Recent cases demonstrate the support English courts will give to arbitration, and the House of Lords' decision in West Tankers Inc v RAS Riunione Adriatica di Sicurita SpA and Ors (2007) is another example.
A West Tankers vessel chartered to Erg Petroli SpA ("Erg") collided with a jetty owned by Erg, causing damage. The English law charterparty required arbitration in London. Erg claimed under its insurance policy and commenced arbitration proceedings in London for the excess. Meanwhile, Erg's insurers sought to recover their loss by commencing court proceedings against West Tankers in Italy. West Tankers sought an injunction requiring the insurers to discontinue the Italian proceedings and instead arbitrate in London.
Issues of jurisdiction in the EU are dealt with by EC Regulation 44/2001. In court proceedings, even if one of the parties begins proceedings in another member state in clear breach of an exclusive jurisdiction clause, courts of other member states cannot intervene (Turner v Grovit (2004)). They must instead trust the court of the Member State where the case is first brought to enforce any jurisdiction clause.
However, the Regulation expressly excludes arbitration. So, was it consistent with the Regulation for an English court to make an order restraining insurers' proceedings in Italy because the proceedings were in breach of an arbitration agreement? The High Court said "yes" and granted the injunction. On appeal, the matter was referred directly to the House of Lords.
The House of Lords referred the question to the European Court of Justice for final determination, but offered its "observations". The Lords argued that the granting of an injunction to protect the contractual right to have a dispute determined by arbitration could not be inconsistent with the Regulation, which does not apply to arbitration, or, by extension, any proceedings in support of arbitration.
They also considered the realities of arbitration as a method of resolving commercial disputes to be "the most important consideration". People engaged in commerce choose arbitration in order to be outside the procedures of any national court, preferring the certainty of a mutually agreed, often neutral jurisdiction, and the privacy, informality and finality which arbitration offers. The Court was most concerned to see that choice protected - as Lord Hoffman put it "the courts are there to serve the business community rather than the other way round".
Whether the ECJ agrees, or considers commercial concerns legitimate in interpreting the Regulation, remains to be seen. Some academics fear that the effect on the choice of England as an arbitration venue could be far reaching. There are other jurisdictions willing to step into any breach, as the House of Lords pointed out. Others think this a storm in a teacup - Member State courts are trusted to enforce exclusive jurisdiction clauses, why not arbitration agreements?
Whatever the result, the decision emphasises the continuing willingness of the English courts actively to support parties' decisions to choose arbitration to resolve their disputes by granting orders restraining court proceedings elsewhere in the EU. This support is one of the reasons that London maintains its pre-eminence as the centre for international arbitration. The European Court may yet spoil the party.
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