Greater Powers For EU Anti-Suit Relief Continue To Vest In Arbitral, Not Curial, Hands

When courts compel parties to arbitration, i.e. upholding the underlying arbitral agreement, it is considered a routine judicial response. When courts prohibit parties from pursuing proceedings before other national courts, i.e. granting an anti-suit injunction, it is considered an exceptional judicial device. Worse, within the EU, it is considered incompatible with the Brussels I Regulation (EU Regulation 44/2001) ("EU Regulation") for a court in an EU Member State to grant an anti-suit injunction. What about anti-suit injunctions issued by arbitral tribunals? Following the recent European Court of Justice ("ECJ") judgment in Gazprom,[i] arbitral tribunals that have their seat within the European Union are allowed to grant anti-suit relief restraining actions before other EU Member State courts. This is a major and welcome development for the international arbitration community.

Key Aspects

For those involved in international arbitration, particularly with EU-seated tribunals, there are three components to this judgment of principal interest.

First, the ECJ considered whether the EU Regulation must be interpreted as precluding an EU Member State court from recognising and enforcing, or from refusing to recognise and enforce, an arbitral award prohibiting a party from bringing actions before that Member State's courts.

Second, in resolving any dispute concerning the recognition or enforceability of arbitral awards, the ECJ's decision delivers a ringing endorsement of the applicable national arbitration law and the ultimate primacy to which the New York Convention[ii] is afforded.

Third, whilst its damaging reach continues to be heavily pruned, the ECJ's controversial decision in West Tankers[iii] has still yet to be reversed.

Background

Common law states have long exercised jurisdiction, by way of anti-suit injunctive relief (itself a creature of equity), to restrain parties from instituting or continuing foreign court proceedings. In relatively recent times, anti-suit injunction powers have been significantly curbed by EU law, primarily in the shape of the EU Regulation, which contains extensive jurisdiction, recognition and enforcement rules to be applied among EU Member States.

Keen on preserving the mutual trust and EU comity bases upon which the EU Regulation was enacted, the ECJ has on several occasions ruled that anti-suit injunctions against intra-EU court proceedings are irreconcilable with the EU Regulation.[iv] Such rulings have drawn heavy criticism from the arbitral community, not least because they spur disputants to bring so-called "torpedo actions" whereby proceedings are commenced in one EU court to delay, if not altogether nullify, the relevant arbitral process or curial proceedings in the court expressly selected by the parties.[v]/

Since Article 1(2)(d)[vi] of the EU Regulation expressly excludes arbitration from its scope of application, it was widely thought that anti-suit injunctions, in the context of preserving arbitral proceedings, would be spared. The ECJ had other ideas. In West Tankers,[vii] the ECJ determined that "a preliminary issue concerning the applicability of an arbitration agreement, including in particular its validity, also comes within the scope of application of the Brussels I Regulation". In other words, those principles of trust and comity between EU Member States necessarily implied that EU Member State courts should trust that other Members' courts will properly determine their jurisdiction—affirmatively or negatively—even in the context of arbitration. In effect, intra-EU anti-suit injunctions, including as to the preservation of arbitral proceedings, were pronounced dead. Unsurprisingly, the ECJ's decision has since caused considerable gnashing of teeth among many arbitral jurists.

In the wake of West Tankers, EU law...