Court considers application to stay proceedings in favour of arbitral proceedings

The claimant and the defendants entered into guarantees which were subject to English law and exclusive jurisdiction. Subsequently, the parties entered into a further guarantee and agreed that any disputes under that guarantee would be determined by ICC arbitration in Florida. Broadly, the same dispute arose in respect of both sets of guarantees and one of the issues in this case was whether the English proceedings brought by the claimant should be stayed because they were "in respect of a matter" which it had been agreed would be referred to arbitration (a stay would be required under section 9(1) of the Arbitration Agreement 1996 if they were in "in respect of a matter" which should be arbitrated).

There is no prior caselaw on the meaning of "in respect of a matter" in England, but other jurisdictions have considered the same or a similar provision. Blair J reviewed those cases and concluded that "matter" was a word of wide import and "the context in which it is being considered is important". He concluded that the essential nature of the claim here was that it was being brought under the guarantees which were subject to English law and jurisdiction. That was the "matter" in respect of which the English proceedings had been brought. The mere existence of a common issue in a different contract was not enough to meet the requirements of section 9(1).

The defendant also sought a stay based on the English court's inherent jurisdiction to stay its proceedings (an arbitration in the US having already been commenced). A preliminary point raised by the claimant was the effect of the ECJ decision in Owusu v Jackson [2005]. This held that, under the (then) Brussels Convention, a contracting state (like the UK) cannot stay its proceedings in favour of a non-EU court (even if that court is the more appropriate forum) if it is first seised and the defendant is domiciled here. Arbitration is expressly excluded under the Brussels Convention/recast Brussels Regulation but the claimant sought to argue that that did not matter here because the court had held that these proceedings had not been brought in respect of a matter which should be arbitrated. That argument was rejected by the judge who held that the Owusu principle does not apply at all to stays made in the context of related arbitral proceedings: "There is nothing in Owusu which expressly addresses the issue of a stay which is not in favour of the courts of another state, but is made pending the determination of disputes in arbitration".

Having decided that the court could therefore exercise its discretion to stay the English proceedings in favour of the US arbitration, the judge nevertheless concluded that the defendants had not yet made out a compelling case for a case management stay.

Accordingly, a stay was refused.