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.