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The Bar
Arbitration: Running the line
Author: Harris Bor
Published: 15/11/2007
The Bar
Arbitration: Running the line
Author: Harris Bor
Published:
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Arbitration is widely recognised to be an autonomous system for the settlement of disputes, where the parties’ choice is paramount, and the tribunal is given power to decide its own competence. In this scheme, national courts at the seat of arbitration are required to limit their interventions to supporting the arbitral process (See the New York Convention, Article II).
Recognition of arbitration agreements
On 17 October, 2007, the House of Lords delivered its decision in Premium Nafta Products v Fili Shipping [2007]. The case involved the construction of an arbitration clause in a number of charter parties. The issues were whether:
- the arbitration clause could cover the issue of whether the contract was procured by bribery; and
- one party could be bound to participate in an arbitration when it alleges that, but for the arbitration, it would never have agreed to arbitrate.
On the first issue, the Lords confirmed that courts should start from the assumption that the parties, as rational businessmen, are likely to have intended for any dispute arising out of their relationship to be decided by the same tribunal. The clause should be construed in accordance with this presumption unless specific language directs otherwise.
On the second issue, the Lords relied on the well-established principle of separability, namely that the arbitration agreement must be treated as being distinct from the main contract. The effect of this is that:http://www.ukassignment.org/daixieEssay/falvessaydaixie/
- the invalidity or recission of the main agreement will not automatically entail the invalidity of the arbitration agreement; and
- parties are presumed to have intended that the question of whether there was a concluded agreement to be decided
by arbitration.
It follows that English courts will no longer rely too heavily on overly technical approaches when construing the existence and scope of arbitration clauses but seek to uphold the agreement to arbitrate wherever practically possible. This must be welcome news for parties seeking to protect their agreement to arbitrate.
Anti-arbitration injunctions
One danger to the arbitral process comes from courts preventing parties or arbitrators by injunction from commencing or participating in arbitration proceedings. Abuse is most likely to occur where a party approaches its own court, which is not a court at the seat of arbitration, for assistance. According to the International Court of Arbitration, in 2006, 22 out of 31 cases involving anti-suit injunctions involved injunctions granted by national courts of one of the parties.#p#分页标题#e#
English courts award injunctions when they consider it just and reasonable to do so, and where it is held that:
- no injustice to the claimant will be caused; and
- the court is satisfied that the continuation of arbitral proceedings would be oppressive, vexatious or an abuse of process of the court (see Compagnie Nouvelle France Navigation v Compagnie Navale Afrique du Nord [1996].
In Weissfisch v Julius, Weissfisch & Davis [2006] an action was brought to prevent an arbitration in Switzerland. However, the only connection to England was that the sole arbitrator was an English lawyer. The court rejected the application primarily on the basis that the arbitration agreement expressly stated that the seat of arbitration would be Switzerland and the dispute governed under Swiss law. This was not a matter for the English courts.
Although English courts only grant anti-arbitration injunctions in exceptional circumstances, they are not beyond being persuaded to do so even where there are no exceptional circumstances, or England is not the seat of the arbitration (see Nigel Peter Albon v Naza Motor Trading [2007].
Parties might seek to limit the possibility of an anti-arbitration agreement by ensuring the selection of a neutral seat of arbitration, drafting the arbitration agreement in the clearest terms, and selecting arbitrators who are unlikely to be easily intimidated. Parties that have been forced to defend anti-arbitration injunction proceedings might also consider seeking contractual damages for breach of the agreement to arbitrate (see A v B [2007]).
Anti-suit injunctions
Anti-suit injunctions are aimed at preventing or restraining proceedings in courts in breach of an arbitration agreement. They are not aimed at the foreign court but the defendant who has promised through the arbitration clause not to bring foreign proceedings. Since Angelic Grace [1995], English courts generally have felt no diffidence in granting anti-suit injunctions provided that they are sought promptly and before the foreign proceedings are too far advanced.
In Starlight Shipping v Tai Ping Insurance [2007], an English court granted an anti-suit injunction to restrain Chinese proceedings commenced in breach of an arbitration clause found in a bill of lading. The basis of the decision was that the parties must be restrained from reneging on their promise to arbitrate. The court rejected the submission that the defendants were not bound by the arbitration agreement as a matter of Chinese law.
Anti-suit injunctions are most frequently sought before arbitration proceedings are commenced, but may well be useful to preserve arbitration awards already made. In Noble Assurance v Gerling-Konzern [2007], the English court injuncted a defendant from continuing proceedings in another jurisdiction aimed at nullifying an arbitration award. Similarly, in C v D [2007], the court prevented an insurer from challenging an arbitration award from being challenged in New York, under New York law.#p#分页标题#e#
One conceptual problem is whether arbitration clauses ought to be treated differently from standard jurisdiction clauses.
Under article 27 of Regulation 44/2001, once a court within the European Union (EU) has been seised with a matter, no other court within the EU can interfere, regardless of whether the initiating party has displayed bad faith. Arbitration, however, is expressly excluded from the regulation. The question is whether the term ‘arbitration’ in this context covers all matters relating to arbitration, including the validity of the agreement, or only to procedural matters and enforcement issues. This question is currently before the European Court of Justice (ECJ), following a reference from the House of Lords in Front Comer [2007]. The Lords, when referring the matter commented that in its view, the regulation 44/2001 is unsuited to arbitration “in which the situs and governing law are generally chosen by the parties on grounds of neutrality, availability of legal services and the unobtrusive effectiveness of the supervisory jurisdiction”. We must hope that the ECJ agrees.
Harris Bor is a barrister at Devereux Chambers.
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