Anti-suit injunctions and arbitration agreements
The English High Court may grant an injunction when, in its view, it appears to be convenient and just. The High Court may thus grant an anti-suit injunction to protect a party’s rights under an arbitration agreement in circumstances where there are no arbitral proceedings ongoing and none are intended. The parties can seek a declaration from the High Court that there is a binding arbitration clause,[1] or the High Court can refuse to determine the existence of an alleged arbitration clause prior to commencement of arbitration proceedings.
Anti-suit injunctions and arbitration agreements under the old Brussels I Regulation 44/2001
Arbitration proceedings are excluded by Article l(2)(d) of the Brussels Convention. Under Article 5(3), the Italian court in The Front Comor had jurisdiction on the merits for damages in tort, since the Italian plaintiff's jetty was hit in Syracuse. However, the existence of an arbitration clause was a preliminary issue under the Brussels Convention. The case involved different issues, such as the claimant’s estoppel in starting proceedings in its own courts, or procedural tactics that did not favour its interests such as the Italian torpedo injunctions. The case also involved a ‘forum shopping’ issue, since the negligent navigation exception under English law was preferable for the shipowners, while the interpretation under Italian law was preferable for the Italian insurers. It must be noted that the eventual favourable judgment by an Italian court would be enforceable in England under the Brussels I Regulation (recast), but the Italian court would first have to determine whether the English arbitration clause was valid.
The historical treatment of anti-suit injunctions within the scope of the old Brussels Convention helps explain how an arbitration agreement cannot restrain parties from commencing proceedings in an EU Member State court in breach of an arbitration agreement.
The CJEU’s Front Comor is a leading case. An English arbitral tribunal awarded equitable damages for breach of an exclusive London arbitration clause. Arbitration falls outside the scope of application of the old Brussels I Regulation 44/2001, according to its Article 1 (2)(d). The charterers first initiated arbitral proceedings in London. The charterers’ insurers brought a lawsuit in Italy. The shipowners sought and obtained an anti-suit injunction issued by Colman J on 21 March 2005, restraining the insurers from continuing the Italian process. The case was referred to the CJEU by the House of Lords and the ruling allowed the Italian court to decide whether the London arbitration agreement was valid, or whether the Italian courts had jurisdiction to hear the case. The CJEU forbade an anti-suit injunction from restraining an EU court starting proceedings to determine the validity of an English arbitration agreement, avoiding the applicability of the New York Convention, under which all EU Member State courts would be obliged to stay the proceedings.[2] The CJEU held that, being a preliminary issue in a claim for substantive relief, the existence of an arbitration agreement fell within the scope of the Brussels Convention. The London arbitral tribunal found that the shipowners did not incur liability and a London court upheld the award. In a separate hearing, the London court then awarded equitable damages following the breach of the exclusive London arbitration agreement. After the C JEU’s judgment was rendered on 10 February 2009, a third award was enforced following s 66 UKAA, and the English High Court and Court of Appeal upheld it, refusing to set it aside.
In the more recent Gazprom case, the CJEU held that an anti-suit injunction issued by a Lithuanian arbitral tribunal fell within the scope of the arbitration exception in Article l(2)(d), as it was compatible with Brussels I Regulation 44/2001. The court allowed its recognition and enforcement by an EU Member State court.
On 6 December 2008, a consignment of coal purchased by the Endesa Generación SA was shipped aboard the Wadi Sudr,w destined for the Spanish port of Ferrol. A clean on board CONGENBILL B/L was signed on behalf of the shipowners, National Navigation Co, with a standard clause incorporating an unidentified charterparty. During the voyage, the Wadi Sudr suffered a breakdown in the steering system. The ship was towed, and general average was declared. The cargo was discharged in Carboneras to be sent on to Ferrol. Endesa alleged that unloading the vessel in Carboneras caused problems which, in turn, caused significant delay, extraordinary costs and damage to the terminal. Endesa applied for an arrest of the vessel in Carboneras to ensure a maritime claim under the 1952 Arrest Convention, which would cover all damages suffered as a result of breach of contract of carriage (Article l(l)(e)).
Shortly after Endesa applied for the arrest of the ship, National Navigation Co began proceedings before the English High Court, with the intention of solving the dispute in England. By order of 31 July 2008, the Spanish judge suspended proceedings and rejected the shipowner’s plea until the High Court reviewed its jurisdiction to hear the case (and the validity of the arbitration clause). The Spanish judge considered that the arrest of the ship was an interim measure aligned with Article 28 of the Brussels I Regulation, rather than Article 27 (lis alibi pendens), because these were related actions.
The Spanish Court of Appeal rejected the shipowner’s challenge to Spanish jurisdiction based on the High Court’s ongoing proceedings, where the validity of the arbitration clause included in the B/L was under scrutiny. In Spain, the formal validity of an arbitration clause inserted in a B/L by reference to a charterparty is regulated under the New York Convention. However, individual negotiation and the express and unequivocal consent of the parties were necessary requirements.
At first, the English High Court decided that any finding by an EU Member State court that had to be recognised in England creates an issue of estoppel with paragraphs 1 and 3 of s 32 of the UK Civil Jurisdiction and Judgments Act 1982 (CJJA) (‘overseas judgments given in proceedings brought in breach of agreement for settlement of disputes’):
In determining whether a judgment given by a court of an overseas country should be recognised or enforced in the United Kingdom, a court in the United Kingdom shall not be bound by any decision of the overseas court relating to [proceedings] contrary to an agreement under which the dispute in question was to be settled otherwise than by proceedings in the courts of that country.
Gloster J acknowledged the relevance of The Front Comor - which was rendered while the High Court proceedings were taking place. She understood that these matters were outside of the scope of the Brussels I Regulation and that the statements made by the Spanish judge were not binding. She understood that the arbitration clause had been correctly incorporated into the B/L. The judge considered the issue as one of UK public policy.
The enforceability of an arbitral award is guaranteed by the New York Convention, despite the fact that an EU Member State’s judgment may declare an arbitration agreement null and void. The fourth paragraph refers to ancillary proceedings, which requires interpretation as to whether it shall include a declaration about the existence of an arbitration agreement:
This Regulation should not apply to any action or ancillary proceedings relating to, in particular, the establishment of an arbitral tribunal, the powers of arbitrators, the conduct of an arbitration procedure or any other aspects of such a procedure, nor to any action or judgment concerning the annulment, review, appeal, recognition or enforcement of an arbitral award.
The English Court of Appeal reviewed the matter again and concluded that Gloster J had erred in concluding that the Spanish judge’s decision should not be recognised in the UK. This had to be considered under the scope of the Regulation and was, therefore, recognised in the UK. To the extent that the decision established that the arbitration clause had not been validly incorporated into the B/L, the English courts were not authorised to review the issue again. An EU Member State judgment must be always recognised in other EU Member States with the minimum formalities provided for in Article 34 of the Brussels Convention (now Article 45 of the Brussels I Regulation (recast)).
In relation to an alleged violation of public policy, the Court of Appeal held that a decision of an EU Member State court could not be considered contrary to public policy. The Court of Appeal decided to order an end to the arbitral procedure that the shipowners had begun in the UK, parallel to the court proceedings. Allowing the continuation of arbitral proceedings had been part of Gloster J’s reasoning for ignoring the Spanish court's judgment (where incorporation of the arbitration clause into the B/L was invalid).
1
Aikens, Lord and Bools (n 16) ch 14.
In another case, in the Spanish Supreme Court,[3] the English law view was defended by the court regarding the recognition of an Italian judgment. The Spanish Supreme Court followed part of the doctrine that considered arbitration excluded from the material scope of the Brussels Convention according to Article 1 (2)(4), avoiding review of the Italian court’s international jurisdiction by the Spanish Supreme Court as prescribed in Article 28(3). The court held that, under certain circumstances, the decision of the Italian court concerning the validity and effectiveness of the arbitration agreement would not be binding on the receiving state. The Spanish Supreme Court considered that the Italian judgment respected the New York Convention and the 1961 Convention on International Commercial Arbitration. The Spanish entity did not prove the requirements of the applicable French law as the third state involved was France (where the award had to be rendered and respected by the Italian judgment) and it was not contrary to Spanish public policy.
In The Wadi Sudr, there were several overlapping chartering contracts in place. The last voyage charterer was Carboex, SA, an entity from which Endesa had bought the coal on CIF terms (cost, insurance and freight). Carboex had chartered the ship for the trip to Morgan Stanley. Endesa was the receiver and B/L holder.
The interpretation of the exception for navigational error by the Italian court was preferred by the Italian insurers. By way of comparison, in The Wadi Sudr15 there was absolute liability under Spanish law rather than an English law due diligence requirement. In The Front Comor, the subrogated insurers started actions in Italy under Italian insurance law against the tortfeasor shipowner, while the charterer did the same for a contractual claim under an ASBATANKVOY charterparty requiring English law and London arbitration proceedings to recover monies from the shipowner. That was held to be inconsistent by the CJEU according to Article 1(2)(d) of the Brussels Convention, which excludes arbitration from its scope.
In contrast with The Wadi Sudr, in The Front Comor the arbitration clause was found to be binding; the Spanish Court decided that no incorporation into the B/L took place and that the shipowners waived their right to rely on such clause once they commenced jurisdiction proceedings in England before the arbitral tribunal could decide that the clause was valid. The Court of Appeal of England and Wales confirmed that the judgment was binding, and the issue was about the substance of the matter. These cases stress the importance of the recognition of dispute resolution clauses included in any charterparty or B/L in favour of EU Member State courts.
2.2 Anti-suit injunctions and arbitration agreements
- [1] Ust-Kamenogorsk Hydropower Plant JSC v. AES Ust-Kamenogorsk Hydropower Plant LLP [2013] UKSC 35. 2 HC Trading Malta Ltd v. Tradeland Commodities SL [2016] EWHC 1279 (Comm). 3 Case C-190/89 Marc Rich & Co AG v. Societa Italiano PA (The Atlantic Emperor) [1992] ECR1-3855; The Heidberg [1994] 2 Lloyd’s Rep 287, 298-303; Toepfer International GmbHv. Société Cargill France [1997] EWCA Civ 2811; Case C-391/95 Van Uden Maritime BV trading as Van Uden Africa Line v. Kommanditgesellschaft in Finna Deco-Line [1998] ECR 1-7091; Navigation Maritime Bulgare v. Rustal Trading Ltd (The Ivan Zagubanski) [2000] EWHC 222 (Comm); Through Transport Mutual Insurance Association (Eurasia) Ltd v. New India Assurance Co Ltd (The Hari Bhum) [2004] EWCA Civ 1598; A v. B [2006] EWHC 2006 (Comm); [2007] 1 Lloyd’s Rep 237. 4 Case C-185/07 Allianz SpA (formerly Riunione Adriatica Di Sicurta SpA) v. West Tankers Inc (The Front Comor) EU:C:2009:69, [2009] ECR 1-663.' 5 West Tankers Inc v. RAS Riunione Adriatica di Sicurta SpA [2005] EWHC 454 (Comm).
- [2] Sandiforth (n 5). 2 West Tankers Inc v. Allianz SpA (The Front Сотої) [2012] EWHC 854 (Conun); Yvonne Baatz, ‘The Conflict of Laws’ in Yvonne Baatz (ed), Maritime Law (4th edn, Routledge 2018) 10-14; Yvonne Baatz, ‘Should Third Parties Be Boimd by Arbitration Clauses in Bills of Lading?’ (2015) 1 LMCLQ 85, 109-111; Sandiforth (n5). 3 West Tankers Inc v. Allianz SpA (The Front Сотої) [2012] EWCA Civ 27, [2011] EWHC 829 (Conun). 4 Case C-536/13 Gazprom OAO v. Lietuvos Respublika EU:C:2015:316. 5 Aikens, Lord and Bools (n 16) ch 14. 6 National Navigation Co v. Endesa Generación SA (The Wadi Sudr) [2009] EWCA Civ 1397; Baatz, ‘The Conflict of Laws’ (n 36) 14-17.
- [3] Cerámicas Casao, SA v. TAG Impianti Automazione Gestione srl (appeal) Case RJ 2007/3178, Civil Chamber, Section 1 Judgment No 558/2007, rendered on 17 May 2007. 2 Eduardo Albors Méndez and Javier Portales Rodríguez, ‘Cuestiones jurisdiccionales en el derecho marítimo: Los casos “Front Comor” y “Wadi Sudr”’ in José Luis García-Pita y Lastres, María Rocío Quintans Enas and Angélica Díaz de la Rosa (eds), Estudios De derecho marítimo (Thomson Reuters Aianzadi 2012) 121-140. 3 ibid. 4 The Wadi Sudr (n 40). 5 Tins is a tanker voyage charterparty developed by the Association of Ship Brokers & Agents (U.S.A.), Inc. (ASBA); see
