The recent CJEU decision in Gazprom (C536/13) has provided only limited clarity in relation to the role of anti-suit injunctions and their permissibility under Brussels I Regulation and the recast of that Regulation.
The judgment did not address whether anti-suit injunctions are a permitted remedy under the recast Brussels I Regulation (“the Recast Regulation”), with the Court instead preferring to limit its decision by focusing solely on the old regime of the unmodified Brussels I Regulation (“the Regulation”) and noting that the facts of Gazprom were distinguishable from previous case law.
The failure to address any wider issues under the new recitals in the Recast Regulation means the position remains vague and the wait continues for a clarification with regard to the arbitration exception within the Recast Regulation.
The anti-suit injunction (an order requiring a party not to commence or cease to pursue court proceedings in a different jurisdiction) is a key weapon in safeguarding an exclusive jurisdiction clause in an arbitration agreement against the tactical use of parallel proceedings in a different jurisdiction.
However, the effectiveness of such injunctions was blunted in a European context with the decision in Western Tankers (C185/07) where the CJEU determined that an arbitral anti-suit injunction preventing the court of a Member State seised of a dispute from ruling on its own jurisdiction was incompatible with the principles of the Regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. This decision was notwithstanding the provision in Article 1 (2)(d) of the Regulation stating as follows: “The Regulation shall not apply to:… (d) arbitration”.
The CJEU’s decision in this instance was based on the premise that although the Regulation did not apply to arbitration itself, proceedings commenced in a foreign jurisdiction, and in particular proceedings to determine the validity of an arbitration agreement did fall under the Regulation’s scope. The Court determined that an anti-suit injunction would strip a court of a Member State to rule on its own jurisdiction which ran counter to the mutual trust which Member States accorded to each other’s legal systems.
The Recast Regulation
There appeared to be an attempt with the reworking of the Regulation to re-establish the arbitration exception with the introduction of a new recital as follows:
This Regulation should not apply to arbitration. Nothing in this Regulation should prevent the courts of a Member State, when seised of an action in a matter in respect of which the parties have entered into an arbitration agreement, from referring the parties to arbitration, from staying or dismissing the proceedings, or from examining whether the arbitration agreement is null and void, inoperative or incapable of being performed, in accordance with their national law.
A ruling given by a court of a Member State as to whether or not an arbitration agreement is null and void, inoperative or incapable of being performed should not be subject to the rules of recognition and enforcement laid down in this Regulation, regardless of whether the court decided on this as a principal issue or as an incidental question.
On the other hand, where a court of a Member State, exercising jurisdiction under this Regulation or under national law, has determined that an arbitration agreement is null and void, inoperative or incapable of being performed, this should not preclude that court’s judgment on the substance of the matter from being recognised or, as the case may be, enforced in accordance with this Regulation. This should be without prejudice to the competence of the courts of the Member States to decide on the recognition and enforcement of arbitral awards in accordance with the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York on 10 June 1958 (‘the 1958 New York Convention’), which takes precedence over this Regulation.
This Regulation should not apply to any action or ancillary proceedings relating to, in particular, the establishment of an arbitral tribunal, the powers of arbitrators, the conduct of an arbitration procedure or any other aspects of such a procedure, nor to any action or judgment concerning the annulment, review, appeal, recognition or enforcement of an arbitral award.
The Recast Regulation is to apply to all legal proceedings instituted on or after 10 January 2015 and clearly establishes that a court seised of an action may make a ruling on whether an arbitration agreement is null and void, inoperative or incapable or being performed. With such a ruling falling outside the scope of the Recast Regulation the tantalising possibility has been raised that anti-suit injunctions may no longer be dead in the water following West Tankers.
Gazprom – a missed opportunity?
With the Recast Regulation yet to be tested, it was felt that Gazprom might offer the CJEU the perfect opportunity to distinguish West Tankers and enshrine the arbitration exception.
The case related to a dispute between Gazprom OAO and the Government of Lithuania regarding the running of Lithuania’s main natural gas provider (Lietuvos dujos AB), in which both parties were shareholders. Following a dispute, the Lithuanian Ministry of Energy commenced proceedings in the Lithuanian Courts, while Gazprom commenced arbitration under the rules of the Arbitration Institute of the Stockholm Chamber of Commerce (SCC). Gazprom argued that the Ministry were in breach of the terms of the arbitration agreement and the SCC issued an anti-suit injunction requiring the Ministry to withdraw certain court claims.
Unsure of whether to enforce the arbitral tribunal’s award, the Lithuanian court referred three questions to the CJEU as to whether a Member State court can refuse to:
- recognise an arbitral award that limits the jurisdiction of a national court to rule on its own competence
- enforce an arbitral award that contains an anti-suit injunction if it orders a party to limit their claims in another Member State court
- recognise an arbitral award that limits the right of a national court to rule on its own jurisdiction for the purpose of ensuring the supremacy of the EU law and full effectiveness of the Regulation
While the issues in Gazprom were in fact covered by the Regulation, it was hoped that the CJEU might provide in its judgment guidance on the Recast Regulation. These hopes were further buoyed when the Advocate General Wathelet issued his wide-ranging, and controversial, opinion on the case.
AG Wathelet argued that the Recast Regulation should apply to Gazprom because it was a “retroactive interpretative law” as it explains how the arbitration exception should be interpreted. In his opinion, the Recast Regulation excludes any proceedings in which the validity of an arbitration agreement is contested (making anti-suit injunctions permissible). This opinion was on the basis that the fourth paragraph of the new recital refers to ancillary proceedings which, in his interpretation, covers anti-suit injunctions.
In the alternative, AG Wathelet argued that should the CJEU determine that the Regulation applied (rather than the Recast Regulation), then Gazprom could be distinguished from West Tankers, as West Tankers only applied to anti-suit injunctions issued by the court of a Member State, while arbitral tribunals are not bound by the Regulation nor the principles of mutual trust.
Not unsurprisingly, the CJEU declined the opportunity to offer judgment on AG Wathelet’s wider opinion that anti-suit injunctions were permissible under the Recast Regulation, instead deciding that Gazprom was covered by the Regulation and by restricting itself to a finding that Gazprom did indeed occupy separate ground from West Tankers and that arbitral anti-suit injunctions did fall outside the scope of the Regulation.
The current position
While the judgment provided clarity that Member State courts may give rulings on anti-suit injunctions issued by arbitral tribunals without reference to the Regulation, the position under the Recast Regulation (which will only increase in importance) remains unsatisfyingly open.
As a result, arbitration practitioners are left unsure whether anti-suit injunctions ordered by the courts that are in relation to an arbitration are permissible under the Recast Regulation, and it is left for another case and another day to determine this important point of law.