Posts Tagged West Tankers
Update 04 July 2020 the Supreme Court will hear appeal in this case in July, as reported by Milbank.
The Court of Appeal in  EWCA Civ 574 Enka Insaat Ve Sanayi AS v OOO “Insurance Company Chubb” & Ors has overturned Baker J in  EWHC 3568 (Comm) Enka Insaat ve Sanayi v OOO “Insurance Company Chubb” et al. which I reviewed here.
The case is mostly about the proper law of the arbitration agreement (Flaux J using the shorthand the ‘AA law’) aka the lex arbitri. Given that this is excluded from Rome I, residual rules apply which of course under English common law has Sulamerica as its main authority. In this case Enka contends that the AA law is English law, and Chubb Russia that it is Russian law. It is common ground that the lex contractus is Russian law, but the route to that conclusion is also in issue.
The dispute in this case raises the question of the relative weight to be given to the curial law (that is, the law of the seat, GAVC) of the arbitration agreement and the main contract law, where they differ, in determining the AA law. At 69: ‘It is a question on which it would be idle to pretend that the English authorities speak with one voice. It would appear that there are also differences of approach between other jurisdictions in international arbitration generally’.
At 109 Flaux J concludes that parties have impliedly chosen that the proper law of the arbitration agreement should coincide with the curial law and be English law, and further, at 119 that ‘there has been no delay by Enka in this case which provides any good reason for not granting injunctive relief. I would treat this as a classic case, like The Angelic Grace, in which the court should grant an injunction to restrain the further conduct of proceedings brought in breach of an English law arbitration agreement.’
Anti-suit therefore granted.
For those interested in choice of law in arbitration, the judgment is required reading. None of the Rome I (let alone Brussels Ia) issues discussed at the High Court are further discussed here, hence for the purposes of this blog I shall leave the analysis here.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.1.
 EWHC 3568 (Comm) Enka Insaat ve Sanayi v OOO “Insurance Company Chubb” et al. is the very swift follow-up to  EWHC 2729 (Comm) which I review here. I flag the case mostly for:
- at 8, Baker J siding with Males J (and myself) per Nori Holding, that West Tankers is still good authority following Brussels Ia despite Wathelet AG’s suggestions in Gazprom;
- the brief reference at 9, as to whether under Rome I injunctive relief for threat of contractual breach is covered by lex fori or lex contractus. Baker J concludes that issue simply by reminding us that Rome I does not apply to arbitration agreements;
- At 47 ff the discussion of choice of law in spite of no express clause having been included to that effect. Specifically, with reference to Sulamerica, whether choice of seat may imply choice of law.
Anti-suit was denied.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.1.
Airbus v Generali et al: The Court of Appeal on the intensity of review of choice of court under Article 25. Clear echoes of Turner v Grovit and West Tankers.
The claimant in this action and the respondent to the appeal, Airbus, claims declarations (1) that it is not liable to the defendant insurers for losses incurred in relation to an incident which occurred on 29 September 2013 in which an aircraft which it had manufactured sustained damage when landing in Rome and (2) that proceedings commenced against it by the defendants in Italy have been commenced contrary to the terms of an English exclusive jurisdiction clause. The clause in question is contained in an Airframe Warranties Agreement dated 8 July 2010 (“the Warranties Agreement”) concluded between (among others) Airbus and the defendants’ insured, the Italian airline company Alitalia. The issue on this appeal is whether the English court has jurisdiction over these claims by virtue of the jurisdiction clause. Moulder J held that it does and the defendant insurers (henceforth “the appellants”) now appeal.
Appellants contend, in outline, that the jurisdiction clause is of limited scope and does not extend to Airbus’s claims in this action, that the claim for a negative declaration falls within an arbitration clause in a different agreement, a Purchase Agreement dated 31 October 2005 which provides for ICC arbitration in Geneva, and that their own proceedings in Italy under articles of the Italian Civil Code are not within the scope of either clause. They say in addition that they cannot be in breach of an exclusive jurisdiction clause to which, as insurers, they were never parties and that, regardless of the true construction of the clause, there is no basis on which the English court can make a declaration against them (essentially, per Turner v Grovit and West Tankers).
Males LJ at 49: The standard of proof to be applied in determining whether the English court has jurisdiction under Article 25 of the Brussels Recast Regulation is that of a good arguable case. Kaifer Aislimentos was discussed as relevant authority. However, at 52: ‘sometimes it will be sensible, when a question of law arises on an application to challenge jurisdiction, for the court to decide it rather than merely deciding whether it is sufficiently arguable.’ Discussion of the contractual construction of the choice of court clause then follows at 62 ff and concludes in favour of a wide application in casu.
At 77 ff: The question whether the appellants’ claim in Italy falls within the scope of the English jurisdiction clause. Males LJ notes correctly that this depends on the nature of the claim brought in Italy, not on the defences which may be or have in fact been raised by Alitalia. At 82 he fairly swiftly concludes that even though the Italian claim is for breach of non-contractual obligations under articles of the Italian Civil Code, it is sufficiently connected to the Warranties Agreement to be within the scope of the exclusive jurisdiction clause. At 83 therefore: the commencement and pursuit of the Italian proceedings was contrary to the terms of that clause and that the English court has jurisdiction to determine that claim.
That then brings us to the discussion of what the English courts might potentially do to assist the party relying on the choice of court clause – given the unavailability of anti-suit per West Tankers. Noteworthy is that the new lis alibi pendens rule protecting choice of court following Brussels Ia, seemingly was not deployed or discussed in the Italian proceedings – at any rate there is no reference to any such discussion in the Court of Appeal judgment (other than perhaps at 84 which seems to suggest that amendment of claims brought the issue to the surface and this may not yet have been the case at the time of the discussion of the Italian proceedings).
A statement by the English courts finding infringement of the clause, would not just have an impact on cost rulings but would also ground a delictual claim. At 97 Males LJ settles the discussion whether such a declaration might be possible: ‘I can see no valid basis on which West Tankers can be distinguished. If it is held that commencement of the Italian proceedings by Alitalia would have been a breach of the jurisdiction clause in the Warranties Agreement, it follows that their commencement by the appellant insurers is a breach of an equivalent obligation in equity which Airbus is entitled to enforce and that the English court has jurisdiction to grant a declaration to say so.’
Interesting and highly relevant authority.
(Handbook of) EU Private International Law, 2nd ed. 2016, Heading 184.108.40.206.2., Heading 2.2.9, Heading 220.127.116.11.
Nori Holdings: High Court holds that West Tankers is still good authority even following Brussels I Recast. (Told you so).
In  EWHC 1343 (Comm) Nori Holdings v Otkritie Males J follows exactly the same line as mine in commenting on West Tankers – specifically the bodged attempt in Brussels I Recast to accommodate the concerns over West Tankers’ sailing the Brussels I ship way too far into arbitral shores.
For my general discussion of the jurisdictional /arbitration issues see here. A timeline:
- When the Council came up with its first draft of what became more or less verbatim the infamous recital 12 I was not enthusiastic.
- When Wathelet AG in his Opinion in Gazprom suggested recital 12 did overturn West Tankers, I was not convinced. (Most of those supporting this view read much into recital 12 first para’s instruction that the Regulation does not impede courts’ power ‘from referring the parties to arbitration’).
- Indeed the CJEU’s judgment in Gazprom did not commit itself either way (seeing as it did not entertain the new Regulation).
- Cooke J was on the right track in Toyota v Prolat: in his view the Recast did not change West Tankers.
- Males J confirms: West Tankers is still good authority. At 69 ff he does not just point out that Wathelet was not followed by the Court. 92 ff he adds five more reasons not to follow the suggestion that West Tankers has been overruled. He concludes ‘that there is nothing in the Recast Regulation to cast doubt on the continuing validity of the decision in West Tankers (Case C-185/07)  AC 1138 which remains an authoritative statement of EU law’.
(Handbook of) EU Private International Law, 2nd ed. 2016, Heading 18.104.22.168.2.
Anti-suit once again climaxes outside the Brussels I (Recast) context. The High Court in Crescendo Maritime.
As I have reported before, English practice is to continue using anti-suit injunctions outside of the Brussels I Regulation, in particular to support arbitration. Recent application was made in Crescendo Maritime, restraining litigation in China. Teare J confirmed among others (per Toepfer v Cargill) that forum non conveniens (Chine was the natural forum for litigation in ordinary) has little relevance in the context of arbitration clauses.
Kennedys have background to the case (essentially, backdating of a shipbuilding contract to avoid newly introduced international rules on tank coatings). The considered use of anti-suit once again underlines the importance of tools of civil procedure to support global arbitration practices.
European private international law, second ed. 2016, Chapter 2, Heading 22.214.171.124
Gazprom. Arbitral anti-suit injunctions and the Judgments Regulation. Grand Chamber holds they are outside the scope, but not therefore invincible.
The ECJ today has held in C-536/13 Gazprom in a matter of factly manner (I had suspected the Court would be brief), that the enforcement of arbitral awards falls outside the Brussels I-Regulation, where that enforcement by the court of that State, effectively prohibits the party concerned from taking the case to a court in that very Member State. Rich was the main formula referred to, among the various precedents: ‘reference must be made solely to the subject-matter of the dispute‘ to assess the scope of Brussels I’s arbitral exclusion.
Importantly, West Tankers was distinguished particularly on the basis that in the facts at issue, there was no competing court in another Member State, hence no scope for the principle of mutual trust to be violated. The AG’s review of the impact of the recitals newly added by the Brussels I recast, was not addressed at all by the Court.
The judgment does not solve all outstanding issues, however. Firstly, the Court’s reasoning seems to suggest that where competition with a court in another Member State is at issue, effet utile of the Brussels I Regulation might take the upper hand, as it did in West Tankers. Recognition of the award arguably in such case would amount to anti-suit. Further, the Court (this was a Grand Chamber judgment) points out that the award still has to go through the national court’s standard recognition and enforcement process, outside the framework of Title III of the Regulation, instead governed by national residual law as well as the New York Convention. Both of these (including through ordre public) might still offer quite a remit for the Lithuanian courts to refuse recognition.
In Toyota v Prolat  EWHC 3649 (Comm) the High Court was asked by Toyota to confirm the existence of an agreement between parties to arbitrate. The arbitral panel, already seized by Toyota, agreed that it would be best for the Court preemptively to settle this issue since it suspects any ruling by the tribunal itself will be subject to litigation by Prolat. The agreement (existence of which is disputed by Prolat; it had employed an authorised agent, whose signings on behalf of Prolat are disputed) concerns the delivery of sugar by Toyota to Prolat. Prolat objects to the jurisdiction of the tribunal. It has itself started proceedings in Naples for damages for various alleged wrongdoing by Toyota, whether for breach of contract or tort.
The interest of the case for this blog lies in particular with the concurrent proceedings in Italy and the UK. Should the UK decline? The case is subject to Regulation 44/2001, not to the recast. Cooke J holds that ‘This Court is not being asked to interfere with the functions of the Italian court as no form of anti-suit injunction is being sought against Prolat. This Court is being asked to determine whether or not there is an arbitration agreement and to make a declaration in the light of its conclusion.‘ West Tankers is therefore distinguished. Would, had it applied, Regulation 1215/2012 made a difference? Cooke J held that it would not: ‘Article 1(2)(d) remains unchanged from the earlier Regulation but is more fully explained in paragraph 12 of the Preamble. I was also referred to Article 73 which states that the Regulation will not affect the application of the New York Convention. (…)‘ (at 16)
He concludes ibidem ‘Although it is not yet in force, it was suggested that some might regard the new Regulation as declaratory of the existing state of the law. . The jury on that, as is well-known, is out.
Cooke J further explores the issue of the applicable law to the contract per its putative law (Article 10(1) Rome I). Firm and justifiable conclusion (at 18) there, is: English law.
Gazprom, arbitral Antisuit Injunctions and the Judgments Regulation: Wathelet AG gets one or two things off his chest
Wathelet AG opined yesterday in Gazprom, Case C-536/13, re the fate of arbitral anti-suit injunctions. (See my posting on the application, for context). He takes the opportunity to add to the chorus of criticism of the ECJ’s West Tankers ruling, at considerable length; and to review the ‘new’ regime under the Brussels I recast, in light of recital 12 of that Regulation.
His review of the ‘new’ regime of the Brussels I recast, and the contrasting positions of the EC and a number of Member States, support my proposition that the recast, by incorporating a summary of previous case-law in its recitals, has certainly not clarified things beyond discussion. Wathelet in fact suggest that the recitals do rebuke the ECJ and return application of the Regulation to the Rich scenario – however I am not convinced that Rich itself necessarily clarifies things. (It, too, like Van Uden and like the current recital, uses a confusing variety of criteria. I have a paper forthcoming on the Brussels I recast (already in a Dutch version should readers be interested) which looks into this).
At any rate, the lengthy review of the position under the recast evidently is outside the scope of the preliminary review, since the recast does not apply to it, and the ECJ is certain not to entertain the AG’s review of the recast and his rebuke of West Tankers at all. (Although his critical views are not likely to endear him to the Court).
Returning to the actual questions, the AG suggests the Court reply that that the Brussels I Regulation is not applicable in the present case (it falling exclusively within the scope of the 1958 New York Convention) and that, in any event, (what is effectively) an anti-suit injunction issued by an arbitration tribunal is not contrary to that Regulation. Finally, that under the New York Convention, a Member State cannot classify Brussels I’s jurisdictional regime as being ‘ordre public’ and hence capable of leading to refusal of recognition of an arbitral award.
The AG decisively supports arbitration in this opinion, however the ECJ is bound to be much shorter (and perhaps less sympathetic) in its judgment. To be continued….
here); and the circulation of arbitral awards and arbitration-related judgments, including the issue of the conclusive and preclusive effects of prior arbitral awards in relation to conflicting judgments (res judicata issues: including whether the priority which the Brussels I-Regulation concedes to the New York Convention, means that a court in a Member State can or indeed must give priority to a conflicting arbitral award over a judgment of the court of another EU Member State).the existence of parallel arbitration and judicial proceedings (lis pendens issues; see also
A great kick-off to a continuing debate. Geert.
Should arbitral anti-suit injunctions follow the West Tankers fate? Lithuanian court challenges the ECJ
In Case C-536/13 Gazprom, the Lithuanian Supreme Court has challenged the ECJ to specify the limits (or not) of its findings in West Tankers – on which I have reported extensively elsewhere. The Court of Justice ruled in February 2009 on the basis of effet utile that the English courts were out of their league in issuing an anti-suit injunction, prohibiting Allianz and Generali from pursuing the case in the Italian courts (on the basis of Article 5(3)’s special jurisdictional rule for tort) and obliging them to take the case to arbitration in London.
In Gazprom, A tribunal rendered an award holding that proceedings by Lithuania in Vilnius partially breached the arbitration clause in the shareholders’ agreement between parties. The arbitral tribunal ordered the Republic of Lithuania to withdraw certain claims filed before the Lithuanian courts and to amend other claims. Gazprom is seeking enforcement of the SCC award in Lithuania. Relevant summaries of the award and of the Lithuanian proceedings are available here. The instruction of restraint contained in the award is effectively an anti-suit injunction, albeit rendered by a tribunal instead of a court. The effect of both is the same: does the West Tankers rationale therefore hold (West Tankers, readers will remember, relied on the effet utile of the Regulation to extend its reach to anti-suit injunctions in support of arbitral proceedings, notwithstanding the latter’s clear exclusion from the Regulation)?
Where an arbitral tribunal issues an anti-suit injunction and thereby prohibits a party from bringing certain claims before a court of a Member State, which under the rules on jurisdiction in the Brussels I Regulation has jurisdiction to hear the civil case as to the substance, does the court of a Member State have the right to refuse to recognise such an award of the arbitral tribunal because it 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?
Can a national court, seeking to safeguard the primacy of European Union law and the full effectiveness of the Brussels I Regulation, 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 the Brussels I Regulation?
No chamber has as yet been allocated to the case however I would not be surprised were it to be the Grand Chamber.