West Tankers principle unaffected by Recast Brussels Regulation; mandatory foreign jurisdictional rules do not encroach on scope of widely worded arbitration clause

In Nori Holdings Limited et al v PJSC Bank Okritie Financial Corporation [2018] EWHC 1343 (Comm) the English court has applied the Recast Brussels Regulation, finding that the West Tankers principle remains applicable and, as a consequence, refused to grant an anti-suit injunction in relation to parallel EU court proceedings.

At the same time, it found alleged Russian mandatory jurisdictional rules referring an insolvency dispute to the Moscow Arbitrazh Court insufficient to displace the wide and general wording of an arbitration clause, with the result that it granted an anti-suit injunction in relation to non-EU proceedings. Continue reading

Brexit—the future of state-to-state, investor-state and domestic dispute resolution

The Brexit White Paper

The much-anticipated Brexit White Paper, ‘The United Kingdom’s exit from and new partnership with the European Union’, was published on 2 February 2017. This post focuses on a subject that has to date received relatively little attention—what it has to say about the future of dispute resolution. In its Chapter 2 (‘Taking control of our own laws’), and Annex A, the White Paper contains perhaps a surprising amount on dispute resolution, in comparison to the text devoted to the other eleven of the UK government’s 12 stated principles.

In this blog post we review the White Paper with the aim of discerning so far as possible the potential future of dispute resolution for the UK. In particular, we consider how the UK government envisages, at this relatively early stage, that disputes will be resolved under new post-Brexit UK-EU agreements, and if and how UK businesses will be able to enforce their provisions. We also consider certain implications of the end to the Court of Justice of the European Union (CJEU)’s jurisdiction in the UK and the adoption of the acquis under the Great Repeal Bill.

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Delay causes English Court to deny anti-suit injunction in respect of foreign proceedings brought in breach of an arbitration agreement

A recent case in the English High Court (the Court) demonstrates the need to act promptly when seeking an anti-suit injunction in relation to proceedings in a foreign court. The claimant, Essar Shipping Ltd (ESL) sought an anti-suit injunction in respect of proceedings brought by the respondent, Bank of China Ltd (the Bank) in the Qingdao court in China (the Qingdao Proceedings) on the basis that the subject matter of the dispute was subject to a London-seated arbitration agreement.  ESL also sought a declaration that the arbitration agreement was valid and damages for breach of the arbitration agreement. 

The Court granted the declaration sought on the basis that, on the Bank’s case, the dispute was subject to the arbitration agreement. ESL was also allowed to proceed with its claim for damages.  However, the Court refused to grant the anti-suit injunction.  ESL had objected to the jurisdiction of the court in the Qingdao Proceedings but had not brought the application for an anti-suit injunction promptly. 

Parties intending to seek interim relief should take note of the Court’s emphasis on the requirement of promptness. This is the key factor, not whether it is reasonable to apply to the foreign court first to object to jurisdiction, or whether there will be a long delay in the foreign court.

Notably, whilst the point was not relevant in this case, the Court suggested that anti-suit injunctions cannot be granted in respect of proceedings in another EU Member State Court under the Recast Brussels Regulation.

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French Supreme Court refuses to apply a unilateral jurisdiction clause

In a recent decision, the French Supreme Court (Cour de cassation) has again refused to apply a unilateral jurisdiction clause. A unilateral jurisdiction clause requires one party to bring proceedings in one jurisdiction only, while the other may choose to bring proceedings in other jurisdictions.

The decision, which comes after the much-discussed 2012 Supreme Court judgment in the Rothschild case (Cass. 1. Civ, 26 September 2012)(see our previous blog post here), is a further reminder of the need to give careful consideration to the validity of dispute resolution provisions in the possible jurisdiction of any future proceedings when drafting contracts.

This decision (and the decision in Rothschild) are significant in the context of unilateral jurisdiction clauses. However, and notwithstanding the fact that the French courts have not had a chance to consider the issue in relation to arbitration since the Rothschild decision, there is nothing to suggest that the same approach would be taken with regard to clauses containing an arbitration agreement with an option to litigate in one particular jurisdiction, or an exclusive jurisdiction clause with an option for one party to bring arbitration proceedings (so-called hybrid dispute resolution clauses). As such, a hybrid arbitration clause may be an appropriate option in circumstances where there is a nexus with France and one of the parties wishes to have a degree of flexibility regarding the forum in which disputes will be heard.

Cour de cassation, chambre civile 1, 25 mars 2015, 13-27.264

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CJEU reaches decision on enforcement of arbitral awards containing anti-suit injunctions in the EU: A sensible decision, but limited in scope

The CJEU has issued its much awaited decision in the reference to the Court of Justice of the European Union (CJEU) by the Lithuanian Supreme Court in the case of Gazprom (C-536/13). The Lithuanian Court referred to the CJEU three questions regarding the effect of the Brussels I Regulation (EC) No 44/2001 (the Regulation). As discussed in our earlier blog piece here, the reference related to a request to enforce an arbitral award which has a similar effect to an anti-suit injunction and has therefore been of considerable interest to the arbitration community. This is particularly the case following the opinion of Advocate General Wathelet which considered not only the text of the original Brussels Regulation, but also the Recast Regulation (see our blog post here for more information).

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The European Parliament’s study on arbitration legal instruments and practice in the EU and Switzerland: a step towards a uniform European regime on arbitration?

Two weeks ago the European Parliament’s Policy Department for Citizens’ Rights and Constitutional Affairs published a broad study on the legal instruments and practice of arbitration across the European Union and Switzerland.  This study was undertaken over the past year at the Brunel Centre for the Study of Arbitration and Cross-Border Investment and is based on academic research and the results of a large-scale survey of arbitration practitioners across the EU and Switzerland.

The primary goal of this study is “to portray accurately the actual diversity of arbitration law and practice across the European Union and Switzerland” in order to “discuss the strengths and weaknesses of the law and practice observed” in each European jurisdiction.  In doing so, it first examines the legal framework and practice of arbitration in each Member State.  It then analyses specialised topics of arbitration such as commercial, consumer and online arbitration and finally it evaluates the involvement of EU Member States and the EU in investor-state arbitration.

The study also provides insights into and recommendations for potential future actions and reforms mainly to improve the interaction between arbitration and EU law. Whilst the purpose of this contribution is to guide the European Parliament in its future decisions regarding arbitration, it remains uncertain whether potential reforms on this topic are part of Europe’s broader agenda. Continue reading

Anti-suit Injunctions within the EU: AG Wathelet delivers his Opinion in Gazprom

The Advocate General Wathelet (the AG) has delivered his much awaited Opinion in the reference to the Court of Justice of the European Union (CJEU) by the Lithuanian Supreme Court in the case of Gazprom (C-536/13). The Lithuanian Court referred to the CJEU three questions pertaining to the effect of the Brussels I Regulation (EC) No 44/2001 (the Regulation). The Regulation determines the member state courts’ jurisdiction and excludes arbitration from its scope. However, the exception has gradually been eroded by the CJEU in decisions such as West Tankers.

The Reference in the present case related to a request to enforce an arbitral award which has a similar effect to an anti-suit injunction and has therefore been of considerable interest to the arbitration community. The background to the reference is more fully explained in our blog post [here]. In his Opinion, AG Wathelet also considered in detail the effect of the Recast Brussels I Regulation (the Recast Regulation), which comes into force on 10 January 2015. This opinion is the first that considers its terms, and, if adopted by the CJEU, would set down a marker for the interpretation of the arbitration exception within the Recast Regulation, with the effect that an anti-suit injunction issued by an arbitral tribunal would be recognisable and enforceable by member state courts.

AG Wathelet concluded that:

  • the Regulation does not require the court of a member state to refuse to recognise and enforce an anti-suit injunction issued by an arbitral tribunal; and
  • the fact that an award contains an anti-suit injunction is not a sufficient ground for refusing to recognise and enforce it on the basis of Article V(2)(b) of the 1958 Convention because the Regulation is not a matter of public policy.

The Opinion holds great interest for its discussion of the implications of the Recast Regulation (even though it was the current Regulation that was in issue). In the AG’s view, the Recast Regulation aims to correct the boundary which the ECJ (now the CJEU) had traced between the application of the Regulation and arbitration in the West Tankers (Case C-185/07). The decision in West Tankers was seen by many as signifying the death of the anti-suit injunction in Europe. In the AG’s view, it is clear from its legislative history that the Recast Regulation seeks to reinstate the position in which the consideration of the validity of an arbitration agreement as an incidental question falls outside the scope of the Recast Regulation.

The AG also opined on what it means for a court to be seised on the question of the validity of an arbitration agreement in the context of the Recast Regulation. He noted that while a court may be seised on the incidental question of validity of an arbitration agreement, this falls outside the scope of the Recast Regulation. A court is not seised on the substance of the dispute (proceedings which do fall within the scope of the Recast Regulation), until it has decided the issue of the validity of the arbitration agreement.

AG Wathelet also observed that an anti-suit injunction issued by an arbitral tribunal could not be considered in the same way as that issued by a member state court.

Whilst it remains to be seen whether the AG’s opinion will be adopted by the CJEU, his interpretation of the effects of Recital 12 of the Recast Regulation offers hope that a party will be able to protect an arbitration agreement by virtue of an anti-suit injunction, even when parallel proceedings are threatened or brought within the EU.


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Exploiting the advantages of an English arbitral seat? Commercial Court confirms the validity of an arbitration agreement and tribunal’s substantive jurisdiction whilst parallel proceedings continue in Italy

The English Commercial Court has granted an application under section 32 of the English Arbitration Act 1996 (the Act), determining that a tribunal appointed by the Refined Sugar Association has substantive jurisdiction to hear a dispute that has arisen out of a sugar sale between Toyota Tsusho Sugar Trading Limited (Toyota) and Prolat S.R.L. (Prolat). Section 32 provides that, if certain conditions are satisfied, a court may determine any question as to the substantive jurisdiction of the tribunal.

The application arose because Prolat had brought proceedings against Toyota in the Italian courts contending, among other things, that there was no arbitration agreement. Toyota had started arbitration proceedings in London against Prolat on the basis that the parties had concluded an agreement to arbitrate.

The Court first considered its jurisdiction to consider the question of the existence of the arbitration agreement given that Prolat had commenced proceedings in Italy, and the relevance of the Brussels Regulation (and the Recast Brussels Regulation to take effect on 10 January 2015 – see our blog post). It concluded that the existence of the Italian proceedings did not encroach on its jurisdiction to make a determination on the issue of the tribunal’s jurisdiction as arbitration fell outside the Brussels Regulation and it was not being asked to interfere with the Italian proceedings which fell within the Brussels Regulation.

The Court focused on an analysis of the contract and the arbitration clause and found that (a) on the facts, the contract and the arbitration clause were valid and governed by English law; and (b) the dispute between the parties fell within the scope of the arbitration clause.

This case highlights the possibility, provided by section 32 of the Act, of creating a “shield” judgment to try to prevent enforcement in England of a judgment made in Member State court proceedings brought in breach of an arbitration agreement.

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