The Court of Justice of the European Union (“CJEU”) has published its much-anticipated judgment in the Gazprom case. It confirmed that under the arbitration exclusion in the original Brussels Regulation, that Regulation does not compel the courts of an EU Member State to refuse to enforce an arbitral award which contains an anti-suit injunction.
Although the ruling reaches the same conclusion as Advocate General Wathalet’s earlier Opinion in the case, it is much narrower in scope and in particular does not consider the text of the Recast Brussels Regulation or revisit the decision in West Tankers. It is likely that the application of West Tankers under the Recast Brussels Regulation will come back before the CJEU in the future.
Request for a preliminary ruling
The Supreme Court of Lithuania made a request to the CJEU for a preliminary ruling in the Gazprom case (Case C‑536/13: “Gazprom” OAO). The request concerned the status of arbitration and anti-suit injunctions in light of the Brussels Regulation (Regulation No. 44/2001 on jurisdiction and the recognition and enforcement of civil and commercial matters). Article 1(2)(d) of the Brussels Regulation excludes arbitration from the scope of the Regulation (commonly referred to as the “arbitration exception”). Three questions were referred to the CJEU:
- Can an EU Member State court refuse to recognise an arbitral award containing an anti-suit injunction, on the basis this would restrict the court’s “right to determine itself whether it has jurisdiction to hear the case under the rules on jurisdiction in the Brussels I Regulation”?
- Can a Member State court refuse to enforce an arbitral award that contains an anti-suit injunction if the award orders a party to limit its claims in another EU Member State court?
- Can a Member State court, 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 Recast Brussels Regulation
On 10 January 2015, a revised version of the Brussels Regulation came into force: Regulation No. 1215/2012 (the “Recast Brussels Regulation”). The arbitration exception remains unchanged in the Recast Brussels Regulation, although its scope is clarified by a new recital 12. The fourth paragraph of that recital provides:
“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 West Tankers decision
In Allianz SpA v West Tankers Inc (Case C-185/07) (“West Tankers”), the European Court of Justice ruled that it was incompatible with the Brussels Regulation for a Member State court to grant an anti-suit injunction to restrain a party from commencing or pursuing proceedings in the courts of another Member State in breach of an arbitration agreement. The decision was controversial as it was seen as extending the scope of the Brussels Regulation to arbitration in a manner which was inconsistent with its proper interpretation and leaving parties faced with so-called “torpedo” actions, which might be brought in Member State courts in breach of an arbitration agreement, without the swift remedy of an anti-suit injunction being available to the victim of such an action.
Advocate General’s Opinion
Advocate General Wathalet delivered his Opinion in Gazprom to the CJEU in December 2014. He concluded that the Brussels Regulation did not compel a Member State court to refuse to recognise and enforce an anti-suit injunction issued by an arbitral tribunal. Arbitration was clearly excluded from the scope of the Brussels Regulation, and the recognition and enforcement of the arbitral award in this case was governed exclusively by the 1958 New York Convention.
In reaching his decision, to the surprise of many, the Advocate General relied on the Recast Brussels Regulation, even though it was not in force at the time and did not apply to the facts of the case. He described recital 12 to the Recast Regulation as “somewhat in the manner of a retroactive interpretative law” which explained how the arbitration exception in both versions of the Regulation “must be and always should have been interpreted”. He considered this clarified the exclusion from the scope of the original Brussels Regulation of any proceedings in which the validity of an arbitration agreement was challenged, including anti-suit injunctions granted by national courts in support of arbitration (in his view, these were covered by the reference in recital 12 to “ancillary proceedings”). On that basis, the Advocate General concluded that the decision in West Tankers could no longer be regarded as correct and it was possible for both Member State courts and arbitral tribunals to grant anti-suit injunctions within the EU in support of arbitration.
The CJEU dealt with the three questions referred to it as one: whether the Brussels Regulation had to be interpreted as precluding a Member State court from recognising and enforcing (or from refusing to recognise and enforce) an arbitral award which prohibited a party from bringing certain claims before a court of that Member State. It agreed with the Advocate General’s conclusion that the Regulation should not be interpreted in this way, although it reached its decision on a much narrower basis, declining either to extend its reasoning to the text of the Recast Brussels Regulation or to contradict its own previous decision in West Tankers.
The court began by noting that arbitration was excluded from the scope of the Brussels Regulation by virtue of article 1(2)(d). It then went on to distinguish West Tankers on the basis that the decision concerned anti-suit injunctions granted by Member State courts. Here, the court was not being asked whether an anti-suit injunction issued by a Member State court was incompatible with the Brussels Regulation, but whether it would be compatible for a court to recognise and enforce an arbitral award ordering a party to arbitration to reduce the scope of claims in proceedings pending before a court of that Member State. The Brussels Regulation only governed conflicts of jurisdiction between the courts of the Member States. As arbitral tribunals were not State courts, there was no such conflict in this case.
Unlike in West Tankers, there was no question here of an infringement of the principle of mutual trust on which the Brussels Regulation was based (i.e. the trust which Member States accord to one another’s legal systems and judicial institutions), because the anti-suit order had been made by an arbitral tribunal and not a court.
In addition, the tribunal’s prohibition of a party from bringing certain claims before a Member State court could not deny the party access to the court before which it had brought proceedings in order to challenge the validity of the arbitration agreement. In proceedings for the recognition and enforcement of an arbitral award, a party could contest the recognition and enforcement, and the court seised would have to determine, on the basis of the applicable national procedural law and international law, whether or not the award should be recognised and enforced. This meant that neither the award, nor the decision by which a Member State court recognised it, were capable of affecting the principle of mutual trust.
The court confirmed that proceedings for the recognition and enforcement of an arbitral award were covered by the national and international law applicable in the Member State in which recognition and enforcement are sought, and not by the Brussels Regulation. Here, this would be Lithuanian procedural law and the 1958 New York Convention.
The arbitration community will no doubt welcome this clear and concise judgment from the CJEU, although some may be disappointed that the court did not accept the Advocate General’s invitation to revisit West Tankers and, with reference to recital 12 of the Recast Brussels Regulation, re-open the way for Member State courts as well as tribunals to grant anti-suit orders in support of arbitration. As a result, for the time being the West Tankers decision still stands and the prohibition on the grant of such injunctions by Member State courts remains.
It was entirely understandable that the court resisted any temptation to extend its reasoning to the Recast Brussels Regulation, given that the Regulation did not apply to the facts of the case before it. We will have to wait for another opportunity for the CJEU to consider the application of West Tankers under the Recast Regulation, and to see whether it adopts the broad reading of recital 12 used by Advocate General Wathalet. Viewed as a menace in some quarters and a vital protection in others, the availability of anti-suit injunctions within the EU may still re-emerge.
Leaving that aside for now, the CJEU’s decision focused on the scenario which was before it, where the proceedings to enforce the award and the proceedings brought in breach of the arbitration agreement were brought in the same Member State. However, on the face of it, the Gazprom decision opens up the prospect of one Member State court ordering enforcement of an anti-suit injunction issued by an arbitration tribunal, while at the same time another Member State court conducts proceedings brought in breach of the arbitration agreement. It will probably only be a matter of time before the CJEU is called upon again, to rule on how far the effect of the Gazprom decision extends.
Case C‑536/13: “Gazprom” OAO
Sarah Speller and Jeremy Mash