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International Arbitration under Threat This was the theme of the excellent presentation by Rowan Plantrose on 10th March in which he analysed the implications of the European Court of Justice decision in West Tankers Inc v RAS Riunione Adriatica di Sicurta S.A. Rowan first outlined the background starting with the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 1958. This stated that a court at the request of one of the parties must refer a dispute back to arbitration unless the agreement was found to be null and void, inoperative or incapable of being performed. The provisions are enshrined in S.9 of the Arbitration Act 1996 whereby under an application under that section the court shall grant a stay unless satisfied that the arbitration agreement is null and void etc. This had been stringently applied by the English courts. This then raised the issue of what happens if litigation is begun in a foreign court. It has been the practice of the English courts to issue an anti suit injunction to prevent court proceedings in breach of an arbitration agreement in a foreign country, where the seat of the arbitration would otherwise be in England. Rowan explained however that this had been always regarded with suspicion abroad. The 'West Tankers' case was concerned with the collision of a vessel owned by West Tankers and chartered to Erg Petroli SpA with a jetty owned by Erg in Syracuse. The charter party was governed by English law and provided for arbitration in London. The insurers Allianz SpA, which paid the claim by Erg commenced subrogated proceedings against West Tankers before an Italian court. West Tankers sought a declaration in the English courts that the insurers were bound by the arbitration clause and an injunction requiring them to discontinue the Italian proceedings. This was granted but appealed on the basis that an anti suit injunction was incompatible with European law, and ultimately referred to the E.C.J. The appeal revolved around the interpretation of EC Regulation 44/2001 which effectively provides for the recognition and enforcement of judicial decisions between E. C. member states. It specifically excludes arbitration. These provisions had been rigidly applied by the E.C.J. in respect to litigation even where there was an exclusive right to litigate in a particular country. In effect, if proceedings are started in the court of one country, any subsequent proceedings in another have to be stayed. Despite the exclusion of arbitration from Regulation 44/2001 the E.C.J. has held that anti-suit injunctions are not compatible with the regulation. The rationale was that member states must trust the courts of another member states to apply jurisdictional rules correctly. Rowan then went on to explain the significance of this decision. The injunctions had proved a speedy and cost effective remedy (in particular avoiding the need for 2 sets of legal advisors) and reduced the risk of tactical commencement of proceedings in other jurisdictions. His particular concern however related to the practical reality of arbitration as a method of resolving commercial disputes. Arbitration is chosen so that the parties can be outside the procedures of any national courts. They prefer the privacy, informality and absence of any prolongation of the dispute by appeal which arbitration offers. Furthermore the choice of arbitration may affect the substantive rights of the partner. In his view the principle of autonomy of the parties should allow them these choices. His final point was that the European Community is engaged with the rest of the world. If Europe is unable to offer a safe seat for arbitration there is no shortage of alternatives, e.g. New York, Hong Kong, Bermuda or Singapore. This could be bad for the E.C. and in particular the U.K. This was referred to in the House of Lords judgement but commercial considerations were held irrelevant by the ECJ. Although this may reduce value of arbitration over court proceedings the threat to arbitration may be exaggerated as the most important factors are likely to be location, neutrality, language, support of local courts and procedural low, and not the availability of anti-suit injunctions. |
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