Although the ECJ decision in Allianz SpA and Another v West Tankers Inc Case 185/07 of 10 February 2009 ("the West Tankers decision") confirmed that under European Council Regulation No 44/2001 ("the Regulation") any EU member state court, even one having supervisory jurisdiction over an arbitration, could not order the court of another member state to halt proceedings issued there in breach of the arbitration agreement, it did not deal with how the potential problems arising from parallel proceedings in member states should be resolved.

Attention has since turned to whether an English court, with supervisory jurisdiction over an arbitration, would be fettered by the prior decisions of courts of other member states that reflect on that arbitration. Two recent developments shed some light on the way forward.

First, in the case of National Navigation Co v Endesa Generacion SA [2009] EWHC 196 (Comm), the English court had to consider whether it was bound to recognise a Spanish court's decision that a London arbitration clause was not valid and binding. The English court decided that:

  • where it was asked to grant declaratory relief stating that a London arbitration clause was valid and binding, it was not bound by the Spanish court's decision because the declaratory proceedings were within the arbitration exception to the Regulation and thus fell outside the scope of the Regulation;
  • further, and potentially more significantly, even if the English court was otherwise bound to recognise the Spanish court's decision, it should not do so on public policy grounds given the UK's obligation under the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("the New York Convention") to give effect to an arbitration clause that is valid in accordance with its proper law.

Having decided that it was not prevented by the Regulation from reaching its own conclusion on the matter, the English court proceeded to grant the declaratory relief sought (namely that there was indeed a valid and binding arbitration agreement) notwithstanding the contrary conclusion of the prior seized Spanish court.

The English court's recognition of the importance of the UK's obligations under the New York Convention is welcome, but the potential for parallel proceedings is not. The European Commission's Green Paper of 21 April 2009, which accepts the primacy of the New York Convention, proposes a number of potential solutions to the parallel proceedings problem. These proposals include modifications to the Regulation to grant the courts of the place of arbitration:

  • exclusive jurisdiction in respect of court proceedings in support of arbitration, including decisions on the existence, validity and scope of an arbitration agreement; and
  • exclusive competence to certify the enforceability of the award, as well as its procedural fairness, after which the award would freely circulate within the member states of the Regulation.

These proposals, if adopted (we expect they probably will be), should resolve the risk of conflicting judgments within the Community and, within the European context, significantly enhance the power of the supervisory court in the place of arbitration (the seat). They will, however, work most satisfactorily where the parties specify their preferred seat.

While it goes without saying that seat selection should always be carefully considered and clearly reflected in the arbitration agreement, the Commission's further proposal - that in instances where the seat is not specified, the seat would be determined by the arbitral tribunal or by the courts of the member state which would have jurisdiction under the Regulation - is unlikely to result in a venue the parties would have chosen themselves since it will likely be based on domicile or place of performance rather than arbitration expertise or neutrality.

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