In the first reported case on the issue since the introduction of the Brussels I (Recast) Regulation (the “Recast”), the Commercial Court has held that it is still bound by the decision of the CJEU in West Tankers Inc v Allianz SpA (Case C-185/07), which decided that an EU court cannot grant an injunction to restrain a breach of an arbitration clause in another member state. In doing so, the court rejected the contrary opinion of Attorney-General Wathelet in Gazprom OAO (Case C-536/13).

The claimants in Nori Holdings Ltd & others v Bank Okritie Financial Corporation PJSC [2018] EWHC 1343 (Comm) were seeking to enforce LCIA arbitration provisions in five pledge agreements. The defendants had brought court proceedings in Cyprus and Russia. Males J granted an anti-suit injunction to restrain the Russian proceedings, holding that for these purposes it did not matter that the claimants could have sought an equivalent order from the arbitral tribunal rather than the courts.

Because Cyprus is an EU member state, the position as regards the Cypriot proceedings was more complex. Under the original Brussels I Regulation (the “Regulation”), the courts of an EU member state could not issue an anti-suit injunction to restrain civil and commercial proceedings in another member state. Although the Regulation excluded arbitration from the scope of civil and commercial proceedings, the CJEU in West Tankers held that the scope of this exclusion was not wide enough to permit EU courts to issue anti-suit injunctions in support of arbitration.

An identical exclusion appears in the Recast, but new recitals have been added to clarify the relationship between court proceedings and arbitration. In Gazprom, A-G Wathelet interpreted these recitals as retrospectively indicating that anti-suit injunctions in support of arbitration were always intended to be permitted by both the Regulation and the Recast, implying that West Tankers was wrongly decided.

Males J disagreed, holding that the recitals did not address the question of anti-suit injunctions at all. He suggested that A-G Wathelet had failed to recognise that the West Tankers decision rested on fundamental principles regarding the effectiveness of the Regulation rather than on a narrow point regarding the applicability of the Regulation to a preliminary issue, and had been misled by certain comments in the European Commission’s assessment of a draft of the Recast that did not necessarily apply to the final version.

As a result, Males J refused to restrain the Cypriot proceedings, but commented that if either the Cypriot court or the arbitral tribunal itself were to do so in future, their order would be enforceable in EU member states (including the UK) under the New York Convention.

Comment

This decision is disappointing for businesses that regularly include arbitration clauses in their contracts, who had hoped that Gazprom and the Recast would put an end to the ability to “forum shop” within the EU by bringing proceedings in breach of an arbitration clause in jurisdictions that are perceived as unfriendly to arbitration or where it is likely to require substantial time and costs to obtain a stay. At least until such time as the issue is considered by the Court of Appeal, it seems that West Tankers will remain binding on the English courts.

Meanwhile, parties who are faced with court proceedings within the EU in breach of an arbitration provision will need to consider seeking an anti-suit injunction from the arbitral tribunal rather than from the court in the seat of arbitration, with a view to enforcement under the New York Convention. This makes it imperative to ensure that the tribunal has the power to grant such an injunction, by providing for it expressly in the arbitration agreement or by selecting a venue that provides such powers either under the applicable institutional rules or under the arbitral laws of the seat.