West Tankers Inc. (Claimant/Appellant) v (1) Allianz SpA (Formerly Known as Riunione Adriatica Sicurta) (2) Generali Assicurazioni Generali SpA
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Flaux |
| Judgment Date | 04 April 2012 |
| Neutral Citation | [2012] EWHC 854 (Comm) |
| Docket Number | Case No: 2011 FOLIO 564 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 04 April 2012 |
[2012] EWHC 854 (Comm)
The Honourable Mr Justice Flaux
Case No: 2011 FOLIO 564
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
David Bailey QC, Marcus Mander and Elizabeth Lindesay (instructed by Ince & Co LLP) for the Appellant
Stephen Males QC and Sara Masters (instructed by MFB Solicitors) for the Respondents
Hearing dates: 26 March 2012
Introduction and the issue of law
The Appellant appeals pursuant to section 69 of the Arbitration Act 1996 with the permission of David Steel J from the Final Partial Award on Issues 8 and 9 of a majority of the arbitration tribunal (Sir Brian Neill and Professor Alberto Santa Maria, Michael Baker-Harber dissenting) dated 14 April 2011.
Issues 8 and 9 were as follows:
" Issue 8: Are [the Respondents] liable to [the Appellant] in damages in respect of the legal fees and expenses reasonably incurred in connection with the Italian proceedings?
Issue 9: Are [the Respondents] liable to indemnify [the Appellant] against an award made against Owners in the Italian proceedings which is greater than the liability of [the Appellant] as established in the arbitration?"
The majority of the tribunal answered both those issues in the negative. The issue of law on which the Appellant was given permission to appeal was as follows:
"whether the arbitral tribunal is deprived of jurisdiction to award damages for breach of an arbitration agreement by reason of EU law?"
However, Mr David Bailey QC, who appeared for the Appellant accepted at the hearing of the appeal that the issue should be re-formulated as:
"whether the arbitral tribunal is deprived of jurisdiction to award equitable damages for breach of an obligation to arbitrate by reason of EU law?"
The background to the proceedings
The dispute between the parties arises out of a collision on 8 August 2000 between the Appellant's vessel "Front Comor" and a pier in Sicily belonging to Erg Petroli S.p.A. ("Erg"), who had chartered the vessel from the Appellant. The charterparty contained an arbitration clause which provided for any and all disputes to be referred to London arbitration, with English law to apply. Erg asserted claims against the Appellant for its losses arising out of the collision, and obtained security in the form of a letter of undertaking from the Appellant's P&I insurer. The dispute was referred by Erg to arbitration in London pursuant to the arbitration clause. The Appellant denied liability and counterclaimed for a declaration that it was under no liability to Erg arising out of the collision.
Erg was insured against damage to its jetty and various consequential losses by the Respondent insurers pursuant to contracts of insurance which were governed by Italian law. The Respondents paid Erg up to the policy limits, more than 15 million Euros. On 6 October 2003, the Respondents commenced judicial proceedings against the Appellant in the Tribunale di Siracusa in Sicily, seeking to recover the sums which they had paid to Erg from the Appellant in reliance on their rights of subrogation under the Italian Civil Code.
The Appellant sought an anti-suit injunction from the English Commercial Court to restrain the Respondents from pursuing their claim in Italy in breach of the arbitration agreement, which was granted by Colman J and made permanent on 21 March 2005 following a full hearing in which the Respondents participated. By paragraph 2 of his Order, Colman J also made declarations that (a) the Respondents were obliged to refer any and all disputes arising out of the Charterparty to arbitration in London in accordance with the terms of the charterparty and (b) the claims raised in the Italian proceedings were disputes arising out of the charterparty and accordingly were to be determined in London arbitration.
By his judgment, reported at [2005] 2 Lloyd's Rep 257, Colman J decided (1) that the issue whether by subrogation the Respondents became transferees of the bare right of Erg in delict or such right of action became enforceable only in accordance with the arbitration agreement was to be determined by English law as the law of the arbitration agreement and (2) under English law, the obligation to arbitrate the disputes was an inseparable component of the subject matter transferred to the Respondents by subrogation. On both those points the learned judge followed and applied the decision of the Court of Appeal in The Jay Bola [1997] 2 Lloyd's Rep 279 and specifically the judgment of Hobhouse LJ at 285–6.
There was a "leap frog" appeal by the Respondents from Colman J's decision to the House of Lords, the Respondents contending that Colman J. had no jurisdiction to grant an injunction restraining a person from commencing or prosecuting proceedings in a court of another member state where the court in question had jurisdiction to entertain the proceedings under the Council Regulation (EC) 44/2001 ("the Regulation"). On 21 February 2007, the House of Lords referred the question whether such an injunction was consistent with the Regulation to the European Court of Justice ("ECJ").
Whilst the matter was pending before the ECJ, the Appellant continued with the arbitration, obtaining an Order from the Commercial Court on 3 October 2007 that the Respondents be added as claimants and that a tribunal be constituted pursuant to section 18 of the Arbitration Act 1996, to hear the disputes between the parties, consisting of Mr Baker-Harber, the late Mr David Johnson QC and Sir Brian Neill ("the first tribunal"). In January 2008, that tribunal heard an application by the Appellant for declarations to the same effect as those made by Colman J and for an order restraining the Respondents from taking any further steps in the Italian proceedings. The Respondents took no part in that hearing. By a Final Partial Award ("the first Award") dated 14 May 2008, the first tribunal made the declarations and order sought.
Thereafter, the claim by Erg against the Appellant for damages came on for hearing before the first tribunal on 30 June 2008 and lasted 7 days. Both parties were represented by solicitors and counsel, but again the Respondents took no part in the hearing.
Whilst the first tribunal was considering the terms of its Award, the Opinion of the Advocate General Kokott was delivered on 4 September 2008. She concluded that the question referred should be answered that the Regulation did preclude the courts of a member state from making an order restraining a person from commencing or continuing proceedings before the courts of another member state because, in the opinion of the court, such proceedings are in breach of an arbitration agreement. I will consider her Opinion in more detail below.
In the light of that Opinion, the first tribunal decided to stand over certain issues in the arbitration that arose only between the Appellant and the Respondents (namely what are now described as Issues 8 and 9) until after the ECJ had given its judgment. However, on 7 October 2008, the first tribunal published a further Partial Final Award ("the second Award") by which it held and declared that the Appellant was under no liability whatsoever (in contract, tort or otherwise) to Erg in respect of the collision. In the alternative, if it was wrong in finding no liability, the Appellant was entitled to limit its liability under the Convention on Limitation of Liability for Maritime Claims 1976.
On 14 October 2008, the Appellant applied to the first tribunal under section 57 of the Arbitration Act 1996 for further findings. The Appellant contended that, although it had agreed to Issues 8 and 9 being stood over, it had not agreed that all maters in dispute with the respondents should be stood over. That application was considered at an oral hearing on 3 November 2008, of which the Respondents had notice but did not attend. The first tribunal then made a further Partial Award ("the third Award") dated 12 November 2008 in which it made the same declarations as to non-liability, alternatively limited liability of the Appellant to the Respondents as it had of the Appellant to Erg in its Award of 7 October 2008.
The ECJ handed down its judgment on 10 February 2009. It reached the same conclusion as had the Advocate General in her Opinion, that for a court in a member state to grant an anti-suit injunction restraining a person from commencing or continuing proceedings before the courts of another member state on the ground that such proceedings would be contrary to an arbitration agreement was incompatible with the Regulation. I will consider the judgment in more detail below.
Following the judgment, the arbitration proceedings returned to the House of Lords. Written submissions were made by both parties as to what consequential orders should be made. The House of Lords made an Order allowing the appeal by the Respondents and discharging the anti-suit injunction made by Colman J on 21 March 2005. However, the Order continued:
"Nothing in this Order affects the declarations contained in paragraph 2 of the Order of [Colman J] … of 21 March 2005 [namely the declarations referred to at paragraph 6 above] which remain binding and in full effect."
Thereafter on 15 November 2010, Simon J granted leave to enforce the third Award as a judgment under section 66 of the Arbitration Act 1996. The Respondents applied to set aside that...
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