Is it consistent with the Brussels Regulation for a court of an EU Member State to grant an injunction restraining a party from bringing or continuing proceedings in another Member State in contravention of an arbitration agreement?
The House of Lords referred this question to the European Court of Justice for a ruling last year in Allianz SpA (formerly Riunione Adriatica Di Sicurta SpA) and Others v West Tankers Inc. (Case C-185/07), whilst expressing its own view that there is no inconsistency.
The Advocate General of the ECJ has now published her Opinion to the effect that the House of Lords' view is wrong and such injunctions are incompatible with Community law. The ECJ will now consider her Opinion, before handing down its judgment. Although not obliged to follow an Advocate General's Opinion, in practice the ECJ will often do so.
Potential impact
ECJ case law interpreting the Brussels Regulation already prohibits the grant of an injunction in one Member State to restrain a party from bringing or continuing proceedings brought in another if the latter proceedings have been brought first, even though they have been brought in breach of an exclusive jurisdiction clause or in bad faith. However English courts have held that this principle does not apply where a party has brought court proceedings in breach of an arbitration agreement, because the Brussels Regulation specifically excludes arbitration from its scope, and have granted injunctions in that situation. The Advocate General's view is that the English courts' view is contrary to Community Law and cannot be justified, notwithstanding the importance of upholding arbitration agreements, party autonomy and economic arguments such as the competitive disadvantages which might result for London as an arbitration forum.
Some commentators have suggested that if the ECJ prohibits this type of anti-suit injunction, parties will avoid European arbitration venues such as London in their contracts.
Key points
It remains to be seen whether or not the ECJ judgment will follow the Advocate General's Opinion, but even if it does -
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English courts should not be prevented from granting injunctions to restrain court proceedings taken outside Europe in breach of an arbitration agreement |
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Anti-suit injunctions are relatively rare in comparison to the many thousands of arbitrations conducted annually in London, and there seems likely in practice to be little serious impact on the international standing of English law and London arbitration. |
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