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04 Mar 2009

ECJ decides that anti-suit injunctions in support of arbitration are not available

by Björn Gehle

Anti-suit injunctions in support of arbitration will no longer be available in Member States of the European Union.

Anti-suit injunctions in support of arbitration will no longer be available in Member States of the European Union, following the decision of the European Court of Justice in the West Tankers Case (Allianz SpA v West Tankers Inc [2007] UKHL 4) on 10 February 2009.

Anti-suit injunctions are commonly used to restrain court proceedings which have been commenced by a party in breach of an arbitration agreement.

In its judgment the European Court stated that "an anti-suit injunction [...] is contrary to the general principle which emerges from the case-law of the Court on the Brussels Convention, that every court seised itself determines, under the rules applicable to it, whether it has jurisdiction to resolve the dispute before it" and "in no case is a court of one Member State in a better position to determine whether the court of another Member State has jurisdiction".

In coming to this conclusion the Court had to deal with the question of whether the application for an anti-suit injunction was within the scope of the "arbitration exception" in Article 1(2)(d) of the Regulation. According to the Court this was not the case.

The decision has already caused major concerns in the international arbitration scene, especially in Europe. Nevertheless, one should be aware that the Regulation only binds courts in Member States of the EU, and therefore courts outside the EU are still able to issue anti-suit injunctions in support of arbitration proceedings. In addition most of the EU Member States are signatories to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) and as such are bound to enforce arbitration agreements. These are important considerations when choosing a seat.

The decision affects the attractiveness of EU jurisdictions as a seat of arbitration because prior to this decision a party seeking to enforce an arbitration agreement had the options of:

  • seeking a stay of the proceedings, in the court where those proceedings were commenced; or
  • seeking from another court in the EU, which had jurisdiction over the party commencing the proceedings, an injunction restraining that party from continuing with the court proceedings, brought contrary to the arbitration agreement.

As a consequence of this decision the second option is no longer available. In some European jurisdictions the process of obtaining a stay can be slow, inefficient and expensive. Accordingly, an application for an anti-suit injunction in an efficient jurisdiction was a good alternative way of enforcing an arbitration agreement. Therefore European seats have lost one of the tools available to parties for enforcing arbitration agreements and arguably some of their attractiveness. Jurisdictions (such as Australia) which will still entertain anti-suit injunctions in respect of court proceedings commenced in the EU have a relative advantage because the additional method of enforcing an arbitration agreement is still available.

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