Anti Suit Arbitral Awards Not Hit by Brussels I CJEU

CJEU Rules on Non-Applicability of Brussels I to Arbitral Awards, Silent on Impact of Recast Brussels I Regulation

The Court of Justice of the European Union has reached a decision in the reference made by the Supreme Court of Lithuania in the case of Gazprom (C-536/13) on the effect of the Brussels I Regulation (EC) No 44/2001 on the enforcement of arbitral awards which restrained the Parties from approaching the Court with respect to a dispute that was covered by an arbitration agreement. The CJEU has confirmed that arbitration is excluded from the scope of the Brussels I Regulation and the enforcement of an arbitral award containing an anti-suit inunction shall be governed by the national arbitration law of each Member State and the New York Convention. Unfortunately, the Court did not confirm whether or not this position would hold true vis-a-vis the recast Brussels Regulation which came into effect on 10 January 2015.

Background:

Disputes arose out of a Shareholders’ Agreement between the Ministry of Energy of Lithuania and Gazprom, among others, in relation to Lithuania’s main gas provider. The Shareholders’ Agreement contained an arbitration clause which required all disputes to be settled by arbitration under the Rules of the Stockholm Chamber of Commerce. However, the Ministry of Energy disregarded this clause and initiated proceedings against Gazprom in the Lithuanian Courts. In response to that, Gazprom commenced arbitration and obtained an award which ordered the Ministry to restrict its claims in the court proceedings to matters which were not covered by the arbitration clause.

When Gazprom sought enforcement of the award, a question arose as to whether an arbitral award containing an anti-suit injunction would be violative of the Brussels I Regulation on the Jurisdiction, recognition and enforcement of judgments in civil and commercial matters. The CJEU had in a previous case - C-185/07 Allianz SpA and Generali Assicurazioni Generali SpA v West Tankers Inc.  held that a court of a Member State cannot issue an order restraining a party from commencing or continuing proceedings before a court of another Member State on the ground that those proceedings would be contrary to an arbitration agreement because such order would be incompatible with the Brussels I Regulation. This issue was sent in a preliminary reference to the CJEU wherein the following questions were raised:

1. Where an arbitral tribunal issues an anti-suit injunction and thereby prohibits a party from bringing certain claims before a court of a Member State, which under the rules on jurisdiction in [Regulation No 44/2001] has jurisdiction to hear the civil case as to the substance, does the court of a Member State have the right to refuse to recognize such an award of the arbitral tribunal because it restricts the court’s right to determine itself whether it has jurisdiction to hear the case under the rules on jurisdiction in [Regulation No 44/2001]?
2. Should the first question be answered in the affirmative, does the same also apply where the anti-suit injunction issued by the arbitral tribunal orders a party to the proceedings to limit his claims in a case which is being heard in another Member State and the court of that Member State has jurisdiction to hear that case under the rules on jurisdiction in [Regulation No 44/2001]?
3. Can a national court, seeking to safeguard the primacy of EU law and the full effectiveness of [Regulation No 44/2001], refuse to recognise an award of an arbitral tribunal if such an award restricts the right of the national court to decide on its own jurisdiction and powers in a case which falls within the jurisdiction of [Regulation No 44/2001]?

Decision of the CJEU:

The Court held that “a court of a Member State (is not precluded) from recognising and enforcing, or from refusing to recognise and enforce, an arbitral award prohibiting a party from bringing certain claims before a court of that Member State, since that (Brussels I) regulation does not govern the recognition and enforcement, in a Member State, of an arbitral award issued by an arbitral tribunal in another Member State.”

The primary reason for this decision is that the Brussels I Regulation in Article 1(2)(d) excludes arbitration from the scope of the Regulation. Secondly, the principle of “mutual trust” which restricts the courts of EU Member States from granting anti-suit injunctions is not infringed by an arbitral award as the enforcement of the arbitral award does not involve the interference of a court of one Member State in the jurisdiction of another Member State’s court. Thus, the recognition and enforcement of the award should be determined only on the basis of the procedural law of the Member States and the New York Convention.

Analysis:

Unfortunately, the Brussels I Regulation has been repealed with effect from 10 January 2015 by Regulation (EU) No 1215/2012 whose impact on arbitral awards was not discussed by the CJEU in this decision. The new Regulation contains a very specific provision in Para 5 of Recital 12 excluding “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” from the applicability of the Regulation. The Advocate General opined that besides settling this present issue in favor of arbitration, Recital 12 also empowered the Courts of Member States to order anti-suit injunctions with respect to arbitration[1]  (held to be violative of the repealed Brussels Regulation) but this matter was left untouched by the CJEU.