Source: https://arbitrationnewsaltana.wordpress.com/2015/11/05/following-the-example-of-the-court-of-justice-of-the-european-union-lithuania-gives-effect-to-an-award-ordering-an-anti-suit-injunction-in-the-european-union/
Timestamp: 2018-06-19 16:31:21
Document Index: 356994771

Matched Legal Cases: ['§15', '§26', '§27', '§44', '§40', '§42']

Following the example of the Court of Justice of the European Union, Lithuania gives effect to an award ordering an anti- suit injunction in the European Union | The arbitration team's newsroll
Following the example of the Court of Justice of the European Union, Lithuania gives effect to an award ordering an anti- suit injunction in the European Union
On 13 May 2015, the Court of Justice of the European Union (“the Court of Justice”) left to Member State courts the option to accept or refuse the recognition and enforcement of an anti-suit injunction issued by an arbitral tribunal seated in another Member State. However, the question remained of the recognition and enforcement of such an award by the Member States. This question has recently been answered by Lithuania since its Supreme Court is, according to our sources, said to have agreed to the recognition of the award at issue on 23 October 2015.
The decision of the Court of Justice deserves special attention because it clarified the Court’s stance on anti-suit injunctions, i.e., injunctions prohibiting a litigant from applying to a court other than that designated by the parties. In “Turner” of 2004 (Court of Justice, 27 April 2004, C-159/02) and “West Tankers” of 2009 (Allianz and Generali Assicurazioni Generali, “West Tankers case”, Court of Justice, 10 February 2009, C-185/07), the Court of Justice had decided to ban intra-EU anti-suit injunctions, even in the context of arbitration.
The facts of this case were as follows: on 24 March 2004, the Russian company Gazprom concluded with the Lithuanian State a shareholders’ agreement which contained an arbitration clause.
On 25 March 2011, Lithuania applied to the Regional Court of Vilnius, seeking initiation of an investigation on the activities of Lietuvos dujos, a company of which Gazprom is a shareholder and that was the subject of the above mentioned shareholders’ agreement, the company’s general manager and other members of management.
In its application, Lithuania also claimed that certain corrective measures provided for in the Lithuanian Civil Code should be imposed if it were to be established by the investigation that the actions of that company or those persons were “improper” (§15).
Taking the view that this application was in breach of the arbitration clause contained in the shareholders’ agreement, Gazprom filed a request for arbitration against the Ministry of Energy of Lithuania at the Arbitration Institute of the Stockholm Chamber of Commerce (“SCC”).
In an award of 31 July 2012, the arbitral tribunal found Lithuania to be in partial breach of the arbitration clause and ordered the Ministry to withdraw or limit some of the claims which it had brought before the Regional Court of Vilnius.
Notwithstanding the award of 31 July 2012, the Regional Court of Vilnius ordered, on 3 September 2012, the initiation of the investigation. Thereafter, an appeal was brought before the Lithuanian Court of Appeal by the company’s general manager and the other members of management who were under the investigation.
At the same time, Gazprom applied to that same court for recognition and enforcement in Lithuania of the arbitral award of 31 July 2012.
The case was finally brought before the Supreme Court of Lithuania which decided, after characterizing the award as an anti-suit injunction, to stay the proceedings and refer the following questions to the Court of Justice (§26):
Does the Supreme Court of Lithuania have the right to refuse to recognize an “anti-suit injunction” issued by an arbitral tribunal on the ground that this award “restricts the court’s right to determine itself whether it has jurisdiction to hear the case under the rules on jurisdiction in [the Brussels I Regulation]”?
“Should the first question be answered in the affirmative, does the same also apply where the anti-suit injunction issued by the arbitral tribunal orders a party to the proceedings to limit his claims in a case which is being heard in another Member State and the court of that Member State has jurisdiction to hear that case under the rules on jurisdiction in [the Brussels I Regulation]”?
Finally, “can a national court, seeking to safeguard the primacy of EU law and the full effectiveness of [Regulation No 44/2001], refuse to recognise an award of an arbitral tribunal if such an award restricts the right of the national court to decide on its own jurisdiction and powers in a case which falls within the jurisdiction of [Regulation No 44/2001]?”
The Court of Justice examined and answered these questions together and stated in essence that the Supreme Court of Lithuania’s request addressed the question of whether the Brussels I Regulation “must be interpreted as precluding a court of a Member State from recognising and enforcing, or from refusing to recognise and enforce, an arbitral award prohibiting a party from bringing certain claims before a court of that Member State” (§27).
The Court of Justice answered in the negative and stated that the Brussels I Regulation “must be interpreted as not precluding a court of a Member State from recognising and enforcing, or from refusing to recognise and enforce, an arbitral award prohibiting a party from bringing certain claims before a court of that Member State, since that regulation does not govern the recognition and enforcement, in a Member State, of an arbitral award issued by an arbitral tribunal in another Member State” (§44).
In the motivation of its decision, the Court of Justice firstly recalled that the West Tankers case related to the possibility for “a court of a Member State to make an order to restrain a person from commencing or continuing proceedings before the courts of another Member State”. In the present case, however, the issue at stake was that of the legal effect of an arbitral award, that is not attached to any domestic legal order (§40).
Therefore, the solution of the West Tankers case is not relevant and implicitly, the Court of Justice recognised the power of an arbitral tribunal to issue anti-suit injunctions, which could be seen as favourable for arbitration (See, to that effect, the article by François Muller and Vanessa Thieffry here).
However, the Court of Justice refrained from judging on the recognition and enforcement of such an award, in the Member States, as it added that:
“[…] in the circumstances of the main proceedings, any potential limitation of the power conferred upon a court of a Member State — before which a parallel action has been brought — to determine whether it has jurisdiction would result solely from the recognition and enforcement of an arbitral award, such as that at issue in the main proceedings, by a court of the same Member State, pursuant to the procedural law of that Member State and, as the case may be, the New York Convention, which govern this matter excluded from the scope of Regulation No 44/2001” (§42).
In so doing, the Court of Justice left to the Member States the responsibility to decide whether an award containing an anti-suit injunction should be given tangible effects.
Therefore, the issue of the effects of such an award remains in practice.
With the decision of the Supreme Court of Lithuania of 23 October 2015, this issue seems to be resolved… but only in relation the injunctions enforced in that State.
The decision of the Court of Justice is available here.
Tags: anti-suit injunction, arbitral tribunal, arbitration, Court of Justice, EU, international arbitration, Lithuania
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