The European Court of Justice (“ECJ”), in a ruling addressed to the House of Lords (a “preliminary reference” ruling) on February 10, 2009, held that English anti-suit injunctions cannot be available in Europe in support of arbitration proceedings. According to the ECJ, it is for the third country court (in this case an Italian court) to consider the validity of an arbitration agreement and thus to decline jurisdiction, and not for the English court to interfere with that court’s jurisdiction.

Anti-suit injunctions have been devised as a means to prevent forum shopping and have long been a distinct feature of English civil procedure. English courts use anti-suit injunctions to restrain a person from commencing or continuing proceedings in another jurisdiction or forum. If the opposing party contravenes such an order issued by a court, a contempt of court order may be issued against that party. In the context of arbitration, anti-suit injunctions aim to safeguard the effectiveness of the arbitration agreement by enjoining a party from bringing a suit before a state court and requiring that party to submit to arbitration.

In August 2000, the Front Comor, a vessel owned by West Tankers and chartered by Erg Petroli SpA, collided in Syracuse, Italy with a jetty owned by Erg and caused damage. The charterparty was governed by English law and contained a clause providing for arbitration in London. Erg claimed the maximum amount of compensation from its insurers, Allianz and Generali, and commenced arbitration proceedings in London against West Tankers for the excess. West Tankers denied liability for the damage caused by the collision. Having compensated Erg under the insurance policies for the losses suffered, Allianz and Generali brought proceedings against West Tankers before an Italian court in Syracuse in order to recover the sums paid to Erg. West Tankers objected to that court’s jurisdiction on the basis of the existence of the arbitration agreement. In parallel, West Tankers brought proceedings before the courts in the United Kingdom, seeking to have the dispute settled by arbitration as stipulated in the charterparty. West Tankers also sought to have the two insurers restrained from pursuing any proceedings other than arbitration and from continuing the proceedings commenced before the Italian court.

The House of Lords, before which the appeal was brought in the United Kingdom, asked the ECJ whether the Brussels I Regulation38 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters in Europe prohibits the courts of an EU Member State from making an order to restrain a person from commencing or continuing legal proceedings in another Member State on the ground that such proceedings are in breach of an arbitration agreement. It is noteworthy that in other recent judgments, including Gasser v. MISAT39 (implicitly) and Turner v. Grovit40 (explicitly ), the ECJ had held that an anti-suit injunction whereby a court in Europe prohibits a litigant from commencing or continuing legal proceedings before a court of another EU Member State, is incompatible with the Brussels I Regulation. This was so even where that litigant was acting in bad faith. However, doubt remained as to whether the ECJ rule was also applicable to the case of anti-suit injunctions in support of arbitration, because Article 1(2)(d) of the Brussels Regulation I excludes arbitration from its scope.

The ECJ held that English-style anti-suit injunctions are incompatible with Community law when they are granted in support of arbitration. The ECJ found that such anti-suit injunctions may undermine the effectiveness of the Brussels I Regulation, particularly where they prevent a court of another Member State from exercising the jurisdiction conferred on it by the Regulation. In other words, the ECJ was concerned that the English court was interfering with the jurisdiction of the Italian court. For the ECJ, there was no doubt that the preliminary issue of whether the arbitration agreement is valid and applicable, which is necessary for determining whether the Italian court has jurisdiction as to the merits, also comes within the scope of the Brussels I Regulation. According to the ECJ, the Brussels I Regulation does not authorize the jurisdiction of a court in one Member State to be reviewed by a court in another Member State. Anti-suit injunctions undermine the trust that the Member States accord to one another’s legal systems and judicial institutions and upon which the system of jurisdiction under the Brussels I Regulation is based.

It is obvious that the ECJ followed its standard and long-standing reasoning and methodology that is based on the principle of effectiveness (effet utile) of Community law. Since Turner v. Grovit, it has been known that the ECJ does not view anti-suit injunctions favorably, because these do not sit comfortably within the system of full faith and credit established by the EC Treaty and by the Brussels I Regulation in particular. The ECJ was probably aware that its ruling would have a negative impact on arbitration, but this was a risk that it was willing to take, precisely because of its desire to safeguard the broader principle of effectiveness of the Brussels I Regulation.

What the ECJ probably failed to address is the importance of arbitration as a matter of Community law. It is incorrect to view arbitration solely as a creation of private autonomy which from time to time may have to allow for inroads by Community law; arbitration is itself mentioned in Article 293 of the EC Treaty. There, the necessity of recognition and enforcement of arbitral awards is mentioned side-by-side with the necessity of recognition and enforcement of judgments. The fact that there was no follow-up in Europe with a specific convention on arbitration is not due to the fact that arbitration was seen differently, but rather to the fact that there was already a very efficient tool to ensure enforcement of arbitral awards worldwide, and thus also within the then European Economic Community, the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Exactly like free movement of judgments, free movement of arbitral awards within the EU furthers European integration and is extremely beneficial to Treaty freedoms. Arbitration, therefore, should be accorded the same degree of deference, and if anything there should also be a concern as to its effectiveness.

In conclusion, it is now clear that anti-suit injunctions are no longer available in Europe in support of arbitration. However, such injunctions are still available when they aim at blocking court proceedings in non-EU countries. An open question remains as to anti-suit injunctions ordered by arbitral tribunals. The ECJ ruling does not seem to affect them but this may not be a foregone conclusion. At the same time, the ECJ ruling does not affect the basic principle that in the presence of a valid arbitration clause, state courts must decline jurisdiction; the ECJ simply thought that this was the job of the court of Siracusa (Syracuse) in Italy and that English courts should stay away.