UK: Anti-Suit For Arbitration

Last Updated: 24 April 2008
Article by Paul Howcroft

Following the European Court of Justice decision in Turner v Grovit (C-159/02), there has been no doubt that under the Brussels Regulation the court of one state may not grant an anti-suit injunction to restrain proceedings brought before the court of another state, even where the party is acting in bad faith.

That has led to a number of abusive cases, often seeking negative declarations, being brought in courts that are clearly the wrong fora under the Brussels Regulation but which have a reputation for taking several years to reach that conclusion. In the meantime, the other party with the proper claim is barred from bringing proceedings elsewhere.

However, what remained uncertain was whether the court of one member state could restrain a party from bringing proceedings in another member state in breach of an arbitration agreement, given that arbitration is expressly excluded from the scope of the Brussels Regulation by art. 1(2)(d).

That was the issue before the House of Lords in West Tankers Inc v Ras Riunione Adriatica [2007] UKHL 4. In that case, insurers brought proceedings in Italy against a ship’s owner in respect of damage done to an insured who had chartered the ship. The charterparty was expressed to be governed by English law and provided for arbitration in London. The ship owner applied to the English court for an anti-suit injunction to restrain the insurers from continuing the Italian proceedings.

The English Commercial Court granted the injunction, and the insurers appealed to the House of Lords. It found that the matter was not obvious and that it would be appropriate to refer the question to the European Court of Justice.

However, in case it should be of any assistance, their Lordships set out their view which was that an anti-suit injunction to enforce an arbitration agreement would not be inconsistent with the Regulation, as arbitration was excluded.

The House of Lords felt that the basic principles of the Regulation allocated jurisdiction for court proceedings and were entirely unsuited for arbitration in which the situs and governing law were chosen by the parties on the grounds of neutrality, the availability of legal services and the "unobtrusive effectiveness" of the supervisory jurisdiction.

The parties had chosen arbitration in order to be outside the procedures of any national court, and the principle of autonomy of the parties should allow them such choices.

The courts within the United Kingdom had for many years exercised the jurisdiction to restrain foreign court proceedings, which promoted legal certainty and reduced the possibility of conflict. The existence of the jurisdiction to restrain proceedings could be regarded as one of the advantages that the chosen seat of arbitration had to offer the parties.

Comment:

It is debateable whether the exclusion of arbitration from the scope of the Regulation was meant to extend to questions of the jurisdiction of courts seised of related proceedings, and the question of whether that court should be allowed to make its own decision in response to an application for a stay based on an arbitration agreement.

On the other hand, the ground on which that court might stay the proceedings would not be a ground based on the Regulation, and why should the position be any different if the court is in a member state or elsewhere?

It is notable that the ship owners brought their application in England for an anti-suit injunction, rather than applying in Italy for a stay of the proceedings. Perhaps there were practical reasons which very much influenced the view of the House of Lords.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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