West Law Report

One EU court cannot stop case in another

Posted in Court of Justice of the European Communities (ECJ) (cas, Times Law Report by mrkooenglish on February 19, 2009

From The TimesFebruary 13, 2009

One EU court cannot stop case in another
Court of Justice of the European Communities
Published February 13, 2009
Allianz SpA and Another v West Tankers Inc
Case C-185/07
Before V. Skouris, President and Judges P. Jann, C. W. A. Timmermans, A. Rosas, K. Lenaerts, A. Ó Caoimh, P. Kuris, E. Juhász, G. Arestis, A. Borg Barthet, J. Klucka, E. Levits and L. Bay Larsen Advocate General J. Kokott
(Opinion September 4, 2008)
Judgment February 10, 2009

It was not open to a court in one European Union member state to order a party in a case before it to discontinue proceedings begun by that party in another member state on the ground that the parties had agreed to refer any disputes between them to arbitration in the first state.

The Grand Chamber of the Court of Justice of the European Communities so held when delivering a preliminary ruling on a reference by the House of Lords under articles 68 and 234 EC.

A vessel owned by West Tankers Inc and chartered by Erg Petroli SpA, under a charter-party governed by English law and containing a clause providing for arbitration in London, collided with and caused damage to a jetty in Syracuse, Italy, owned by Erg.

On a claim by Erg, Allianz SpA and Generali Assicurazioni Generali SpA, the insurers, paid compensation to Erg and, under their right of subrogation to Erg’s claims, brought proceedings against West Tankers before the Tribunale di Siracusa, Italy.

West Tankers raised an objection of lack of jurisdiction, on the basis of the existence of the arbitration agreement.

West Tankers also brought proceedings in England for a declaration that the dispute between itself and the insurers was to be settled by arbitration pursuant to the arbitration agreement, and for an injunction restraining the insurers from pursuing any proceedings other than arbitration and requiring them to discontinue the proceedings in Italy.

The High Court granted the antisuit injunction sought, and the insurers appealed to the House of Lords, arguing that the granting of the injunction was contrary to Council Regulation (EC) No 44/2001 of December 22, 2000, on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (OJ 2001 L12/1).

The House of Lords took the view that the principle, decided in Case C-116/02 Erich Gasser GmbH v MISAT Srl ([2005] 1 QB 1) and Case C-159/02 Turner v Grovit([2005] 1 AC 1), that an injunction restraining a party from commencing or continuing proceedings in a court of a member state was not compatible with the system established by Regulation No 44/2001, could not be extended to arbitration, which was completely excluded from the scope of the regulation by article 1(2)(d).

The House of Lords referred a question on that issue to the European Court.

In its judgment the Grand Chamber of the Court of Justice held: Proceedings which might appear to be excluded from the scope of Regulation No 44/2001 could nevertheless have consequences which undermined its effectiveness, and that was so if such proceedings prevented a court of another member state from exercising the jurisdiction conferred on it by the regulation.

If, because of the subject matter of the dispute, ie the nature of the rights to be protected in proceedings, such as a claim for damages, those proceedings came within the scope of Regulation No 44/2001, a preliminary issue concerning the applicability of an arbitration agreement, including in particular its validity, also came within its scope of application.

It followed that the objection of lack of jurisdiction raised by West Tankers before the Tribunale di Siracusa on the basis of the existence of an arbitration agreement came within the scope of Regulation No 44/2001 and that it was exclusively for that court to rule on that objection and on its own jurisdiction, pursuant to articles 1(2)(d) and 5(3) of the regulation.

The use of an antisuit injunction to prevent a court of a member state, which normally had jurisdiction to resolve a dispute under article 5(3), from ruling, in accordance with article 1(2)(d), on the very applicability of the regulation to the dispute brought before it, necessarily amounted to stripping that court of the power to rule on its own jurisdiction under the regulation.

Such an injunction was contrary to the general principle that every court seised itself determined, under the rules applicable to it, whether it had jurisdiction to resolve the dispute before it: see Gasser, paragraphs 48 and 49.

On those and further grounds stated by it the Court ruled: It was incompatible with Regulation No 44/2001 for a court of a member state to make an order to restrain a person from commencing or continuing proceedings before the courts of another member state on the ground that such proceedings would be contrary to an arbitration agreement.

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