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Web alert: Anti-suit injunctions – a disappointing decision from the ECJ? Gazprom OAO

22 May 2015

The club refers to its recent web alert ‘Anti-suit injunctions – are they still a useful remedy in the UK?’ dated 05 May 2015. This web alert follows on from, and should be read in conjunction with, our earlier publication.

 
‘Recast’ Brussels Regulation (1215/2012/EU)

For over ten years [1], it has been accepted that the English courts have restricted powers when it comes to issuing anti-suit injunctions within the EU, seeking to restrain court proceedings before another EU state. However, what about an anti-suit injunction seeking to restrain the breach of an arbitration agreement?

One of the most reported cases in recent years has been the European Court of Justice (ECJ) decision in The Front Comor[2]. In this case, the ECJ, in practical terms, abolished anti-suit injunctions issued in support of arbitration agreements within the EU.

A common complaint following The Front Comor decision was that it had the practical effect of there being conflicting decisions in parallel proceedings in the EU. It was feared that the decision in The Front Comor would also render London arbitrations vulnerable to ‘torpedo’ actions and, in effect, render London arbitration agreements worthless, also therefore undermining the New York Convention. The European Parliament and the European Commission acknowledged this and a ‘recast’ Brussels Regulation (1215/2012/EU) came into effect on 10 January 2015.

In this new Regulation, the arbitration exception in Article 1(2)(d) of Regulation 44/2001 has been clarified in Recital 12, which reads as follows (our emphasis):

‘This Regulation should not apply to arbitration. Nothing in this Regulation should prevent the courts of a Member State, when seized of an action in a matter in respect of which the parties have entered into an arbitration agreement, from referring the parties to arbitration, from staying or dismissing the proceedings, or from examining whether the arbitration agreement is null and void, inoperative or incapable of being performed, in accordance with their national law.

A ruling given by a court of a Member State as to whether or not an arbitration agreement is null and void, inoperative or incapable of being performed should not be subject to the rules of recognition and enforcement laid down in this Regulation, regardless of whether the court decided on this as a principal issue or as an incidental question.

…….

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.’

The ‘recast’ Brussels Regulation does not expressly deal with anti-suit injunctions, however, and so it remained somewhat unclear whether they would, in the future, be permitted within the EU in relation to breaches of arbitration agreements. It was hoped that through Gazprom OAO[3] the ECJ would give clarification and confirm that anti-suit injunctions would be permitted within the EU, in support of arbitration agreements.

There was this hope because, whilst not wanting to dwell on the particular facts of this case, the AG in Gazprom (which, although none binding on the ECJ, is considered persuasive) had opined that if The Front Comor had been decided under the ‘recast’ Regulation the result would have been different.  In his view, application for anti-suit injunctions in support of arbitration agreements would have fallen within the ‘ancillary proceedings’ expressly permitted by Recital 12 above.

Unfortunately, the ECJ in this case didn’t have to decide this point in arriving at their decision. In Gazprom it was an arbitration tribunal which had handed down (in effect) an anti-suit injunction against the claimants who had commenced an action before the Lithuanian courts. The ECJ, therefore, was able to hold that recognition of an arbitral anti-suit injunction fell outside the ‘recast’ Regulation, without the need to clarify whether or not the same would have been said had the anti-suit been issued by a court in a member state.

Therefore, the question as to whether or not the ‘recast’ Brussels Regulation has changed matters and now permits anti-suit actions by member state courts, so as to protect arbitration agreements, remains unanswered. This is disappointing and will be viewed by many as a missed opportunity.

In the meantime, Recital 12 makes it clear that a member state court need not wait for the decision of a different member state on the validity of any arbitration agreement, even if that court was ‘first seized’. However, this alone doesn’t help an innocent party, where parallel proceedings have been brought in a different member state.  

This article intends to provide general guidance on the issues arising as a matter of English law. It is not intended to provide legal advice in relation to any specific query. The law is also not static and if, in doubt, The Standard Club is always on hand to assist. 
 
Members requiring further information on this topic should direct their enquiries to either their usual contact at the club, or to olivia.furmston@ctplc.com.

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[1] See: Turner v. Grovit, Case C-159/02 [2004] ECR I-3565
[2] West Tankers v. Allianz SpA and another, 2009, Case C-185/07
[3] Gazprom OAO – C-536/13