a proceeding in a foreign or international tribunal”–could be utilized in aid of the EC Directorate-General for competition. That body was a “foreign or international tribunal” in the eyes of the Court. The next logicial question, though, is “what about private arbitral tribunals?” Is that a “foreign or international tribunal” within the meaning of Section 1782?
Despite the broad guidance given by the Court in Intel, the lower courts remain split: two district courts in three seperate districts have held that private arbitral tribunals are not included in the statute, while three others have held that they are. The authors of this article provide a good summary of the post-Intel case law, up to and including the most recent decision denying discovery in aid of private arbitration by the Southern District of Texas.
In this round-up of significant U.S. decisions during the first two months of 2009, we’ll focus on two areas of law that generate a lot of jurisprudence at the appellate level. A. Jurisdiction for Acts Occurring Abroad Two federal statutory schemes—the first a response to the events of September 11, the second a 200 year […]
Alexander Layton QC is a barrister in practice at 20 Essex Street, London. He is a specialist in private international law and arbitration, and joint general editor of European Civil Practice. Although he acted for the UK government at the oral hearing in West Tankers, the views below are purely personal. Much of what I […]
Rafael Arenas is Professor of Private International Law at the University of Barcelona (Universidad Autónoma). He has numerous publications in the field of international commercial law. He is author of several monograph works, such as Registro Mercantil y Derecho del Comercio Internacional, and co-author of Derecho de los negocios internacionales Regulation 44/2001 also applies to arbitral […]
Catherine Kessedjian is Professor of Law at the European College of Paris (University Paris 2) and a former Deputy Secretary General of the Hague Conference on Private International Law.
Commenting “à chaud” is contrary to the good lawyer’s tradition (at least in civil law). But our world does not allow anymore reflecting for substantial periods of time and everything has to be done now. So be it!
The relation between arbitration and the Brussels I Regulation is everything but an easy question and the least to be said is that the Judges at the European Court cannot be bothered to really ask themselves the hard questions. One page or so of reasoning in West Tankers shows that, for the Court, the matter is “evident” and without much interest. This is exactly the kind of attitude which is counterproductive.
The decision is narrow-minded. It is surprisingly so since the Court has, in the past, tackled very important political issues (political in the sense of, for example, the place of Europe within the word etc…). It is about time that the European Institutions think about the policy Europe wants to establish about arbitration, and the European Court could have sent some encouraging signals to the Member States. This is a missed occasion.
On the substance of the case:
1) The starting point taken by the Court (after the Advocate General) is a mistake. If the arbitration exception in Reg 44/2001 is to be taken seriously, the Court cannot say that the validity of an arbitration agreement is a “question préalable” in the classic meaning of the expression. Indeed, as soon as there is a prima facie evidence that an arbitration agreement exists, there is a presumption that the parties wanted to free themselves from the judicial system. Consequently, any jurisdiction in the world lacks power to decide on the merits because, in matters where they are free to do so, parties have deprived courts from the power to decide on their dispute. Power is preliminary to jurisdiction. Jurisdiction is a question which does not arise if the entire judicial system is excluded from the parties’ will. This is why the starting point of the analysis is to say that Reg 44/2001, which deals with jurisdiction, has nothing to say about whose power it is to decide on questions of arbitration. Hence the exclusion of arbitration, from its scope,
2) To say that the scope of Brussels I is only to be interpreted as far as the merits of a case are concerned (point 26) may be true for other exclusions of Article 1 of 44/2001, not for arbitration. If we go the route taken by the Court, then the arbitration exclusion is emptied of its significance because every single matter referred to arbitration is indeed also capable of being arbitrated (at least in a great number of Members States). The interpretation made by the Court is contrary to the well settled principle when interpreting a legal text; i.e. that of giving an effective meaning to the provision.
3) I am not saying that West Tankers inaugurates the trend. Indeed, it was already there in the Van Uden decision. And we were probably not attentive enough to the potential damaging effect of Van Uden.
4) The validity of the arbitration agreement is consubstantial with the power to arbitrate. Therefore, it cannot be taken lightly. This is why, instead of leaving the New York Convention as an afterthought (point 33), the Court should have started the analysis with the Convention. The Court should have embraced the well known consequence of Article II-3 of the Convention: it is for the arbitral tribunal to decide on the validity of the arbitration agreement, unless (and only in that case) it is “null and void, inoperative or incapable of being performed”.
5) Then the court should have asked the only legitimate question: “which court has the power to decide whether the arbitration agreement is “null and void, inoperative or incapable of being performed”. Here the Court should have noted that the New York Convention is silent. And it should have noted also that Reg 44/2001 is silent too for very good reasons: because arbitration is excluded.
6) The next question would have then been: can we go beyond the text and provide for a uniform jurisdictional rule? There, I think, the Court should have paused and ask herself what is the policy behind the need for a uniform rule. Certainly, the importance of Europe as a major arbitration player in the world could have been one consideration. But there are others which I won’t detail here.
7) Is it for the Court to go beyond the text it is asked to interpret (and decide contra legem)? Most of the time, the answer is NO. And the Court has, in some occasions, clearly said so and said that it is for the Member States to adopt the proper rules (one of the last occasions of such a prudent approach by the Court is the Cartesio case in matters of company law). Why in the world the Court did not take that prudent approach when it comes to arbitration? I have nothing to offer as a beginning of an answer.
8 ) If the Court had taken that approach, then the answer to the House of Lords would have been, as European Law stands now, the matter falls under national law and there is nothing in European Law which prevents you from using your specific procedural tools, even though we may disapprove of them.
9) This, in my view, was the only approach possible. It is so much so, that part of the reasoning of the Court is based on an erroneous analysis of what is an anti suit injunction. Unless I am mistaken, I understand those injunctions to be addressed to the party not to the foreign court. Yes, at the end of the process, it is the foreign court which will be deprived of the matter because the party would have withdrawn from the proceedings. But the famous “mutual trust” (which alone would merit a whole doctoral dissertation) has no role to play here.
10) By deciding the matter the way it did, the Court does not render a service to the parties. West Tankers basically says that any court in the EU which could have had jurisdiction on the merits (if it were not for the arbitration agreement) has jurisdiction to review the validity of the arbitral agreement. This is the wrong message to send. It allows for mala fide persons who want to delay proceedings and harass the party who relies on an arbitration agreement. It may not have been the problem in West Tankers as such, but the effect of West Tankers is clearly contrary to a good policy.
Thomas Pfeiffer is professor of law and director of the Institute for Comparative Law, Conflict of Laws and International Business Law of Heidelberg University. He has published intensively in the areas of contract law, private international law and international dispute resolution.
1) For those who have read the famous opinion of Lord Ellenborough in Buchanan v. Rucker (Court of King’s Bench 1808), the following may sound familiar:
Can the island of Britannia render a judgment to bind the rights of the whole world? Would the world submit to such an assumed jurisdiction? – For EC Member States, according to Allianz v. West Tankers, the answer is “not any more”, not only with regard to anti-suit injunctions in general but also with regard to injunctions meant to protect arbitration agreements.
2) The exception for “arbitration” in Art. 1 II lit. d) Regulation 44/2001 applies if the subject matter of the case falls within its scope. Based on this criterion, it seems correct to say that the London High Court proceedings fall under the arbitration exception whereas the Syracuse proceedings do not. My only objection against the Court’s reasoning on this issue relates to the statement that, in Syracuse, where the defendant raised the arbitration agreement as a defence, the validity of the agreement only formed a “preliminary question”. In Private International Law, the term “preliminary question” or “incidental question” refers to situations where one legal relationship (e.g. succession) depends on the existence of another legal relationship (e.g. marriage). The arbitration issue raised in Syracuse was relevant for the admissibility of the proceedings. Procedural admissibility is a separate issue of its own, not a mere preliminary question for the subject matter (insofar I agree with Andrew Dickinson). However, even if it is not a mere preliminary issue, the arbitration agreement still is only a defence so that it is correct to say that it is outside the scope of the subject matter of the Syracuse proceedings. In other words: the Syracuse proceedings fall under the regulation whereas the London proceedings do not.
3) Under these circumstances, the legal situation is the following: An English injunction can in no way at all touch the Syracuse Court’s legal competence to determine its international jurisdiction (governed by the Brussels I Regulation) on its own. Instead, such an injunction would have affected the court’s ability to effectively make use of this competence as a matter of fact. According to the ECJ, such a factual effect constitutes an infringement of EC law, and this view can indeed be based on the general principle of practical effectiveness of EC-law and the principle of loyalty under Art. 10 EC-Treaty. No Member State must conceive its law in a way so that EC law is deprived of its practical effectiveness.
4) In West Tankers, it was argued that the court at the seat of the arbitral tribunal is best able to protect the arbitration agreement by supportive measures so that there is a conflict between the principle of effectiveness of community law on the one hand and of effectiveness of the procedural system on the other hand. The ECJ gives a formal answer to that: The formal answer is that, in the European area of Freedom, Justice and Security under Art. 65 EC-Treaty, both the London and the Syracuse Court are Courts of the same system and of equal quality. That is both legally correct and fiction with regard to reality.
5) Despite of these reservations, there are good reasons why the result of the ECJ deserves support. According to the logic of anti-suit injunctions, the outcome of jurisdictional conflicts depends on the effectiveness of enforcement proceedings available on both sides and on other accidental factors such as the localisation of assets that can be seized to enforce court decisions. Letting the outcome of cases depend on factors like these is a concept that is essentially unjust, unless one claims that the stronger system is automatically better. International cooperation between legal systems is possible only on the basis of equality and the mutual respect. Trying to impose the view of one country’s courts on the court system of another country is a concept which might have been appropriate in the times of hegemony. And although I admire many of the superb qualities of the English legal system and profession, there should be no space for such a one-sided concept in the context of international co-operation.
6) English lawyers will certainly come up with other ideas of how to protect English arbitration proceedings such as e.g. penalty clauses and other contractual constructions, the validity of which will raise interesting new questions.
7) Instead of a conclusion: Why is everybody talking about the “West Tankers” and not of “Allianz”? It seems that Britannia, despite of the outcome of this case, does not only still rule the waves but also the names. Be that a comfort for all my English friends.
(Jonathan Harris is the Professor of International Commercial Law at the University of Birmingham, and a barrister at Brick Court Chambers. He is one of the authors of Dicey, Morris & Collins: The Conflict of Laws, and is co-editor of the Journal of Private International Law.) I have little to add about the judgment itself. […]
Andrew Dickinson is a Solicitor Advocate, Consultant to Clifford Chance LLP and Visiting Fellow in Private International Law at the British Institute of International & Comparative Law. His commentary on the Rome II Regulation is published by Oxford University Press. The views expressed below are the author’s personal, initial reaction to the judgment. Scaramanga: “A […]