Soleymani v Nifty. The Court of Appeal does not convince on Brussels Ia’s arbitration exception (as applied to consumers) yet does lift a stay to allow scope of consumer rights under English law to be litigated in the UK.

Update 30 01 2023 see similar result in Chechetkin v Payward Ltd & Ors [2022] EWHC 3057 (Ch).

Soleymani v Nifty Gateway LLC [2022] EWCA Civ 1297 is the appeal against [2022] EWHC 773 (Comm) which I reviewed here. That post will give readers the necessary background. The Court of Appeal partially overturned. The judge had issued a stay of English proceedings under s9 Arbitration Act 1996, effectively allowing a US arbitrator to decide the validity of the arbitration agreement. That stay has now been lifted and E&W proceedings on that issue will go ahead.

Of note is that the discussion takes place under retained EU law, with the relevant provisions in ia s15b of the Civil Jurisdiction and Judgments Act 1982 (as amended) mirroring the consumer section of Brussels Ia and Directive 93/13 on unfair terms in consumer contracts, as amended.

A first ground of appeal concerned the core of the Brussels Ia issue: whether the Court had jurisdiction under s. 15B CJJA because the exception for arbitration under Article 1(2)(d) of the Recast Regulation did not apply to the Arbitration Claim. In other words whether the exclusion for arbitration is engaged when a consumer, ordinarily protected by the forum actoris provisions in A17 ff BIa, calls upon that protection to seize a UK court.

The first instance judge held that the principal focus and subject matter of Mr Soleymani’s claim is whether he is legally obliged to arbitrate, hence engaging the arbitration exception. The Court of Appeal agrees for largely the same reasons as the judge, and with Popplewell J [89] indicating no change in his views following CJEU Prestige. The CA’s own finding in [2021] EWCA Civ 1589 The Prestige is recalled:  “the question is whether a principal focus of the proceedings is arbitration, the essential subject matter of the claim concerns arbitration, or the relief sought can be said to be ancillary to the arbitration process, these being alternative ways of expressing the same idea”.

The Court of Appeal’s focus seems to be on avoiding abuse by the consumer, who could circumvent the arbitration exception by bringing his claim within the scope of BIa hence characterising it as a claim to enforce his consumer rights.

I continue to find the alternative more convincing: that the consumer section could be easily circumvented, particularly by non-EU based traders and /or in the event of arbitration outside the EU, simply by inserting an ADR clause in the contract, depriving the consumer of the forum actoris. Claimant’s counsel’s nine reasons [51] in my view have convincing appeal, and not Popplewell J’s suggestion [93] ff that in practice the consumer would be protected anyways, either by the ability to sue in the UK and have the ADR clause declared void under consumer protection law, or by the ability to have any foreign award declared unenforceable under the New York Convention’s ordre public exception. The very case at hand show the real difficulties (and costs) the consumer will be put through if and when the business party to the transaction decides to pursue the arbitration proceedings abroad.

The second ground of appeal was dismissed for it relied on s. 15D(1) being construed as invalidating the arbitration clause, which the Court had already held it did not, however ground 3 was accepted, for reasons formulated by Birss LJ.

Mr Soleymani’s claim consisted of claims for three distinct declarations: (i) a declaration that the arbitration clause was unfair and not binding, (ii) a declaration that the governing law clause was unfair and not binding, and (iii) a declaration that the contract formed in the auction was illegal under the Gambling Act 2005.

The jurisdiction issues under Grounds 1 and 2 of the appeal relate only to the first of these three, the arbitration clause claim. The judge as discussed decided that the Arbitration Claim was within the arbitration exception which now forms part of the CJJA (and had its origin in the Brussels Convention and the later Recast Regulation), and the appeal from that decision was dismissed.

The judge however also decided that the other two claims, that is the Governing Law Claim and the Gambling Act Claim were not clearly within the arbitration exception, yet she stayed the E&W proceedings to give way to the arbitration in New York. Therefore these claims were at least capable of falling within the jurisdiction gateway provided for in s15B(2)(b) CJJA 1982.  Ground 3 argued that the first instance judge erred in staying these proceedings under section 9 of the arbitration Act without determining the fairness question or directing a trial before the English Court on the issues raised by that objection.

That ground was upheld for three reasons [151] ff which all go towards limits to Kompetenz Kompetenz in consumer (and other?) cases.

Firstly, the public importance of decisions vindicating (or not) consumers’ rights. The case Mr Soleymani is seeking to make has implications for  consumers in general in this jurisdiction and it is important that they are considered and ruled upon in public in a court. Therefore it was held the s9(4) issues should be decided at a trial and not left to be decided in the arbitral tribunal.

Further [152] the consumer protection rights under UK law involve domestic concepts which UK court are far better placed to adjudicate upon than a New York arbitrator. Even if it were certain that the New York Tribunal would apply UK law (a late proffered undertaking to do so was made and discussed [155] ff), it engages principles which are the subject matter of our domestic jurisprudence, not simply some general notion of fairness.

Thirdly whether the arbitration agreement does in fact operate unfairly on Mr Soleymani is not suited to summary determination. “If the invalidity argument is good, the very reasons which make it good, namely that it places an unfair burden on Mr Soleymani, weigh against allowing the tribunal to decide the issue under its Kompetenz-Kompetenz jurisdiction. The Judge’s finding that there would be nothing unfair about leaving it to the arbitrator to decide that issue is inconsistent with her recognition that there was a triable issue whether this was an unfair arbitration agreement.”

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.3.2, and 2.2.9.2.

QBE Europe v Generali. Move over, West Tankers!

Update 16 September 2022 see Francisco Quintay, mine and others’ pondering on the enforcement implications, here and here. I agree the position of EU-based parties faced with an ASI, is interesting. Ignoring an ASI leads to a contempt judgment, infringement of which is a criminal offence. Unlike Francisco I am not convinced that enforcement of a contempt order would fail under ordre public in the EU.

QBE Europe SA/NV v Generali Espana De Seguros Y Reaseguros [2022] EWHC 2062 (Comm) is not a surprising judgment of course. I flagged it on Twitter early August and I post it here for the sake of blog completeness.

The judgment grants an urgent anti-suit injunction (ASI) to restrain proceedings brought by the Defendant (Generali) against QBE UK in Spain, and to prevent Generali from commencing similar proceedings against QBE Europe. The proceedings in Spain assert a direct claim against QBE UK under a Spanish statute, by reference to a liability insurance policy. The judgment is exactly the kind of ASI outlawed by CJEU West Tankers and will reinforce the position of London in the arbitration market.

Geert.

Brussels Ia and arbitration. The Prestige aka London Steam-Ship Owners’ Mutual Insurance Association Limited v Spain. Time for the EU to decide its direction of travel on commercial arbitration.

I have a bit of catching up to do with the blog and I shall start with the case that is currently also being discussed over at the EAPIL blog. The CJEU has held in C-700/20 London Steam-Ship Owners’ Mutual Insurance Association Limited v Spain (re: the Prestige oil spill). I have further background and links to the English judgments that preceded the reference in my review of the AG Opinion. In that review, I predicted the Court would probably not follow its Advocate General and I should have betted on it for the Court, in Grand Chamber no less, did indeed largely not follow its Advocate General.

Had it been up to the Court of Appeal, the case should have not been referred at all, and given the consequences of the CJEU’s judgment, the referral may come to be regretted.

Essentially, the question at issue is whether an English ‘Section 66’ (Arbitration Act) judgment, which confirms an arbitral award is enforceable in the same way as a judgment in ordinary, qualify as a judgment under the recognition and enforcement Title of Brussels Ia (the case is formally subject to its predecessor, the Brussels I Regulation – see here for a BI- BIa table of equivalence which will make reading of the judgment easier)? If it does, the Spanish judgment contradicting the award is unlikely to be recognised.

Of note is that the 1958 New York Convention does not come into play in the proceedings for the reason that those proceedings do not involve, as Article I(1) of that convention requires, the recognition and enforcement of an arbitral award in a State other than that in which that award was made: the award was made in the UK.

The AG, despite his broad interpretation of the arbitration exclusion in the case at issue, suggests the proceedings are not caught by the arbitration exception, for reasons I discuss in my earlier post. The Court disagrees all in all in succinct terms.

It is worth relisting the 3 issues which the High Court is unsure about, followed by the CJEU’s answer to each:

First, whether a judgment such as its judgment given under Section 66 of the Arbitration Act 1996 qualifies as a ‘judgment’, within the meaning of Article 34(3) of Brussels I, where that court has not itself heard all the substantive merits of the dispute which had been heard by the arbitration tribunal.  Secondly, it has doubts whether a judgment falling outside the material scope of BI  by reason of the arbitration exception may nevertheless be relied on to prevent recognition and enforcement of a judgment from another Member State pursuant to Article 34(3).

Answering these together, the Court [44] kicks off with a curt reference to a fairly unqualified statement in CJEU Rich [18]: ‘the Contracting Parties [to the Brussels Convention, GAVC] intended to exclude arbitration in its entirety, including proceedings brought before national court’.  Further support is found in the 4th (!) para of recital 12 of Brussels Ia, referring specifically to recognition and enforcement proceedings as being excluded from Brussels Ia: [the Regulation does not apply] ‘nor to any action or judgment concerning the annulment, review, appeal, recognition or enforcement of an arbitral award.’

With reference to CJEU Gazprom, the Court [45] notes that the lex causae for recognition and enforcement of arbitral awards is national law, including the international law obligations the Member State may have adhered to. As noted however, the New York Convention does not apply to the recognition of the award at issue.

[48] ff the CJEU however concedes, partially with reference to earlier case-law, that judgments on issues carved out from the Regulation, may nevertheless qualify as a ‘judgment’ as meant in Article 34(3) [‘a judgment shall not be recognised’ ‘3. if it is irreconcilable with a judgment given in a dispute between the same parties in the Member State in which recognition is sought’]. This is mostly meant to protect Member State’s internal legal order and ensure that its rule of law is not disturbed by the obligation to recognise a judgment from another Member State which is inconsistent with a decision given, in a dispute between the same parties, by its own court.

This recycling of a carved-out subject-matter, via the enforcement title remains awkward to me, and is a similar back-door entry into BIa as for ex-EU judgments in C-568/20 J v H Limited.

[54] the Court then makes a leap which is reminiscent of its effet utile (safeguarding the overall objectives of the Brussels regime) approach viz anti-suit and arbitration in CJEU West Tankers : ‘the position is different where the award in the terms of which that judgment was entered was made in circumstances which would not have permitted the adoption, in compliance with the provisions and fundamental objectives of that regulation, of a judicial decision falling within the scope of that regulation.’

[59] it lists the two cardinal sins under Brussels I which the award, had it been a judgment covered by the Regulation (but surely it is not!), would have committed: it would have infringed ‘two fundamental rules of that regulation concerning, first, the relative effect of an arbitration clause included in an insurance contract [here the CJEU refers to Assens Havn, GAVC; update 1 December 2022 someone close to the judgment (in a meeting I think but am not sure was subject to Chatham house rules) also referred to the fact that thousands of victims should not be constrained in their remedies as a result of a contract in which they had no part] and, secondly, lis pendens [here, [64] ff, the Court finds the lis pendens conditions would have been met had the two sets of proceedings both been included in the Regulation, GAVC; update 1 December 2022 the same aforementioned person called this an expression of the clean hands principle].’

This whole construction requires a parallel universe being built next to BIa (or it is effectively nonsense, as prof Briggs puts it).

[71] the CJEU formulates an instruction for courts faced with request for arbitral awards:

It is for the court seised with a view to entering a judgment in the terms of an arbitral award to verify that the provisions and fundamental objectives of Regulation No 44/2001 have been complied with, in order to prevent a circumvention of those provisions and objectives, such as a circumvention consisting in the completion of arbitration proceedings in disregard of both the relative effect of an arbitration clause included in an insurance contract and the rules on lis pendens laid down in Article 27 of that regulation

The UK courts not having so verified, [72] ‘a judgment entered in the terms of an arbitral award, such as that at issue in the main proceedings, cannot prevent, under Article 34(3) of Regulation No 44/2001, the recognition of a judgment from another Member State.’ As Gilles Cuniberti notes, this instruction, effectively to arbitral tribunals (for if they ignore them, their award risks becoming unenforceable) to verify lis pendens requirements  is at odds with CJEU Liberato, and an extraordinary extension of the BIa rules to arbitral tribunals.

Thirdly, is it permissible to rely on Article 34(1)’s orde public exception as a ground for refusing recognition or enforcement of a judgment from another Member State, on the basis that such recognition or enforcement (of the Spanish judgment) would disregard the force of res judicata acquired by a domestic arbitral award or a judgment entered in the terms of such an award. Here, the CJEU [74] ff answers that the issue of the force of res judicata acquired by a judgment given previously is already exhaustively dealt with under Articles 34(3) and (4) of Brussels Ia and cannot therefore be resurrected under the ordre public exception.

The judgment is concocted reality, but not one which surprises me as I already indicated in my post on the AG’s Opinion. It is time the EU have a fundamental reflection on its relation with commercial arbitration. Treated with odd deference in the discussions on investor-state dispute settlement (think: CJEU Achmea, Komstroy etc) yet seriously obstructed in the case-law on the Brussels regime.

Geert.

EU Private International Law, 3rd ed. 2021, ia 2.120.

SCOTUS in ZF Automotive v Luxshare. A break on discovery tourism in arbitration.

The arbitration community in particular was eagerly awaiting judgment of the US Supreme Court in ZF Automotive v Luxshare. SCOTUS has now held that the use of the relevant US CPR rule, on assistance of foreign tribunals, does not apply to arbitration.

Matthias Lehmann reviews the judgment here and makes valid points on how the ruling could and perhaps should have gone the other way, particularly in light of the use of ‘international’ and ‘tribunal’. Whatever the merits of the finding, it confirms a limiting approach courts are taking in accepting discovery shopping. This is also testified eg by the Dutch courts’ approach in Kiobel, and the English courts’ approach in Akkurate and, in an alternative view, in Glaxo v Sandoz.

Geert.

The Prestige litigation before the CJEU. A tricky Opinion on court-sanctioned arbitral awards as judgments under Brussels Ia.

I give background to Collins AG’s Opinion in C-700/20 The London Steam-Ship Owners’ Mutual Insurance Association Limited v Kingdom of  Spain here. The Court of Appeal nota bene in the meantime has held that the High Court should have never referred, as I report here.

Does an English ‘Section 66’ (Arbitration Act) judgment, which confirms an arbitral award is enforceable in the same way as a judgment in ordinary, qualify as a judgment under the recognition and enforcement Title of Brussels Ia? If it does, the Spanish judgment contradicting the award is unlikely to be recognised.

The case at issue in essence enquires how far the arbitration exception of Brussels Ia stretches. Does the arbitration DNA of the case once and for all means any subsequent involvement of the courts is likewise not covered by Brussels Ia (meaning for instance that it must not have an impact on the decision to recognise and enforce an incompatible judgment issued by another Member State in the case); or should the  involvement of the courts in ordinary be judged independently against the Regulation’s definition of ‘judgment’.

The case therefore echoes the High Court’s later intervention in the infamous West Tankers case, and the recent CJEU judgment in C-568/20 J v H Limited (on third country judgments).

(44) the 1958 New York Convention does not come into play in the proceedings for the reason that those proceedings do not involve, as Article I(1) of that convention requires, the recognition and enforcement of an arbitral award in a State other than that in which that award was made: the award was made in the UK.

The AG suggests a broad scope of the exclusion, seeking support in the Jenard and Schlosser Reports. He also confirms the exclusion of arbitration has the effect, in particular, of making it impossible to use that regulation to enforce an arbitral award in another Member State by first turning it into a judgment and then asking the courts of the other Member State to enforce that judgment under Chapter III.

However, in the case at issue he suggests the proceedings are not caught by the arbitration exception, for 3 reasons:

(53) the notion of ‘judgment’ needs to be interpreted broadly;

(54) CJEU Solo Kleinmotoren instructs that for a finding to be a ‘judgment’,  ‘the decision must emanate from a judicial body of a Contracting State deciding on its own authority on the issues between the parties’;  that is the case here for (55) the S66 court does not rubberstamp; it discusses and settles a range of substantive issues between the parties;

(57) there is no requirement that a court must determine all of the substantive elements of a dispute in order to deliver a judgment that satisfies the purposes of that provision; reference here is made to CJEU C-394/07 Gambazzi (see the Handbook 2.576).

In the view of the AG (62) A1(2) is not determinative as to whether a judgment under the recognition and enforcement Title comes within the scope of the Regulation. Those provisions, he suggest, were enacted for different purposes and pursue different objectives: they aim to protect the integrity of a Member State’s internal legal order and to ensure that its rule of law is not disturbed by being required to recognise a foreign judgment that is incompatible with a decision of its own courts. A1(2) on the other hand is firmly part of the free movement of judgments rationale of the Regulation (and limitations thereto).

I think the CJEU judgment could go either way and if I were a betting man (which I am not) I suspect the Court will not follow and instead will take the same holistic approach towards protecting the application of Brussels Ia by the courts in ordinary, as it did in CJEU West Tankers. By the very nature of s66 (and similar actions in other Member States), the ‘issues between the parties’ are different in actions taking place entirely in courts in ordinary, and those in arbitration awards which are subsequently sanctioned (in the sense of ‘approved’) by a court. The latter proceedings do not discuss ‘the issues’ between the parties. They only engage a narrow set of checks and balances to  ensure the soundness of the arbitration process.

Neither do I follow the logic (63) that if the UK were not allowed to take account of the s66 judgment in its decision to recognise, it would mean that Member States would have to ignore all internal judgments with res judicata in an excluded area, including insolvency, social security etc., in favour of other Member States judgments ‘adjudicating upon the same issue’ (63): if they truly adjudicate upon ‘the same issue’, the judgment of the other Member State will be exempt from Brussels Ia. This is unlike the case at hand which clearly did involve a Spanish judgment on a subject matter covered by the Regulation. The arbitration exemption is the only exemption that relates to a modus operandi of conflict resolution: all the others relate to substantive issues in conflict resolution.

Commercial arbitration enjoys a peculiar privilege in the CJEU’s view on ADR (see CJEU Komstroy). I do not think however the Court will give it a forum shopping boost in the context of Brussels Ia.

Geert.

EU Private International Law, 3rd ed. 2021, ia 2.120.

 

Cryptoassets, non-fungible tokens and consumer protection. The High Court rejects jurisdiction in Soleymani v Nifty, re-igniting the opaqueness of the arbitration exception under Brussels Ia.

In Amir Soleymani v Nifty Gateway LLC [2022] EWHC 773 (Comm) Abrose J largely rejected jurisdiction for the English courts in a claim following auction brought by a UK-based digital artwork collector. Another part of the claim was stayed pending arbitration in New York.

Faced with a clause in Nifty’s general terms and conditions that provide for binding arbitration in New York and for New York law to be the governing law of the contract, claimant seeks a declaration that the arbitration agreement was unenforceable due to it being unfair under the UK Consumer Rights Act 2015. Alternatively, he argued the governing law clause is invalid on the same statutory ground, and that a contract arising from the auction is void for illegality pursuant to the UK Gambling Act 2005.

Of note is that the US based arbitrator, in the proceedings initiated by Nifty, is considering himself (with procedural and discovery orders having been issued) broadly similar issues under consumer protection provisions of the ADR provider.

At [34] the qualification of NFTs as ‘art’ or merely ‘technology’ [‘the nature of NFTs as assets, and whether they are artwork, with the Claimant’s position being that he was trading in digital art whereas the Defendant maintained that an NFT is merely a unique string of code stored on a blockchain ledger that makes a digital artwork accessible, and marks authenticity’] is announced as potentially relevant for substance but not for current application.

The discussion largely takes place under retained EU law (s15b of the Civil Jurisdiction and Judgments Act 1982 (as amended)). The judge holds [55] that the claim falls within the arbitration exception of (retained) Brussels Ia seeing as, as she qualifies it

The principal focus and subject matter of Mr Soleymani’s claim is whether he is legally obliged to arbitrate.

Recital 12 BIa is called upon in support. Claimant ([49]-[50] in particular are a good summary of the position) essentially argues such a view is incompatible with the effet utile of the consumer title. I believe that point has merit and one imagines it will be on this point that appeal will be sought (Bitar v Banque Libano-Francaise was offered in some support).

Whether the contract is a ‘consumer’ contract is still discussed [62] ff viz the claim for declaratory relief regarding the unfairness of the arbitration clause under the Gambling Act. The judge holds [79] that on the evidence put forward, Claimant has the better of the argument as to whether the Defendant was directing commercial activities to England (and the UK more generally). However she decides to grant the defendant a stay (which would not have been possible pre-Brexit) in favour of the unfairness issues being discussed in the New York arbitration. (These issues may later return to a UK court in the shape of an ordre public opposition to enforcement of the award in the UK).

I will of course notify if and when permission to appeal will have been granted.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.3.2, and 2.2.9.2.

Paris Court of Appeal reverses ruling on arbitrators’s liability: holds it falls outside Brussels Ia.

I did say I was mopping up the queue this week so here’s a post reminding us of the Paris Court  of Appeal overturning an earlier judgment which had held that an arbitrator’s liability falls within Brussels Ia. I have analysis and further reference to the first instance judgment here, and Gilles Cuniberti’s approving view on the Court of Appeal’s decision is here.

The ruling means the court of the locus arbitri, the curial seat as agreed between the parties, is the natural home for any subsequent disputes involving liability of the arbitrators. I agree with Gilles that this makes a lot of sense from a consolidation and neutrality point of view. I do not however feel for a moment that it clearly follows from Brussels Ia, including its arbitration recital (which has the trimmings of an encyclopaedia, weighing in at more than half a page and 4 paragraphs).

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.3.4, para 2.110 ff..

The continuing enigma that is the Brussels Ia arbitration exception. The Paris CFI on liability claims against arbitrators.

Update 29 April 2021 prof Peters and Meester Bakker argued differently here, in 2020 (in Dutch), in summary and with strong arguments (as well as in contrast with the French Court) pointing to the locus arbitri, the curial seat as agreed between the parties, as the natural home for any subsequent disputes involving liability of the arbitrators.

Thank you indeed Gilles Cuniberti for flagging and discussing the end of March decision (Press Release only) by the Paris Court of First Instance in which it held that an action against an arbitrator for damages following his failure to disclose a conflict of interests, which led to the annulment of the award, fell within Brussels Ia despite its arbitration exception.

I have more sympathy for the decision than Gilles. At the very least I am not surprised national courts should be confused about the demarcation. Brussels Ia inserted the Smorgasbord of confusion following West Tankers, by collating an even prima facie conflicting array of ins and outs in its recital 12. Even before the entry into force of Brussels Ia, Cooke J in Toyota v Prolat held that recital 12 is of no use. Other than in fairly straightforward cases such as Premier Cruises v DLA Piper Russia, good argument might exist on many conceivable cases.

Deciding the demarcation with help from the New York Convention itself (one might have suggested that what is included in New York, should not be included in Brussels Ia) does not help in the case at issue for as ia Tadas Varapnickas notes, Uncitral and New York are silent on the status of the arbitrator.

Assuming BIa applies, there must be little doubt there is a contractual relation, even between the arbitrator and the party who did not appoint her or him, in the BIa Article 7(1) sense, following CJEU flightright.

Curial seat was Paris, yet hearings and deliberations had taken place in Germany. Forum contractus as a provision of services was held to have been Germany.

This is where Burkhard Hess, at the request of Gilles, took over: Burkhard further discusses the findings on arbitration, agrees with Germany as the forum contractus per ia CJEU Wood Floor Solutions, and suggests (see similarly Mann J in Philips v TCL) the German courts are bound by the Paris’ court’s findings per CJEU Gothaer.

Much relevant. I do not know whether appeal is being sought.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.3.4, para 2.110 ff.;

PWC Landwell v LY. The French SC on the EU consumer rights Directive and arbitration agreements.

Many thanks Alain Devers for alerting us back in October to the French Supreme Court’s judgment in PWC Landwell v LY, on agreements to arbitrate and the consumer rights Directive 93/13. Apologies for late posting.

The Supreme Court held [20 ff] that the contract between a client, domicoled at France, and PWC Landwell’s Spanish offices (Landwell used to be the trading name of the law firm side of this multidisciplinary practice), fell within the consumer title of Brussels IA. The Court of Appeal’s judgment had clearly run through the CJEU-sanctioned ‘directed at’ test and found it satisfied in the case at issue (the Landwell website boasting international coverage of its services as well as international contact numbers as strong indicators).

The SC also held that the requirement to turn to arbitration was incompatible with the Consumer Rights Directive 93/13, in particular its A6 which per CJEU C‑147/16 Karel de Grote — Hogeschool Katholieke Hogeschool Antwerpen confirmed in C-51/17 OTP Bank et OTP Faktoring is of ordre public character. The SC agreed with the CA that the clause, despite the client having been in the presence of a bank employee when the contract was put to her, was not properly negotiated and qualifies as a clause abusif.

Geert.

EU Private International Law 3rd ed 2021, para 2.277.

 

Premier Cruises v DLA Piper Russia and UK. Textbook ‘arbitration’ exception under Brussels Ia.

Premier Cruises Ltd v DLA Piper Rus Ltd & Anor [2021] EWHC 151 (Comm) is a textbook case for the relationship between arbitration and the Brussels Ia regulation, as well as relevance of lex arbitri on what is within the scope of an arbitration agreement.

Claimant is Premier Cruises Limited (“PCL”), a company originally domiciled in the British Virgin Islands and now domiciled in the Seychelles, which owns or operates two vessels. Defendants are entities within the DLA Piper Group of legal practices. The First Defendant is DLA Piper Rus Limited (“DLA Russia”), an English company with operations in Russia. The Second Defendant is DLA Piper UK LLP (“DLA UK”), an English LLP.  On 29 January 2020 (within the scope of Brussels Ia, therefore, at least as against DLA UK), PCL commenced proceedings against DLA in the Commercial Court claiming damages in contract and/or in tort for professional negligence.

DLA Russia argues the claim is within the scope of its arbitration agreement included in the engagement letter (International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation). DLA UK accepted it was not included in that agreement and applied for a case-management stay.

PCL argue its action against DLA Russia is in respect of advice allegedly given and work allegedly carried out by DLA Russia prior to 26 May 2015 when the Engagement Letter came into force.

At 52, Edward J identified Russian law as both lex contractus and lex arbitri, and held at 138 after hearing the Russian law experts, that upon contractual construction, PCL’s claim was not included in the clause for it was not meant to apply retroactively.

At 147 ff he agreed with PCL that a case-management stay for the claim against DLA UK is not possible given, with reference to Recital 12 BIa, that the arbitration exception is not engaged: ‘The claim made against DLA UK in this action is not one in respect of which PCL and DLA UK have entered into an arbitration agreement [161]; Arbitration is not the principal focus of the English proceedings against DLA UK; the essential subject matter of the claim made against DLA UK does not concern arbitration; and the relief sought in the proceedings is not ancillary to or an integral part of any arbitration process [163] (reference is made to The Prestige].

The claim being within BIa, Owusu rules out a case management stay. The judge should have outright rejected the additional suggestion ([158 juncto [164]) of a temporary stay being within the Owusu confines.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.3.4, para 2.110 ff.

 

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