Anti-suit Injunctions: ECJ Decision of 10 February 2009 in West Tankers Case

Originally published 10 February 2009

Keywords: Anti-suit injunctions, ECJ, West

Tankers, arbitration agreement, contractual right

Introduction

In a landmark decision released today in the case of West

Tankers,1 the European Court of Justice (the

"ECJ") has removed an English

court's power to grant an anti-suit injunction in support of an

arbitration agreement. The case was referred to the ECJ by the

House of Lords on 2 April 2007. The House of Lords2

asked the ECJ for a preliminary ruling on the question "Is

it consistent with EC Regulation 44/20013 for a court of

a Member State to make an order to restrain a person from

commencing or continuing proceedings in another Member State on the

ground that such proceedings are in breach of an arbitration

agreement?" Despite the views expressed by the House of

Lords in support of this common law remedy, the ECJ has confirmed

the opinion of the Advocate General4 by ruling that an

order in such circumstances is not compatible with Regulation

44/2001 ("the Regulation").

English Law Remedy to Support Arbitration

Proceedings

An anti-suit injunction is a powerful common law tool used to

protect a party's contractual right to arbitrate or to refer

proceedings to a particular court's jurisdiction by defeating

competing proceedings commenced in breach of an arbitration

agreement or exclusive jurisdiction clause. The English court's

ability to grant such relief in respect of exclusive jurisdiction

clauses has become restricted in recent years by the effect of

certain decisions of the ECJ. Until now, the position of

arbitration cases was different as they are excluded from

Regulation 44/2001. The position has now changed as a result of

this ruling.

Facts of Case

West Tankers owned a vessel which was chartered to the Insured.

The vessel collided with a jetty in Italy also owned by the

Insured. The charterparty between West Tankers and the Insured was

governed by English law and contained an arbitration agreement

specifying London as the seat of arbitration. The Insured made an

insurance claim and the Insurers paid the limit of the insurance

cover. The following proceedings took place:

The Insured commenced arbitration proceedings in London against

West Tankers in relation to claims for its uninsured losses.

The Insurers (stepping into the shoes of the Insured) commenced

proceedings in Italy against West Tankers to recover amounts paid

under the insurance policies by way of a claim in tort for

damages.

West Tankers sought an injunction in the English court, arguing

that the Insurers were bound by the arbitration clause in the

charterparty to arbitrate in London. (Although the Insurers were

not a party to that agreement, they had stepped into the

Insured's shoes.) The English court at first instance, and the

House of Lords on appeal, agreed with West Tankers and granted an

injunction restraining the Insurers from continuing the Italian

proceedings.

Jurisdiction Regulation and the Scope of the

"Arbitration Exclusion"

The Regulation provides a set of rules for the allocation of

jurisdiction between Member States and is based on the concept that

the courts of each Member State should trust other EU courts to

apply those rules correctly. Article 1(2)(d) of the Regulation

provides that arbitration is excluded from the scope of the

application of the Regulation, the so-called "arbitration

exclusion." The House of Lords took the view that the

arbitration exclusion was applicable given that the purpose of

proceedings before the English courts was to protect West

Tankers' right to have the dispute determined by arbitration.

This meant that the...