An opinion delivered in the Court of Justice of the European Union (CJEU) looks set to reverse the controversial 2009 West Tankers decision1.
The opinion was delivered by Advocate General Wathelet (AG Wathelet) in the case of Gazprom (C-536/13) following a referral from the Lithuanian Supreme Court.
It is significant for arbitration practitioners as it gives an early indication as to how the CJEU will approach the interaction between anti-suit injunctions and Regulation (EU) No 1215/2012 (the Recast Regulation), which replaced the Brussels I Regulation No. 44/2001 (the Brussels Regulation) on 10 January 2015. (West Tankers was decided under the Brussels Regulation, but the Recast Regulation was central to AG Wathelet’s reasoning.)
In West Tankers, the CJEU (then the ECJ) ruled that it was inconsistent with the Brussels Regulation for a Member State court to issue an anti-suit injunction restraining a party from commencing or continuing proceedings in another Member State on the grounds that such proceedings breached an arbitration agreement. This was despite the ‘arbitration exclusion’ in Article 1(2)(d) of the Brussels Regulation which purported to exclude arbitration from its scope.
Further, in its judgment the ECJ said that to permit injunctions restricting a Member State court’s ability to determine its own jurisdiction would run contrary to: (i) the principle that every court seised determines for itself whether or not it has jurisdiction and (ii) the principle of mutual trust between Member States’ legal systems underlying the Brussels Regulation.
This decision was much-criticised. In particular, it was feared that it would encourage parties to commence court proceedings in a foreign jurisdiction in breach of their arbitration agreement for tactical reasons, eg to stall the progress of the arbitration.
The decision in Gazprom: the crucial points
Despite not being in force at the time of his opinion, AG Wathelet said that the Recast Regulation was a statement of the law as it should always have been interpreted – in effect, a “retroactive interpretative law”. In support of this, he cited a series of cases pre-dating West Tankers which contrasted with the ECJ’s decision in that case.
Accordingly, he addressed the Lithuanian referral predominantly in light of the Recast Regulation and not the then-in force Brussels Regulation (as interpreted by West Tankers). It was central to his reasoning in declining to follow West Tankers.
Introduced partly in response to West Tankers, the Recast Regulation explicitly bolsters the ‘arbitration exclusion’ at Recital 12, which begins:
“This Regulation should not apply to arbitration”
AG Wathelet said that the primary effect of Recital 12 was to exclude arbitration from the remit of the Recast Regulation. Consequently, in Gazprom, the Lithuanian Supreme Court was not required to reject the anti-suit measures instituted in support of the arbitration in question, as the English House of Lords had been in West Tankers. In addition, he said that verification of the validity of an arbitration award – whether this is the principal issue in question or incidental to it – does not come within the scope of the Recast Regulation.
AG Wathelet also emphasised the final paragraph of Recital 12, which he said:
“Not only [...] exclude[s] the recognition and enforcement of arbitral awards from the scope of [the Recast Regulation] but it also excludes ancillary proceedings, which in my view covers anti-suit injunctions issued by national courts in their capacity as court supporting the arbitration”.
Consequently, he said, there is nothing prohibiting a Member State court from issuing an anti-suit injunction in support of an arbitration held within its jurisdiction, as such a measure would be an ‘ancillary proceeding’ coming within the broad ‘arbitration exclusion’ in Recital 12.
He added that arbitral tribunals are not the same as Member State courts. Accordingly, the fear in West Tankers that anti-suit injunctions in support of arbitrations could undermine the principle of mutual trust between Member State courts was misplaced as arbitral tribunals are not bound by the principle. Further, he noted that anti-suit injunctions are the only effective remedy available to arbitral tribunals to rule in favour of an ‘innocent’ party to an arbitration agreement when it deems that the counterparty is in breach.
AG Wathelet concluded by reaffirming that the recognition and enforcement of the Gazprom arbitration award fell exclusively within the scope of the New York Convention, to which Recital 12 gives precedence over the Recast Regulation.
The preliminary CJEU judgment is expected in the coming months. Whilst AG Wathelet’s opinion is not binding on the CJEU, which can decline to apply it, such a course of action would be highly unusual.
The judgment will reveal whether, and to what degree, the introduction of the Recast Regulation will mark a new departure in the CJEU’s approach to Member States’ ability to issue anti-suit injunctions in support of arbitration.
Research by Strachan Gray, Trainee Solicitor.