No longer can English courts restrain proceedings before the courts of other EU Member States on the ground that they infringe an English arbitration agreement. In Case C-185/07 Allianz SpA v. West Tankers Inc. (10 February 2009), the Court of Justice held that such relief is incompatible with Regulation 44/2001, the Brussels I Regulation (“the Regulation”).
Allianz, subrogated insurers of an Italian insured, had sued West Tankers in Italy, contrary to the insured's contract with West Tankers, which bound Allianz to submit any disputes to arbitration in England. They claimed damages in delict, asserting jurisdiction under Article 5(3) of the Regulation. West Tankers countered by seeking an injunction from the English courts restraining the Italian proceedings. The Court of Justice prohibited such relief in principle in Case C-281/02 Turner v. Grovit [2004] E.C.R. I – 3565. But Allianz was arguably different, prompting the reference to the Court of Justice. Article 1(2)(d) of the Regulation provides (delphically) that “arbitration” is outside the Regulation's scope. This suggested that injunctions enforcing arbitration agreements, because ancillary to arbitration, were unaffected by the Regulation.
The House of Lords concluded emphatically in Allianz that such orders were free of the Regulation ([2007] UKHL 4, noted [2007] 66 C.L.J. 493). The Court of Justice disagreed. Proceedings to enforce arbitration agreements by injunction have the right to arbitrate as their subject matter and so fall outside the Regulation. But the effet utile of the Regulation requires that it cannot be overridden by national law as to matters within its scope. The issue in Allianz was whether the arbitration agreement prevented the Italian courts from exercising jurisdiction in proceedings to which the Regulation clearly applied. That preliminary issue was as much subject to the Regulation as Allianz's substantive claim, and its effective disposal under the Regulation as important. The role of the acquis communautaire thus confirmed, the Court concluded that the injunction sought in Allianz undermined the Regulation's effectiveness. National courts must determine unhindered issues preliminary to their jurisdiction, such as the effect of arbitration or jurisdiction agreements: Case C-116/02 Erich Gasser GmbH v. MISAT [2003] E.C.R. I-14693. And litigants like Allianz may legitimately challenge such agreements by suing in the courts of their choice.
Allianz establishes a comprehensible distinction. The effect of arbitration agreements belongs to national law, save where it implicates the civil jurisdiction of national courts. But the Court's reasoning, developed in paragraphs [22] to [32] of the judgment, is profoundly unsatisfying:
(i) It ignores the compelling argument, endorsed by the House of Lords, that Article 1(2)(d) should be broadly construed. The mere presence of an arbitration agreement arguably signals the parties' intention that their dispute is a private matter, unconstrained by the Regulation. This is not, as the Court perhaps supposed, an extra-legal aspiration irrelevant to construing the Regulation but a robust measure of Article 1's scope.
(ii) To suggest that such relief has the effect (as stated by the Court) of “stripping” the Italian court of its competence to test the arbitration agreement is misconceived. At worst, if restrained, Allianz would itself have discontinued its action, which must always be a claimant's choice.
(iii) It is incoherent to conclude that the Regulation privileges the Italian court's role in assessing the agreement's effect. True, as the Court affirmed, the court first seised has sole responsibility for determining the effect of an agreement to another court's jurisdiction (Gasser), and no court may review another's competence (Case C351/89, Overseas Union Insurance [1991] E.C.R. I-3317). Such considerations are decisive in cases involving parallel proceedings in the courts of two Member States. They inform Articles 27 and 28 of the Regulation, conferring exclusive competence-competence on the court first seised. But they are irrelevant in cases like Allianz, involving arbitration in England and judicial proceedings in Italy, where those articles are inapplicable and the imperative to prevent parallel litigation falls away.
(iv) To assert that such relief infringes the principle of mutual trust between Member States is similarly suspect. However worthy an aspiration, the principle counts in the present context only if it promotes the regime's paramount objective of eradicating parallel proceedings and irreconcilable judgments. But it cannot do so in Allianz, where the regime's rules controlling parallel proceedings are inapplicable.
(v) Why did it matter that such relief would have prevented Allianz from challenging the arbitration agreement in Italy? It was obviously the injunction's purpose to discourage Allianz's action. But this is scarcely significant when Allianz could always have challenged the agreement before the arbitrators in England. Access to justice does not entail access to justice wherever a claimant wishes (cf. The Kribi [2001] 1 Lloyd's Rep. 76).
The decision in Allianz is alarmingly insecure. Hard to defend analytically, it is perhaps less about the true meaning of the Regulation, more about promoting two policy objectives come what may – the primacy of the Regulation over national law and harmonizing civil procedure in Member States.
The decision's practical implications may seem less severe than those of Gasser, where a party pre-empted by proceedings in a non-contractual forum was barred by Article 27 of the Regulation from suing elsewhere on a jurisdiction agreement while those proceedings were pending. West Tankers, though wrong-footed by the Italian proceedings, could still initiate arbitral proceedings in England, to which Article 27 does not apply. Moreover, the Italian court would doubtless have referred the parties to arbitration eventually under Article II(3) of the New York Convention on foreign arbitral awards. But Allianz is troubling nonetheless. To curb national remedies protecting arbitration defeats the expectations of those who trust in the protective measures available at the seat of arbitration. To rely upon a court's Article II(3) power to insist on arbitration assumes that such intervention is timely, and ignores the prejudice caused merely by launching pre-emptive proceedings. If unchecked, such proceedings may also distort the arbitral process, altering the balance of advantage, and gifting a tactical victory to the pre-empting party. More significantly, they may inhibit resort to arbitration altogether if the pre-empted party exhausts its resources by defending them, so that the dispute is never arbitrated, effectively neutralising the arbitration agreement. Certainly, Allianz shuns the principle (arguably implicit in Article 1(2)(d)) that an agreement to arbitrate represents a legitimate waiver by the parties of the rules of the Brussels Regulation.
