Enforcing Dispute Resolution Clauses

Originally published in BLG's Reinsurance and International Risk team Notes, Summer 2007

The traditional English approach is to hold the parties to their bargain, and grant an injunction in favour of the agreed jurisdiction or arbitration provision.

This has contrasted sharply with the position adopted by the European Court of Justice (ECJ). Article 27 of EC Regulation 44/2001 (the "Regulation") provides that the courts of one Member State should allow the court first seised of the dispute to determine whether or not it has jurisdiction. Inherent in the Regulation is a principle of trust: the trust by the courts of one Member State to allow the courts of another Member State to determine the correct jurisdiction. Following this principle, it has been held by the ECJ that anti-suit injunctions cannot be granted to restrain proceedings commenced in the courts of another Member State in breach of an exclusive jurisdiction clause (for example in Gasser v Misat (2003), the Austrian court declined jurisdiction until the Italian court (first seised of the dispute) determined its own jurisdiction, despite a clear exclusive Austrian jurisdiction clause in the contract).

The rationale of the ECJ is that if there is a clear dispute resolution provision, the foreign court is likely to dismiss its own proceedings in favour of the express contractual provisions. But this ignores the delay and mischief that can be caused by one of the parties to a contract commencing proceedings in another jurisdiction.

So far, it has remained possible to obtain an anti-suit injunction to restrain foreign proceedings where there is an arbitration agreement. Article 1 of the Regulation states expressly that the Regulation does not apply to arbitration. However, that may be about to change.

In West Tankers v RAS Riunione di Sicurta SpA (2007), the House of Lords recently asked the ECJ to decide whether or not it is open for the court of one Member State to grant an injunction restraining a person from commencing or continuing court proceedings in the courts of another Member State where those proceedings are in breach of an arbitration clause.

West Tankers chartered the "Front Comor" to Erg Petroli SpA ("Erg"). The vessel collided with a...

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