THE status of anti-suit injunctions in Europe has long given rise to controversy. The decision of the Court of Justice of the European Union in Case C-536/13, Gazprom OAO [2015] All E.R. (EC) 711 sheds a new light on the relationship between anti-suit injunctions and the European jurisdiction regime embodied in the Brussels Regulation (Regulation No. 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters). In this much anticipated judgment, the Court of Justice confirmed that, by virtue of the arbitration exclusion in Article 1(2)(d) of the Brussels Regulation, Member State courts are not precluded from enforcing anti-suit injunctions issued by arbitration tribunals and aimed at restraining the proceedings before Member State courts. Although the decision was given before the Recast Brussels Regulation came into force (Regulation No. 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, effective from 10 January 2015), it can be assumed that the same conclusion would have been reached under the new law.
The decision arose from a reference made by the Supreme Court of Lithuania. The background to the dispute involved a company (“Lietuvos dujos” AB, “the company”) in which Gazprom and the State of Lithuania held a portion of the share capital. A shareholders' agreement concluded between Gazprom and the State of Lithuania contained an arbitration clause according to which “any claim, dispute or contravention in connection with this Agreement or its breach, validity, effect or termination, shall be finally settled by arbitration”.
Contrary to that clause, the State of Lithuania initiated court proceedings in the Lithuanian court. It sought to investigate the activities of the company and impose certain corrective measures if it were to be established that the actions of the company were improper. The application related inter alia to a number of Russian nationals appointed by Gazprom to the company's board of directors. In the proceedings, the State of Lithuania was represented by the Ministry of Energy.
Gazprom claimed that the application to the Lithuanian court was made in breach of an arbitration clause contained in the shareholders' agreement. It filed a request for arbitration at the Arbitration Institute of the Stockholm Chamber of Commerce seeking an order against the Ministry to discontinue the investigation proceedings pending before the Lithuanian courts. The arbitral tribunal decided that the proceedings commenced in Lithuania were brought in contravention of the arbitration clause and ordered the Ministry to withdraw or limit some of the claims.
Gazprom applied to the Lithuanian court for recognition and enforcement of this award but failed to obtain a favourable judgment. The application for recognition was refused on the grounds that the arbitral tribunal infringed the national sovereignty of the Republic of Lithuania by limiting the Ministry's capacity to bring proceedings before a Lithuanian court and denied that court the power to determine whether it has jurisdiction. The court held that recognising the award would be contrary to Lithuanian and international public policy; hence the refusal was also justified by Article V(2)(b) of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Gazprom challenged this decision in the Supreme Court of Lithuania.
The Supreme Court classified the award ordering the Ministry to withdraw its claims as an anti-suit injunction. The matter that had to be clarified was whether the enforcement of such an award would be permissible in light of the Brussels Regulation. Although the Regulation excludes arbitration from its scope, in a controversial decision in Case C-185/07, Allianz SpA v West Tankers Inc [2009] E.C.R. I-663 (noted [2009] C.L.J. 278), the European Court of Justice ruled that it is incompatible with the Brussels Regulation for a Member State court to grant an anti-suit injunction to restrain a party from pursuing proceedings in the courts of another Member State in breach of an arbitration agreement. The decision was considered by some as unduly extending the remit of the Brussels Regulation to arbitration. It was criticised for leaving scope for so-called “torpedo actions”, namely actions brought in breach of an arbitration agreement in Member State courts, without the remedy of an anti-suit injunction being available to the defendant. It was unclear whether the enforcement of anti-suit injunctions in arbitration would also be contrary to the Brussels jurisdiction regime.
Three questions were referred to the Court of Justice of the European Union. The first was whether a Member State court can refuse to recognise an arbitral award containing an anti-suit injunction, on the basis that this would restrict the court's right to determine for itself whether it has jurisdiction to hear the case under the rules on jurisdiction in the Brussels Regulation. Secondly, there was a question whether a Member State court can refuse to enforce an arbitral award that contains an anti-suit injunction if the award orders a party to limit its claims in another Member State court. The third question related to the other two and asked whether a Member State court can, for the purpose of ensuring the supremacy of EU law and the full effectiveness of the Brussels Regulation, refuse to recognise an arbitral award which restricts the right of the national court to rule on its own jurisdiction.
The Court of Justice began by restating that arbitration is excluded from the scope of the Brussels Regulation and proceeded to clarify the extent of this exclusion. The court held that, while an anti-suit injunction in West Tankers contravened the principles of comity and mutual trust between the Member States, as it was issued by one Member State requiring a party not to continue proceedings before a court of another Member State, an injunction issued by an arbitral tribunal does not have such an effect. The Brussels Regulation, apart from very limited exceptions, does not authorise the jurisdiction of a court of a Member State to be reviewed by a court of another Member State. It does not, however, extend to arbitration tribunals in cases where recognition and enforcement are sought of an arbitration award containing an anti-suit injunction ordering the claimant to withdraw his claims before a Member State court. As arbitral tribunals are not courts of Member States, the enforcement of anti-suit injunctions issued by those tribunals does not interfere with the Regulation. Instead, the enforcement of such orders is solely a matter of national and international law applicable in Lithuania. In addition, unlike the national court, the arbitral tribunal is not empowered to sanction its anti-suit injunction by issuing penalties against the party who disregards it.
Reaching its decision, the court agreed with the conclusion of the Advocate General Wathelet delivered to the Court of Justice on 4 December 2014. Contrary to the Advocate's opinion, however, the court refused to extend the scope of its ruling to the Recast Brussels Regulation, which took effect from 10 January 2015. The Recast Regulation reinforces the arbitration exception explaining its meaning in the new Recital 12. It was not in force at the time, however, and could not be applied in the case before the Court of Justice. To the surprise of many, the Advocate General not only referred to the Recast Regulation considering Recital 12 as “retroactive interpretative law”, but also concluded that the decision in West Tankers is no longer correct in light of the reinforced arbitration exception clarified under this act. The Advocate General interpreted the exception as excluding from the scope of the Regulation any proceedings concerning the validity of an arbitration agreement. According to his opinion, this included anti-suit injunctions granted by national courts in support of arbitration.
The Court of Justice did not go this far and refused to contradict its ruling in West Tankers. Instead, the court confirmed that it is incompatible with the original Brussels Regulation to issue a decision preventing the party from initiating or continuing proceedings in another Member State. As a result, the prohibition on the grant of anti-suit injunctions by Member State courts still stands and it remains to be seen if the Advocate General's broad interpretation of the arbitration exception under the Recast Regulation will be adopted.
Notwithstanding the court's firm stand on West Tankers, the decision in Gazprom is a step towards ring-fencing arbitration. It endorses the arbitration exception by clarifying that the Brussels Regulation governs conflicts of jurisdiction between the courts of the Member States, not between the courts and arbitral tribunals. As a result, after Gazprom, it is clear that, in Europe, arbitrators have greater anti-suit powers than judges.
