Sara Masters QC and Belinda McRae recently wrote a piece on the CJEU’s decision on the Brussels Regulation Gazprom in (2015) 30(8) Butterworths Journal of International Banking and Financial Law 516. Here’s a summary of their thoughts …
The Gazprom case (C-536/13) is the latest in the line of cases that have explored the scope of the arbitration exception in Article 1(2)(d) of the Brussels I Regulation (“Brussels Regulation”). This was the first case heard by the Court of Justice of the European Union (“CJEU”) after the Brussels I Regulation (Recast) (“Recast Regulation”) came into force on 10 January 2015, which includes a new recital that purports to clarify the scope of that exception. After the controversial opinion of Advocate-General Wathelet of 4 December 2014 on the effect of the Recast Regulation, the CJEU’s judgment in the Gazprom case was hotly anticipated. However, the CJEU unsurprisingly declined to engage with the Advocate General’s views, leaving the impact of the Recast Regulation on anti-suit injunctions to be determined on another day.
By way of background, the place of anti-suit injunctions in the Brussels Regulation regime has long been settled. In short, anti-suit relief in favour of proceedings in EU and Lugarno Convention member state courts is no longer available. The European Court of Justice (“ECJ”), as it was then known, eliminated the use of anti-suit injunctions to stymie court proceedings in member state courts in Turner v Grovit (C-159/02). In the well-known West Tankers case (C-185/07), the ECJ then extended the prohibition to anti-suit injunctions issued in favour of arbitration proceedings.
In both cases, the central justification was that the restraint of proceedings before EU and Lugarno member state courts was incompatible with the principle of mutual trust on which the Brussels Convention (and later, the Brussels Regulation) regime was founded. However, it was widely felt that the effect of West Tankers judgment was a wrongful extension of the Brussels Regulation into the sphere of arbitration, from which its operation was specifically excluded. The ECJ’s judgment also rendered member state courts powerless to protect parties from “torpedo” proceedings.
Now that we are living in the Recast Regulation world, the unanswered question is the extent to which the new Recital 12 modifies the scope of the arbitration exception in Article 1(2)(d). It was this question with which the Advocate General Wathelet chose to engage in the Gazprom case. It was his decision to engage with this question in the particular circumstanes of the Gazprom case and his answer to it that created so much interest in the opinion and the subsequent CJEU judgment in the first place.
The Gazprom case arose out of parallel claims in the Lithuanian courts and in an arbitration conducted under the SCC Rules in Sweden. By way of summary, the arbitral tribunal had made an award ordering the Lithuanian Ministry of Energy to withdraw or limit certain of its claims before the Lithuanian courts. When it came for the Supreme Court of Lithuania to consider whether (i) the arbitral award in Gazprom’s favour should be recognised and enforced and (ii) the Vilnius Regional Court’s order in favour of the Ministry should stand, the Supreme Court sought a preliminary ruling from the CJEU.
The Supreme Court referred several questions to the CJEU concerning the issue of whether the Brussels Regulation requires a member state court to refuse to recognise or to enforce an arbitration award. It is the first of those questions that is of interest. That question was whether a member state court may refuse to recognise an arbitral anti-suit injunction on the basis that it restricts the member state court’s right to determine its jurisdiction under the Brussels Regulation. Importantly, the domestic proceedings in question were issued well before 10 January 2015, so the temporal window of the Recast Regulation was not yet open.
However, the Advocate General interpreted Recital 12 as a “retroactive interpretive law” that sought to clarify the long-standing meaning of the arbitration exception in Article 1(2)(d) (see para 91 of his Opinion). On that basis, the Advocate General considered it appropriate to apply the Recast Regulation in determining the questions before the CJEU. This position gave him the opportunity to opine on the merits of the West Tankers decision and, in particular, its consistency with previous ECJ judgments on the proper interpretation of the arbitration exception. Ultimately, the Advocate General’s view was paragraph 2 of Recital 12 was a deliberate departure from the ECJ’s approach to anti-suit injunctions in West Tankers and a return to the previous position where arbitration was completely excluded from the Brussels Regulation. For this reason, and for the reason that arbitral tribunals are not bound by the Regulation regime, he answered the question put to the CJEU as “no”.
Until the CJEU’s judgment was handed down on 15 May 2015, there was much speculation as to whether the CJEU would give any weight to the Advocate General’s Opinion, as is it traditionally does, or whether it would evade the issue of the meaning and effect of Recital 12 entirely. Perhaps unsurprisingly, given its temporal scope, the CJEU saw no need to engage with the Recast Regulation question. Like the Advocate General, however, it confirmed that the Brussels Regulation applies neither to arbitral tribunals nor to their awards, which has long been understood to be the position in the English courts. It concluded that the procedural law of the particular member state concerned governed the recognition and enforcement of an arbitral anti-suit injunction, not the Brussels Regulation.
Although we will have to wait for a more appropriate reference for a definitive view on Recital 12, there are certain indications as to the CJEU’s possible approach that are evident from the face of the judgment. First, the CJEU confirmed that the Brussels Regulation does not prevent a member state court from recognising or enforcing an arbitral award. It also emphasised the primacy of the New York Convention in reaching its decision. Both of these principles will certainly carry through to any case under the Recast Regulation. Second, the CJEU referred to the West Tankers judgment with approval on several occasions and gave no indication of departing from it. Reading between the lines, we consider it unlikely that the CJEU will resuscitate anti-suit injunctions by departing from West Tankers under the guise of the newly adopted Recital 12.
The full article written by Sara and Belinda can be found in the September issue of the Journal of International Banking and Financial law ‘Anti-suit injunctions after Gazprom: business as usual’ (2015) 30(8) Butterworths Journal of International Banking and Financial Law 516.