Commercial Court confirms that Recast Brussels Regulation does not permit intra-EU anti-suit injunctions

Background

The English Courts have long had the power to grant injunctions restraining a party or parties from commencing or continuing with proceedings in a court or tribunal abroad. An anti-suit injunction is directed against a party itself (rather than the foreign court) and a breach amounts to a contempt of court and could lead to a fine or even the arrest of an individual.

The ECJ decisions of Erich Gasser GmbH v Misat Srl (2003) and Turner v Grovit (2004) confirmed that the old (i.e. pre January 2013) Brussels Regulation (Regulation 44/2001) operated so as to preclude an English Court from granting an anti-suit injunction where the court of another EU member state was first seised (even in breach of an exclusive jurisdiction clause). The principle being that each Member State court should have the power to rule on its own jurisdiction and that all Member States should trust in each other’s competence and not seek to interfere in another Member State’s court’s process.

These decisions led many parties to choose arbitration as their dispute resolution method, based on the fear that their choice of, say, the English Courts to hear their dispute, could be derailed (or at the very least delayed) by a party commencing proceedings in the (potentially much slower) courts of another Member State. At the time, parties thought that the words “The Regulation shall not apply to … Arbitration” in Article 1 of the (old) Brussels Regulation, meant that the Gasser and Turner v Grovit decisions would not affect them.

Then came the case of Allianz SpA v West Tankers Inc (Case C-185/07) [2009] AC 1138, in which the ECJ ruled that the courts of an EU Member State cannot grant an anti-suit injunction to restrain proceedings brought in breach of an arbitration agreement in the court of another EU Member State.

The West Tankers decision was a controversial one and led to a number of proposals to readjust the relationship between the Regulation and arbitration. The result was a new Recital 12 included in the Recast Brussels Regulation (Regulation 1215/2012). This new recital expands on the “arbitration exception” in the old Brussels Regulation, but does not expressly address anti-suit injunctions.

The position under the Recast Brussels Regulation was put to the test in Nori Holding and others v Public Joint-Stock Company Bank Otkritie Financial Corporation [2018] EWHC 1343 (Comm).

Nori Holding

In the Nori Holding case the claimant sought anti-suit injunctions restraining proceedings brought by the defendant bank in the courts of Russia and Cyprus.

Males J granted the anti-suit injunction restraining the defendant from continuing the Russian proceedings.

However, the application for an injunction in relation to the proceedings in Cyprus meant that he had to consider the current status of the West Tankers decision in the light of the Recast Brussels Regulation and the Advocate General’s opinion in the case of Gazprom (C-536/13). In Gazprom, the AG suggested that Recital 12 of the recast Regulation operated to permit Member State courts to issue anti-suit injunctions restraining proceedings brought in another Member State in breach of an arbitration agreement. The CJEU in Gazprom did not need to deal with this part of the AG’s opinion in its judgment as they were addressing the question of whether an anti-suit injunction issued by an arbitral tribunal (as opposed to a court) is compatible with the Recast Brussels Regulation (the court found that it was).

Males J considered that recital 12 is “clear” and that it did not affect the position set out in West Tankers. Males J also considered that the opinion of the AG on this point was “fundamentally flawed”.

It should not be thought, however, that the claimant in this case was without any remedy in respect of the Cyprus proceedings. Males J confirmed that the claimant could:

(a) Seek an anti-suit injunction from the arbitral tribunal (n.b. the CJEU in Gazprom confirmed that the (old) Brussels Regulation would allow the enforcement of such an injunction in the EU Courts); and

(b) Seek to recover damages in respect of any losses caused to it as a result of the Cyprus proceedings from the arbitral tribunal.

The impact that Brexit will have on the English Court’s ability to grant anti-suit injunctions remains to be seen. If the UK were to follow Denmark, Iceland, Norway and Switzerland and sign up to the Lugano convention (which mirrors the wording of the (old) Brussels Regulation), or something similar, then the position will remain unchanged. But if no terms are agreed, anti-suit injunctions restraining proceedings in EU Member State courts could be back on the table.