EU legal adviser: recast Brussels I Regulation may not prevent anti-suit injunctions in support of arbitration

Although the recast version of the Brussels I Regulation does not come into force until next month, advocate general and former judge Melchior Wathelet said that it explained how a provision excluding arbitration in the original version "must be and always should have been interpreted". The Court of Justice of the EU (CJEU) is not bound by the opinion of its advocates general, but opinions are followed in the majority of cases.

If upheld by the CJEU, Wathelet's opinion would overturn a controversial decision that stopped an English court from preventing legal proceedings brought in Italy over a dispute which contained a London arbitration clause. Wathelet said that the judgment in that case, known as West Tankers after one of the parties involved, had been criticised because "in reality it had extended the scope of the Brussels I Regulation to arbitration in a way that could undermine its effectiveness".

Litigation and arbitration expert Richard Dickman of Pinsent Masons, the law firm behind Out-Law.com, said: "The AG's opinion not only confirms, in emphatic style, that more unwelcome consequences of West Tankers would not arise under the recast Brussels I Regulation, but also that, as many commentators believe, the CJEU's decision in West Tankers was wrong."

"If adopted by the Court, the AG's opinion will go some way towards preventing the sorts of delaying tactics parties have deployed to avoid their contractual commitment to submit disputes to arbitration by starting court proceedings in another member state. An anti-suit injunction issued by an arbitral tribunal will have to be recognised in other member states and a court can rule on the validity of an arbitration agreement even where proceedings are pending in another member state. It remains to be seen, however, whether a court in one member state will be able to issue an anti-suit injunction to prevent a party from pursuing proceedings in another member state where there is a valid arbitration agreement, as the English court in West Tankers sought to do," he said.

The Brussels I Regulation determines which member states' courts have jurisdiction over a dispute. It grants exclusive jurisdiction to the court "first seised" of the action, and allows that court to rule on any challenges to that jurisdiction. However, arbitration agreements, the recognition and enforcement of which is governed by the New York Convention, are excluded from the scope of the regulation.

Lithuania's supreme court had asked the CJEU to clarify whether it should refuse to enforce an arbitration award issued in Stockholm in 2012 in a dispute involving Gazprom, the Russian state-owned energy company, and the Lithuanian Energy Ministry, which involved the parties' minority shareholdings in gas provider Lietuvos Dujos. The award required the Lithuanian Energy Ministry to withdraw claims it had made in the Vilnius Regional Court and refer them to arbitration instead.  According to the Lithuanian court, the award limited its ability to rule on its own competence in violation of Brussels I.

In the West Tankers case, the CJEU held that for an arbitral tribunal to grant an anti-suit injunction was incompatible with Brussels I. Despite the exclusion of arbitration agreements from the scope of the regulation, in that case the applicability of the arbitration clause itself was a preliminary issue to be decided by the Italian court. Allowing the English court to grant an anti-suit injunction in those circumstances "necessarily amounts to stripping [the Italian court] on the power to rule on its own jurisdiction" under Brussels I, the CJEU said.

However, Wathelet said that the preamble to the recast regulation emphasised the fact that arbitral awards governed by the New York Convention should never have been affected by Brussels I, as well as preserving the existing exclusion of arbitral proceedings from its scope. The preamble also specifically stated that the regulation should not apply to an "action" or "ancillary proceedings" relating to arbitration, including the recognition and enforcement of an award, he said.

"Admittedly, that regulation will be applicable only from 10 January 2015, but, like Gazprom, the Lithuanian, German and French governments, the Commission and the Swiss Confederation [all of which intervened in the case], I think that the court should take it into account in the present case, since the main novelty of that regulation, which continues to exclude arbitration from its scope, lies not so much in its actual provisions but rather ... in its preamble, which in reality, somewhat in the manner of a retroactive interpretative law, explains how that exclusion must be and always should have been interpreted," Wathelet said.

"That means that, if the case which gave rise to [West Tankers] had been brought under the regime of the Brussels I Regulation (recast), the [Italian court] could have been seised on the substance of the case on the basis of that regulation only from the time when it held that the arbitration agreement was null and void, inoperative or incapable of being performed ... In those circumstances, the anti-suit injunction forming the subject matter of the judgment in [West Tankers] would not have been held to be incompatible with the Brussels I Regulation," he said.

He said that this would not undermine the effectiveness of the Brussels I Regulation because it did not "prevent the referring court from 'itself determin[ing], under the rules applicable to it, whether it has jurisdiction to resolve the dispute before it'."

"On the contrary, [the New York Convention] allows it to ascertain whether the arbitral tribunal had jurisdiction, in addition to Article V(2)(a), which allows it to determine whether, under its own law, the dispute before the arbitral tribunal is capable of settlement by arbitration," he said.