Gazprom (Judgment)  EUECJ C-536/13
The European Court of Justice (“ECJ”) has recently confirmed that the Brussels Regulation does not prevent a EU member state court from recognising and enforcing an anti-suit injunction granted by arbitrators. Its reasoning is that arbitration and arbitral tribunals fall outside the scope of the Brussels Regulation (Regulation (EC) No 44/2001).
The ECJ had, but did not take, the chance to consider whether its prohibition of anti-suit injunctions issued by member state courts in relation to the pursuit of proceedings within the EU should be lifted, in light of the clarifications in the ‘recast’ Brussels Regulation that became effective from 10 January 2015. This would have required the ECJ to reverse its decision in the Front Comor (West Tankers) case. The ECJ chose not to go down this road in Gazprom, but decided instead to confine itself to an analysis of the compatibility with the 2001 Regulation of anti-suit injunctions ordered by arbitral tribunals. The ECJ concluded that arbitral awards of this type are permissible.
Where one party commences foreign court proceedings in breach of an English exclusive jurisdiction clause or arbitration agreement, the other party may wish to apply to the English court for an anti-suit injunction. This is an order by the court that the first party should desist from its pursuit of the foreign action. Such injunctions have traditionally been available from the English court either on the grounds that the foreign proceedings are a breach of contract, or alternatively because they are vexatious and oppressive.
Anti-suit injunctions issued by EU courts were rendered impermissible within the EU, however, following the ECJ’s decisions in Turner v. Grovit in 2004 and the Front Comor in 2009. In Turner v. Grovit, where there was a breach of an exclusive English jurisdiction clause, the ECJ held that an anti-suit injunction issued by the English court to restrain proceedings in another EU state, represented an unacceptable interference with the right of the court first seised of proceedings to decide its own jurisdiction. In the Front Comor, the ECJ held that a similar prohibition extended to an injunction granted by the English court to restrain the pursuit of proceedings in Italy, which had been brought in breach of a London arbitration agreement. The ECJ recognised that the English action leading to the anti-suit injunction was not within the Brussels Regulation, as the action related to arbitration. Arbitration is altogether excluded from the scope of the Regulation by Article 1.2(d). Questions of enforcement and recognition of arbitral awards are instead subject, as between state parties to it, to the 1958 New York Convention. Despite this exclusion, the English court’s injunction was said to strip the Italian court’s power to rule on its jurisdiction under the Regulation. As such, the injunction undermined the effectiveness of the Regulation and ran counter to the concept of ‘mutual trust’ between courts of the EU member states, upon which the Regulation is based.
While anti-suit injunctions within the EU were ruled out as a result of these decisions, they have continued to be available to the English courts in order to restrain breaches outside the EU, either of exclusive jurisdiction clauses or of arbitration agreements.
Not least as a result of the Front Comor decision, which gave rise to considerable controversy, changes were made to the Brussels Regulation and the recast Brussels Regulation (EU) 1215/2012 came into force on 10 January 2015. The recast Regulation maintains the arbitration exception and indeed emphasises it in new Recital 12. No mention is made of injunctions in the recast Regulation. There has in consequence been some uncertainty whether court-issued anti-suit injunctions might be permitted in the future within the EU to protect arbitration agreements. Gazprom offered the ECJ the opportunity to revisit that point and the interface between arbitration and EU law.
In Gazprom, the relevant contract provided for Stockholm arbitration. One of the parties instead commenced Lithuanian court proceedings. The other party obtained an anti-suit injunction in the form of an arbitration award from the arbitrators and then sought to enforce that arbitral award in Lithuania, under the New York Convention. The Supreme Court of Lithuania referred the matter to the ECJ, asking if it could refuse to recognise and enforce an arbitration award on the basis that the award restricted the Lithuanian court’s right to rule on its own jurisdiction in a case falling within the Brussels Regulation.
The Advocate General’s opinion
The opinion rendered by Advocate General Wathelet (“AG”) in Gazprom on 4 December 2014 took into account the recast Brussels Regulation (even though the opinion was handed down before the revisions came into effect). The AG concluded that, given the arbitration exception, the Brussels Regulation must be construed as not requiring the court of a member state to refuse to recognise and enforce an anti-suit injunction issued by an arbitral tribunal.
Just as significantly, perhaps, the AG considered the decision in the Front Comor and indicated that, under the recast Regulation, the court-issued anti-suit injunction in the Front Comor would have been compatible with the recast Regulation. The AG suggested that the ruling in the Front Comor was inconsistent with certain earlier ECJ decisions (in Hoffman, Marc Rich and Van Uden) and observed that the recast Regulation was intended to combat the so-called ‘Italian torpedo’ of delaying tactics. His view was that courts within the EU should be permitted to take measures to ensure the effectiveness of arbitration agreements, without being prevented from doing so by the Brussels Regulation.
The AG considered that Gazprom could in any event be distinguished from the Front Comor, because Gazprom concerned an arbitration award (rather than an anti-suit injunction ordered by a court). The award was, therefore, subject to recognition and enforcement under the New York Convention, rather than the Regulation. The AG added that the fact that an arbitration award contains an anti-suit injunction is not a sufficient reason for refusing to recognise or enforce it on grounds of public policy.
The ECJ decision
On 13 May 2015, the ECJ handed down its decision in Gazprom. The ECJ agreed with the AG that it is not incompatible with the Brussels Regulation for a member state court to recognise an arbitration award that contains an anti-suit injunction. The Regulation does not prevent a court in an EU member state from recognising and enforcing (or from refusing to recognise and enforce) an award, either pursuant to national law or the New York Convention. So far so good.
Unlike the AG, however, the ECJ did not consider the position under the recast Brussels Regulation. The ECJ instead restricted itself to the 2001 Brussels Regulation. Further, while it cited and recalled the Front Comor, it made no reference to the AG’s observations and chose not to comment on whether the proscription of anti-suit injunctions within the EU might be altered under the recast Regulation. Instead, the ECJ merely distinguished the Front Comor, on the basis that the anti-suit injunction in Gazprom was not issued by a member state court but by an arbitral tribunal. The conclusion was that there was no question in Gazprom of an infringement of the principle of mutual trust between member states or of any interference by a member state court with the jurisdiction of another member state court under the 2001 Brussels Regulation.
The decision in Gazprom is, as far as it goes, favourable to arbitration supporters. There is now a clear statement from the ECJ that it is not contrary to or incompatible with the Brussels Regulation for arbitral tribunals to issue awards containing anti-suit injunctions. Such awards can, at least prospectively, be enforced within the EU (and elsewhere) under the 1958 New York Convention. No doubt in appropriate instances they will be coupled with awards for damages for breach of the agreement to arbitrate.
Nevertheless, arbitration awards are likely to be rather less effective than court-issued injunctions carrying sanctions for non-compliance. Further, under the New York Convention, courts can refuse to recognise and enforce awards if they consider such recognition and enforcement would be contrary to public policy.
The ECJ declined, despite the AG’s invitation, to consider the recast Brussels Regulation and to re-consider the prohibition of court-issued injunctions in the EU. It is difficult to detect in the short judgment in Gazprom any appetite on the part of the ECJ to change the status quo and to allow member state courts to issue anti-suit injunctions affecting other EU proceedings.
We are left, then, in a rather perverse position. Arbitrators can issue anti-suit injunctions to restrain breaches of arbitration agreements, wherever those breaches occur. In respect of breaches within the EU, however, it remains unacceptable for member state courts to do likewise.