LORD NICHOLLS OF BIRKENHEAD
My Lords,
1. I have had the advantage of reading in draft the opinion of my noble
and learned friend Lord Hoffmann. I agree that, for the reasons he gives,
a question should be referred to the European Court of Justice in the
terms proposed by him.
LORD STEYN
My Lords,
2. I have read the judgment prepared by my noble and learned friend
Lord Hoffmann. I agree with it. In particular I agree with the opinion
which Lord Hoffmann expressed on the question referred.
LORD HOFFMANN
My Lords,
Introduction
1. The main question in this appeal is whether a court of a Member
State may grant an injunction against a person bound by an arbitration
agreement to restrain him from commencing or prosecuting proceedings
in breach of the agreement in a court of another Member State which has
jurisdiction to entertain the proceedings under EC Regulation 44/2001
("the Regulation"). After hearing the arguments of counsel, I am of
opinion that an answer to this question is not obvious and is necessary to
enable the House to give judgment. It is therefore the duty of the House
to refer the question to the Court of Justice under article 234.
The Facts
2. In August 2000 the Front Comor, a vessel owned by West Tankers
Inc ("Tankers") and chartered to Erg Petroli SpA ("Erg") collided with a
jetty owned by Erg at Syracuse and caused damage. The charterparty
was expressed to be governed by English law and contained a clause
providing for arbitration in London. Erg claimed upon its insurers, Ras
Riunione Adriatica di Sicurtà SpA and Generali Assicurazioni Generali SpA
("the insurers") up to the limit of its insurance cover and commenced
arbitration proceedings against Tankers in London for the excess. Tankers
counterclaimed that it was not liable for any of the damage caused by the
collision. The pleadings in the arbitration are complete.
3. On 30 July 2003 the insurers commenced proceedings against Tankers
before the Tribunale di Siracusa to recover the amounts which it had
paid Erg under the policies. It brought a delictual claim by virtue of
its statutory right of subrogation to Erg's claims under Article 1916 of
the Italian Civil Code. Subject to any application for a stay pursuant
to the New York Convention on the Recognition and Enforcement of
Foreign Arbitral Awards, to which Italy is a party, the Italian courts have
jurisdiction under article 5(3) of the Regulation.
The English proceedings
4. On 10 September 1994 Tankers commenced these proceedings against
the insurers, claiming declarations that the dispute which was the subject
of the proceedings in Syracuse arose out of the charterparty and that the
insurers claiming by right of subrogation were therefore bound by the
agreement to refer it to arbitration in London. Tankers also claimed an
injunction to restrain the insurers from taking any further steps in relation
to the dispute except by way of arbitration and in particular requiring
them to discontinue the proceedings in Syracuse.
5. Colman J gave a judgment on 21 March 2005. He decided that both
in English and Italian law the right to the delictual claim which had been
transferred to the insurers by subrogation was subject to the arbitration
clause in the charterparty. He therefore made the declarations claimed
by Tankers. On the question of whether it would be consistent with the
Regulation to grant an injunction to restrain further prosecution of the
proceedings in Syracuse, he said that he was bound by the decision of
the Court of Appeal in Through Transport Mutual Insurance Association
(Eurasia) Ltd v New India Assurance Co Ltd [2005] 1 Lloyd's Rep 67 to
hold that it was. He therefore granted the injunction.
6. Colman J certified that, as the question of whether an injunction could
be granted had been previously decided by the Court of Appeal, the case
was suitable for appeal directly to the House of Lords under section 12
of the Administration of Justice Act 1969. He also certified two other
issues which do not raise questions of European law, namely, whether the
grant of the injunction was inconsistent with the New York Convention
and whether as a matter of discretion an English court should refuse to
restrain proceedings in another Member State. In my opinion the judge
was right to give negative answers to both these questions and it is
unnecessary to enlarge upon the reasons which he gave.
The Community Legal Provisions
7. The jurisdictions of the Courts of Member States are governed by the
Regulation. But article 1(2)(d) of the Regulation provides that it is not to
apply to arbitration.
The National Legal Provisions
8. By section 37(1) of the Supreme Court Act 1981 the High Court has
jurisdiction to grant an injunction (whether interlocutory or final) "in
all cases in which it appears to the court to be just and convenient to
do so." The English courts have regularly exercised this power to grant
injunctions to restrain parties to an arbitration agreement from instituting
or continuing proceedings in the courts of other countries: see The Angelic
Grace [1995] 1 Lloyd's Rep 87. In addition, by section 44(1) and (2)
(e) of the Arbitration Act 1996 the court has power to grant an interim
injunction "for the purposes of and in relation to arbitral proceedings".
Observations
9. In case it should be of any assistance to the Court of Justice, I shall
state my own opinion on the question referred. For convenience I
shall refer only to the Regulation and its articles, even though some of
the cases were decided under the equivalent articles of the Brussels
Convention.
10. Gasser GmbH v MISAT Srl (Case C-116/02) [2003] ECR I-14693
(which decides that a court of a Member State on which exclusive
jurisdiction has been conferred pursuant to article 23 cannot issue an
injunction to restrain a party from prosecuting proceedings before a court
of another Member State if that court was first seised of the dispute) and
Turner v Grovit (Case C-159/02) [2004] ECR I – 3565 (which decides that
a court of a Member State may not issue an injunction to restrain a party
from commencing 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) are both 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.
11. Thus in Gasser GmbH v MISAT Srl (Case C-116/02) [2003] ECR
I-14693, article 27 required the court of exclusive jurisdiction to stay
proceedings until the court first seised had applied article 23 and refused
jurisdiction. In Turner v Grovit (Case C-159/02) [2004] ECR I – 3565
the one court had to trust the other to dismiss the proceedings on the
ground that they had been brought in bad faith. In each case, the court
which had granted the injunction had been purporting to act pursuant to a
jurisdiction within the scope of the Regulation.
12. Arbitration, however, is altogether excluded from the scope of the
Regulation by article 1(2)(d). The basic principles by which the Regulation
allocates jurisdiction, giving priority (subject to exceptions) to the
domicile of the defendant, are entirely unsuited to arbitration, in which
the situs and governing law are generally chosen by the parties on
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. While it is true that all Member States adhere to the 1958 New
York Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (which article 71 of the Regulation declares to be unaffected) the
Convention is not a Community instrument and does not create a system
for the allocation of jurisdiction comparable with the Regulation.
13. It is settled by the decision of the Court of Justice in Marc Rich &
Co AG v Società Italiana Impianti PA [1991] ECR I-3855 ("the Atlantic
Emperor") that the exclusion applies not only to arbitration proceedings
as such but also to Court proceedings in which the subject-matter is
arbitration. In Van Uden Maritime BV v Deco-Line [1998] ECR I-7091 the
Court decided that the subject-matter is arbitration if the proceedings
serve to protect the right to have the dispute determined by arbitration.
The question in that case was whether a Dutch court had jurisdiction
under article 31 to make an interlocutory order for a provisional payment
against a German debtor when the substantive dispute was being heard
by arbitrators in the Netherlands. The Court decided (in paragraph 33)
that jurisdiction existed because, despite the existence of an arbitration,
the subject matter of provisional measures was not arbitration:
"... it must be noted...that provisional measures are not in principle
ancillary to arbitration proceedings but are ordered in parallel to such
proceedings and are intended as measures of support. They concern not
arbitration as such but the protection of a wide variety of rights. Their
place in the scope of the Convention is thus determined not by their own
nature but by the nature of the rights which they serve to protect..."
14. The proceedings now before the House are entirely to protect
the contractual right to have the dispute determined by arbitration.
Accordingly, they fall outside the Regulation and cannot be inconsistent
with its provisions. The arbitration agreement lies outside the system
of allocation of court jurisdictions which the Regulation creates. There
is no dispute that, under the Regulation, the Tribunale di Siracusa has
jurisdiction to try the delictual claim. But the arbitration clause is an
agreement not to invoke that jurisdiction and it is that agreement which
the order of Colman J requires to be performed. As Professor Dr Peter
Schlosser points out in an illuminating article (Anti-suit injunctions
zur Unterstützung von internationalen Schiedsverfahren (2006) RIW
486-492), an exclusive jurisdiction clause is in this respect quite different.
It takes effect within the Regulation under article 23 and its enforcement
must therefore be in accordance with the terms of the Regulation; in
particular, article 21. But an arbitration clause takes effect outside the
Regulation and its enforcement is not subject to its terms.
15. The contrary argument is that any court order in any proceedings
(whether falling within the scope of the Regulation or not), which
restrains a party from invoking a jurisdiction available under the
Regulation, conflicts with the Regulation because it amounts to an
indirect interference with that jurisdiction. Professor Schlosser describes
this argument as divorced from reality (lebensfremd) and I agree with
him. In extending the application of the Regulation to orders made in
proceedings to which the Regulation does not apply, it goes far beyond
the reasoning in Gasser and Turner v Grovit and ignores the practical
realities of commerce.
16. I mention in passing that such an extension would apply not only
to arbitration proceedings but also to orders made in other excluded
proceedings such as those concerning matrimonial property (paragraph
a) and insolvency (paragraph b). So, for example, in SA Banque Worms
c/Épx Brachot Cass 1ère civ 19 November 2002, the French Cour
de Cassation decided that a court exercising jurisdiction in a French
bankruptcy could make an order restraining a creditor from taking
execution proceedings against the debtor's land in Ibiza, although the
Spanish court would plainly have had exclusive jurisdiction under the
Regulation to entertain such an application. Orders of this kind (described
by Sandrine Chaillé de Néré in her Note on the case as "[une idée]
audacieuse" and "très efficace") have been made by English courts for
over a century: see Re Oriental Inland Steam Company (1874) LR 9 Ch
App 557. I am not surprised that it did not occur to the Cour de Cassation
that such an order, made in proceedings excluded from the Regulation,
might nevertheless conflict with it.
17. But perhaps the most important consideration is the practical reality
of arbitration as a method of resolving commercial disputes. People
engaged in commerce choose arbitration in order to be outside the
procedures of any national court. They frequently prefer the privacy,
informality and absence of any prolongation of the dispute by appeal
which arbitration offers. Nor is it only a matter of procedure. The choice
of arbitration may affect the substantive rights of the parties, giving
the arbitrators the right to act as amiables compositeurs, apply broad
equitable considerations, even a lex mercatoria which does not wholly
reflect any national system of law. The principle of autonomy of the
parties should allow them these choices.
18. Of course arbitration cannot be self-sustaining. It needs the support
of the courts; but, for the reasons eloquently stated by Advocate General
Darmon in The Atlantic Emperor, it is important for the commercial
interests of the European Community that it should give such support.
Different national systems give support in different ways and an important
aspect of the autonomy of the parties is the right to choose the governing
law and seat of the arbitration according to what they consider will best
serve their interests.
19. The Courts of the United Kingdom have for many years exercised
the jurisdiction to restrain foreign court proceedings as Colman J did in
this case: see Pena Copper Mines Ltd v Rio Tinto Co Ltd (1911) 105 LT
846. It is generally regarded as an important and valuable weapon in the
hands of a court exercising supervisory jurisdiction over the arbitration.
It promotes legal certainty and reduces the possibility of conflict between
the arbitration award and the judgment of a national court. As Professor
Schlosser also observes, it saves a party to an arbitration agreement from
having to keep a watchful eye upon parallel court proceedings in another
jurisdiction, trying to steer a course between so much involvement as will
amount to a submission to the jurisdiction (which was what eventually
happened to the buyers in The Atlantic Emperor: see [1992] 1 Lloyd's Rep
624) and so little as to lead to a default judgment. That is just the kind of
thing that the parties meant to avoid by having an arbitration agreement.
20. Whether the parties should submit themselves to such a jurisdiction
by choosing this country as the seat of their arbitration is, in my opinion,
entirely a matter for them. The courts are there to serve the business
community rather than the other way round. No one is obliged to choose
London. The existence of the jurisdiction to restrain proceedings in
breach of an arbitration agreement clearly does not deter parties to
commercial agreements. On the contrary, it may be regarded as one
of the advantages which the chosen seat of arbitration has to offer.
Professor Schlosser rightly comments that if other Member States wish to
attract arbitration business, they might do well to offer similar remedies.
In proceedings falling within the Regulation it is right, as the Court of
Justice said in Gasser and Turner v Grovit, that courts of Member States
should trust each other to apply the Regulation. But in cases concerning
arbitration, falling outside the Regulation, it is in my opinion equally
necessary that Member States should trust the arbitrators (under the
doctrine of Kompetenz-Kompetenz) or the court exercising supervisory
jurisdiction to decide whether the arbitration clause is binding and then to
enforce that decision by orders which require the parties to arbitrate and
not litigate.
21. Finally, it should be noted that the European Community is engaged
not only with regulating commerce between Member States but also
in competing with the rest of the world. If the Member States of the
European Community are unable to offer a seat of arbitration capable of
making orders restraining parties from acting in breach of the arbitration
agreement, there is no shortage of other states which will. For example,
New York, Bermuda and Singapore are also leading centres of arbitration
and each of them exercises the jurisdiction which is challenged in this
appeal. There seems to me to be no doctrinal necessity or practical
advantage which requires the European Community handicap itself by
denying its courts the right to exercise the same jurisdiction.
Reasons for the reference
22. The question referred is one of very considerable practical importance
on which different views have been expressed by national judges and
writers.
Question referred
23. Is it consistent with EC Regulation 44/2001 for a court of a Member
State to make an order to restrain a person from commencing or
continuing proceedings in another Member State on the ground that such
proceedings are in breach of an arbitration agreement?
Conclusion
24. If counsel have any comments on the form of the reference or
question referred, they are invited to submit them in writing within 14
days.
LORD RODGER OF EARLSFERRY
25. I have had the advantage of considering the speech of my noble and
learned friend Lord Hoffmann, in draft. I agree with it and would make the
reference to the European Court as he proposes.
LORD MANCE
My Lords,
26. I agree with the judgment given by my noble and learned friend Lord
Hoffmann and the reference he proposes.
27. The issue is whether the approach established by the European
Court of Justice in Gasser v. MISAT (Case C-116/02) and Turner v.
Grovit (Case C-159/02) extends to the present arbitral context. Current
English authority is against the view that it does. European academic
opinion exists both for and against extension (See e.g: – for extension: –
Kropholler, Europäisches Zivilprozessrecht (8th ed.) para. 20 (in passing);
Dutta & Heinze, Prozessführungsverbote im englischen und europäischen
Zivilverfahrensrecht, page 40; Carrier, Anti-suit Injonction: Le CJCE met
fin à un anachronisme (2004) 56 Le Droit Maritime Français ("DMF")
403, 411-2; against extension: – Schlosser, Anti-Suit Injunctions zur
Unterstützung von internationalen Schiedsverfahren (2006) RIW 486,
cited by Lord Hoffmann; Krause, Turner/Grovit – Der EuGH erklärt
Prozessführungsverbote für unvereinbar mit dem EuGVÜ (2004) RIW
533, 540-1; Muir Watt, commentary on Turner v. Grovit (2004) Rev.
Crit. DIP, 93(3), 654, 662; Cachard, Portée d'une demande d'anti-suit
injunction devant le juge français, (2006) DMF 856, 876; and Clavel, Anti-
suit Injunctions et Arbitrage, (2001) Revue de l'Arbitrage 669, 684. See
also: – Gaudemet-Tallon, Compétence et Exécution des Jugements en
Europe, para. 48 (neutral); and compare paras. 31d and 17b in Rauscher,
Europäisches Zivilprozessrecht Kommentar (2nd ed.)).
28. Like Lord Hoffmann and Lord Steyn, I find the views advanced against
its extension to the arbitral context powerful. It would be a major step,
affecting the choice of venue and efficacy of international arbitration
generally. The Brussels regime does not regulate relations between
litigation and arbitration. Advocate General Darmon in Marc Rich and
Co. AG v. Società Italiana Impianti PA (Case C-190/89) highlighted the
"fundamental importance" of modern arbitration, its essential, deliberate
independence of litigation and the role of major international arbitration
centres like London. All are potentially affected.
29. The purpose of arbitration (enshrined in most modern arbitration
legislation) is that disputes should be resolved by a consensual
mechanism outside any court structure, subject to no more than limited
supervision by the courts of the place of arbitration. Experience as a
commercial judge shows that, once a dispute has arisen within the scope
of an arbitration clause, it is not uncommon for persons bound by the
clause to seek to avoid its application. Anti-suit injunctions issued by the
courts of the place of arbitration represent a carefully developed – and,
I would emphasise, carefully applied – tool which has proved a highly
efficient means to give speedy effect to clearly applicable arbitration
agreements.
30. It is in practice no or little comfort or use for a person entitled
to the benefit of a London arbitration clause to be told that (where a
binding arbitration clause is being – however clearly – disregarded) the
only remedy is to become engaged in the foreign litigation pursued in
disregard of the clause. Engagement in the foreign litigation is precisely
what the person pursuing such litigation wishes to draw the other party
into, but is precisely what the latter party aimed and bargained to avoid.