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In making a reference to the European Court of Justice ("the
ECJ") as to whether it is consistent with Council Regulation (EC)
No 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments
in Civil and Commercial Matters ("the Regulation"), for the
Court of a member state to make an Order restraining a person from commencing
or continuing proceedings in another member state on the ground that
such proceedings were in breach of an arbitration agreement, the House
of Lords, by way of assistance to the ECJ, set out its views on the
question referred and concluded that it was consistent.
A vessel owned by West Tankers and chartered
to Erg Petroli ("Erg") collided with a jetty owned by Erg
at Syracuse in Sicily. The charter party was expressed to be governed
by English law and contained a clause providing for arbitration in London.
Erg claimed upon its insurers, RAS Reunione Adriatica di Sicurta and
others ("the insurers"), up to the limit of its insurance
cover and commenced arbitration proceedings against West Tankers in
London for the uninsured excess. The insurers commenced Court proceedings
against West Tankers in Sicily to recover the amounts paid to Erg. West
Tankers in turn commenced proceedings in London, claiming an anti-suit
injunction on the grounds that as subrogated insurers, the insurers
were bound by the London arbitration agreement in the charter party.
In giving its views the House of Lords made a number of observations.
In previous decisions of the ECJ it was
established that a Court of a member state on which exclusive jurisdiction
has been conferred cannot issue an injunction to restrain a party from
prosecuting proceedings before a Court of another member state if that
Court was first seized of the dispute. Also, a Court of a member state
may not issue an injunction to restrain a party from commencing proceedings
or prosecuting proceedings in another member state which has jurisdiction
under the Regulation, on the ground that those proceedings have been
commenced in bad faith. These decisions were based upon the proposition
that the Regulation provides a complete set of uniform rules for the
allocation of jurisdiction between member states and that the Courts
of each member state have to trust the Courts of other member states
to apply those rules correctly.
However, arbitration was excluded from
the scope of the Regulation. The ECJ had determined that the exclusion
applies not only to arbitration proceedings as such but also to court
proceedings in which the subject matter is arbitration, and that the
subject matter is arbitration if the proceedings served to protect the
right to have the dispute determined by arbitration.
The basic principles by which the Regulation
allocates jurisdiction, giving priority to the domicile of the defendant,
were entirely unsuited to arbitration, in which the jurisdiction and
the governing law were generally chosen by the parties on the grounds
of neutrality, availability of legal services and the unobtrusive effectiveness
of the supervisory jurisdiction. There is no set of uniform community
rules which member states can or must trust each other to apply. Although
all member states adhere to the 1958 New York Convention, this was not
a community instrument and did not create a system for the allocation
of jurisdiction comparable with the Regulation.
Lord Hoffman, in giving the leading judgment,
with which the other Lordships concurred, stated that the proceedings
before the House of Lords were entirely to protect the contractual right
to have the dispute determined by arbitration. Accordingly, he concluded
that they fell outside the Regulation and could not be inconsistent
with its provisions. The arbitration agreement lay outside the system
of allocation of Court jurisdictions which the Regulation created. An
exclusive jurisdiction clause took effect within the Regulation and
its enforcement was therefore to be in accordance with the terms of
the Regulation. However, the arbitration clause was in agreement not
to invoke the jurisdiction of the Sicilian Court and therefore took
effect outside the Regulation and its enforcement was not subject to
the terms of the Regulation.
Lord Hoffman went on to say that the
Courts of the United Kingdom had for many years exercised the jurisdiction
to restrain foreign Court proceedings. This was generally regarded as
an important and valuable weapon in the hands of a Court exercising
supervisory jurisdiction over arbitration. It promoted legal certainty
and reduced the possibility of conflict between the arbitration award
and the Judgment of a national Court. Whether the parties should submit
themselves to such a jurisdiction by choosing England as the seat of
their arbitration was, in his opinion, entirely a matter for them. If
the member states of the European community were unable to offer a seat
of arbitration capable of making Orders restraining parties from acting
in breach of an arbitration agreement there was no shortage of other
states which would do so. There seemed to be no doctrine or necessity
or practical advantage which required the European community to handicap
itself by denying its courts the right to exercise the same jurisdiction.
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