Arbitration SpeedRead: An Update on Anti-Suit Injunctions and the Recast Brussels Regulation

By Garreth Wong, Lewis Brooke

07-2018

In 2009, the European Court of Justice held in Allianz SpA v West Tankers Inc (Case C-185/07) that the granting of an anti-suit injunction restraining proceedings brought in another EU member state in breach of an arbitration agreement, was inconsistent with the 2001 Brussels Regulation. When the Recast Brussels Regulation took effect in 2015, there was much debate as to whether or not the West Tankers decision would still apply The recent Commercial Court decision in Nori Holdings Ltd v Bank Otkritie Financial Corporation [2018] EWHC 1343 has confirmed that West Tankers is still good law.

The basis for the West Tankers decision

From 2002 until 2015, jurisdiction between EU member states was governed by the 2001 Brussels Regulation (Regulation (EC) 44/2001). Notably, article 1(2)(d) of the 2001 Regulation stated that arbitration was outside the scope of the Regulation (the "arbitration exception"). This exception led the courts of certain member states (particularly the English courts) to the view that the 2001 Regulation did not impact their ability to grant anti-suit injunctions restraining proceedings in the courts of another member state, due to breach of an arbitration agreement.

However, in West Tankers, the ECJ decided that an anti-suit injunction granted by the English courts restraining proceedings brought in Italy was incompatible with the 2001 Brussels Regulation. It reasoned that both the subject matter of the Italian proceedings (tort claims in the Italian courts), and the question of whether the arbitration agreement was enforceable, fell within the scope of the 2001 Brussels Regulation.

In other words, in determining whether or not the arbitration exception applies, so whether an anti-suit injunction should be granted to restrain litigation allegedly in breach of an arbitration agreement, the ECJ said the courts should look at the nature of the proceedings against which the injunction is being directed (here, tort litigation in the Italian courts) – not at the proceedings in support of which the injunction is being requested (here, arbitration in London).

As tort litigation in the Italian courts did not fall within the arbitration exception, the granting of the anti-suit injunction was incompatible with the 2001 Brussels Regulation. Essentially, the ECJ determined that it was for only the court of the member state which had been seised of proceedings said to be in breach of an arbitration clause, and not the courts of any another member state, to decide whether it had jurisdiction where there was a potential breach of an arbitration agreement.

The Nori Holdings judgment 

In January 2015, the Recast Brussels Regulation (Regulation (1215/2012)) took effect, superseding the 2001 Regulation. Recital 12 of the Recast Regulation contains the following wording regarding the arbitration exception:

"This Regulation should not apply to any action or ancillary proceedings relating to, in particular, the establishment of an arbitral tribunal, the powers of arbitrators, the conduct of an arbitration procedure or any other aspects of such a procedure, nor to any action or judgment concerning the annulment, review, appeal, recognition or enforcement of an arbitral award."

There was, unsurprisingly, speculation as to whether or not the decision in West Tankers would still apply, in light of this additional wording. In Nori Holdings, the claimants applied for an anti-suit injunction in the Commercial Court to restrain court proceedings in Russia and Cyprus brought by the defendant Russian bank, allegedly in breach of an arbitration agreement. 

Males J refused the application for an anti-suit injunction in respect of the proceedings brought in Cyprus, on the basis that nothing in the Recast Brussels Regulation or its recitals suggested that the principles in the 2001 Brussels Regulation, as confirmed in West Tankers, had changed. Males J stated, inter alia, at paragraph 90:

"Neither the Recast Regulation itself nor its recitals say expressly that those principles no longer apply or that an anti-suit injunction in support of arbitration issued by a court in a member state takes precedence over them."

And at paragraph 99:

"I conclude that there is nothing in the Recast Regulation to cast doubt on the continuing validity of the decision in West Tankers […] which remains an authoritative statement of EU law."

It is notable that Males J disagreed with the opinion of Advocate General Wathelet, given in December 2014 in Case C-536/13 (Gazprom OAO), in which the Advocate General stated that the wording of Recital 12 had changed the position set out in West Tankers. Males J noted, however, that:

  • the ECJ did not follow the Advocate General's opinion in that case; 
  • if the Advocate General was right that Recital 12 served only to clarify how the 2001 Regulation should have been interpreted all along, then by definition it did not bring about any change in the law; and
  • this was significant as the ECJ in Gazprom clearly considered West Tankers to be a correct statement of the law under the 2001 Regulation.

The judgment in Nori Holdings has therefore provided welcome clarification as to the applicability of the West Tankers principle in light of the Recast Brussels Regulation.  In short, anti-suit injunctions are not available to parties seeking to prevent litigation in another EU member state in breach of an arbitration agreement.   

Part of Bird & Bird's series of Arbitration SpeedReads aimed at providing busy practitioners and in-house counsel with easy to read updates on topical Arbitration issues.

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