Clearing Up West Tankers

Although the ECJ decision in Allianz SpA and Another v

West Tankers Inc Case 185/07 of 10 February 2009

("the West Tankers decision") confirmed

that under European Council Regulation No 44/2001 ("the

Regulation") any EU member state court, even one having

supervisory jurisdiction over an arbitration, could not order the

court of another member state to halt proceedings issued there in

breach of the arbitration agreement, it did not deal with how the

potential problems arising from parallel proceedings in member

states should be resolved.

Attention has since turned to whether an English court, with

supervisory jurisdiction over an arbitration, would be fettered by

the prior decisions of courts of other member states that reflect

on that arbitration. Two recent developments shed some light on the

way forward.

First, in the case of National Navigation Co v Endesa

Generacion SA [2009] EWHC 196 (Comm), the English court

had to consider whether it was bound to recognise a Spanish

court's decision that a London arbitration clause was not valid

and binding. The English court decided that:

where it was asked to grant declaratory relief stating that a

London arbitration clause was valid and binding, it was not bound

by the Spanish court's decision because the declaratory

proceedings were within the arbitration exception to the Regulation

and thus fell outside the scope of the Regulation;

further, and potentially more significantly, even if the

English court was otherwise bound to recognise the Spanish

court's decision, it should not do so on public policy grounds

given the UK's obligation under the 1958 New York Convention on

the Recognition and Enforcement of Foreign Arbitral Awards

("the New York Convention") to give effect to an

arbitration clause that is valid in accordance with its proper

law.

Having decided that it was not prevented by the Regulation from

reaching its own conclusion on the matter, the English court

proceeded to grant the declaratory relief sought (namely that there

was indeed a valid and binding arbitration agreement)

notwithstanding the contrary conclusion of the prior seized Spanish

court.

The English court's recognition of the importance of the

UK's obligations under the New York Convention is welcome, but

the potential for parallel proceedings is not. The European

Commission's Green Paper of 21 April 2009, which accepts the

primacy of the New York Convention, proposes a number of potential

solutions to the parallel...