West Tankers Revisited: Enforcement of Declaratory Awards

The long-running dispute between West Tankers Inc. and Allianz SpA continued last week with the High Court refusing an application to set aside an order granting leave to enforce an English arbitration award in this jurisdiction where proceedings in relation to the same dispute were ongoing in Italy. In doing so, the court sought to protect the primacy of the arbitration award over any inconsistent Italian judgment which might otherwise be recognised and enforced in England.

Background

In West Tankers v Allianz SpA and others, the insurers, Alliance SpA and Generali Assicurazione Generali SpA, applied to set aside an order granting leave to West Tankers to enforce an arbitration award pursuant to section 66(1) of the Arbitration Act 1996 (the "Act"). The award made by the tribunal was a declaration that West Tankers had no liability in respect of the collision of a ship with a jetty in Italian waters.

The same dispute is the subject of ongoing proceedings in Italy, pursued by the insurers against West Tankers, following the well publicised decision by the European Court of Justice that it is incompatible with EU law for a court of a Member State to make an order restraining a party from commencing or continuing proceedings in the court of another Member State in breach of an arbitration agreement (see our Law-Now for further background information).

Having obtained an arbitration award in its favour, West Tankers was concerned that the insurers might in future obtain an Italian judgment which was inconsistent with that award. The insurers could then seek to have that judgment recognised and enforced in England, pursuant to Chapter III of EC Regulation 44/2001 (relating to the jurisdiction and recognition and enforcement of judgments in civil and commercial matters between EU member states) (the "Regulation"). Those concerns were behind West Tanker's application to have the award enforced as a judgment, the thinking being that once the award had been converted into a judgment, any subsequent Italian judgment in favour of the insurers would not be recognised in England pursuant to Article 34(3) of the Regulation. Article 34(3) of the Regulation provides that:

"A judgment will not be recognised: ...

3. If it is irreconcilable with a judgment given in a dispute between the same parties in the Member State in which recognition is sought."

West Tanker's application was successful and, by an order dated 15 November 2010 (the "Order"), it was...