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West Tankers Inc. v Allianz SPA and Another

Judgment Business Law Reports Cited authorities 21 Cited in 31 Precedent Map Related
Vincent
JurisdictionEngland & Wales
JudgeLord Justice Toulson,Lord Justice Lloyd,Lord Justice Carnwath
Judgment Date24 January 2012
Neutral Citation[2012] EWCA Civ 27
Docket NumberCase No: A3/2011/1118
CourtCourt of Appeal (Civil Division)
Date24 January 2012
Categories

[2012] EWCA Civ 27

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT, COMMERCIAL COURT

Field J

[2011] EWHC 829 (Comm)

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Carnwath

Lord Justice Lloyd

and

Lord Justice Toulson

Case No: A3/2011/1118

Between:
West Tankers Inc
Respondent
and
(1) Allianz SPA
(2) Generali Assicurazione Generali SPA
Appellants

Mr Stephen Males QC and Miss Sara Masters (instructed by MFB Solicitors) for the Appellants

Mr David Bailey QC and Mr Marcus Mander (instructed by Ince & Co LLP) for the Respondent

Hearing date: 22 November 2011

Lord Justice Toulson

Introduction

1

The question for the court is whether there is power under section 66 of the Arbitration Act 1996 to order judgment to be entered in the terms of an arbitral award in a case where the award is declaratory in form and more particularly, as in the present case, where it takes the form of a negative declaration, i.e. a declaration that the successful party has no legal liability to the other party in respect of the subject matter of the arbitration.

2

Section 66 provides:

1. An award made by the tribunal pursuant to an arbitration agreement may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect.

2. Where leave is so given, judgment may be entered in terms of the award.

…

4. Nothing in this section affects the recognition or enforcement of an award under any other enactment or rule of law, in particular under Part II of the Arbitration Act 1950 (enforcement of awards under the Geneva Convention) or the provisions of Part III of this Act relating to the recognition and enforcement of awards under the New York Convention or by an action on the award.

3

The underlying dispute is between the insurers of voyage charterers of the vessel Front Comor and the vessel's owners about responsibility for a collision during the voyage charter. The collision was with a pier owned by the charterers and caused extensive damage rendering the berth unusable for a lengthy period. The insurers were subrogated to any claims of the charterers against the owners. The arbitrators appointed under the charter party found that the owners had contractual immunity, under the terms of the charterparty, from responsibility to the charterers for the damage and made an award declaring that the owners were under no liability to the charterers' insurers in respect of the collision.

4

On 15 November 2010, on a without notice application by the owners, Simon J ordered that the owners should be permitted pursuant to section 66(1) of the Act to enforce the declaratory award in their favour and that:

"Pursuant to section 66(2) of the Arbitration Act 1996, judgment be entered against the defendants in terms of the said award, namely a declaration that the [owners] are under no liability (whether in contract or in tort or otherwise howsoever) to the [charterers and their insurers] in respect of the collision between the vessel Front Comor and the pier (and mooring dolphins) at Erg Petroli's Installation at Santa Panagia, Sicily on 8 August 2000."

5

An application by the insurers to set aside the order of Simon J was dismissed by Field J in a judgment dated 6 April 2011 [2011] EWHC 829 (Comm) [2011] 2 Lloyd's Rep 117 but he gave the insurers leave to appeal. The arguments presented on both sides have been clear, succinct and well-focused.

6

The issue might at first sight appear to be arcane. Section 48 of the Act provides that an arbitral tribunal may make a declaration as to any matter to be determined in the proceedings. Section 58 provides that, unless otherwise agreed by the parties, an award made by the tribunal pursuant to an arbitration agreement is final and binding both on the parties and on any persons claiming through or under them, which plainly includes a subrogated insurer. In those circumstances, an independent observer might think it a pointless question whether such an award can be turned into a judgment of the court, since it is binding as a declaration of rights in any event, and in most cases he would be right. But in this case the owners perceive that there may be a possible advantage to them in having the award in the form of a judgment and the insurers evidently perceive a risk that the owners may be right. The reason has to do with a jurisdictional battle which has already taken the case to the House of Lords ( West Tankers Inc v RAS Reunione di Sicurita Spa [2007] UKHL 4, [2007] 1 Lloyd's Rep 391) and to the European Court of Justice ( Allianz Spa v West Tankers Inc, Case C-185/07, [2009] 1 AC 1138).

The Italian proceedings

7

While the arbitration was proceeding, the charterers' insurers brought a claim against the owners in the Tribunale di Siracusa in respect of the same incident. Colman J granted an anti-suit injunction restraining the insurers from taking any steps to prosecute their claims except by way of London arbitration. The House of Lords referred to the ECJ the question whether it was consistent with the Brussels Regulation (EC Regulation 44/2001) for the court of a member state to make an order restraining a person from continuing proceedings before the courts of another member state on the ground that such proceedings would be contrary to an arbitration agreement. In making the reference Lord Hoffmann and Lord Mance set out reasons why they considered that it should be permissible to do so. Lord Hoffmann said at paragraph 17:

"People engaged in commerce choose arbitration in order to be outside the procedures of any national court. They frequently prefer the privacy, informality and absence of any prolongation of the dispute by appeal which arbitration offers. Nor is it only a matter of procedure. The choice of arbitration may affect the substantive rights of the parties, giving the arbitrators the right to act as amiablescompositeurs, apply broadly equitable considerations, even a lex mercatoria which does not wholly reflect any national system of law. The principle of autonomy of the parties should allow them these choices."

8

In a lengthy and fully reasoned opinion Advocate General Kokott recognised the importance of party autonomy but she disagreed that an anti-suit injunction provided an appropriate mechanism for its enforcement.

9

The Advocate General cited, at paragraph 49, the statement of the ECJ in Van Uden Maritime BV v Kommanditgesellschaft in Firma Deco-Line ( case c-391/95) [1998] ECR 1–7091, para 24, that where parties have excluded the jurisdiction of the courts in a dispute arising under a contract and have referred that dispute to arbitration, there are no courts of any state that have jurisdiction as to the substance of the case for the purposes of the Brussels Regulation. That statement, she observed, is certainly correct, but the justification for the exclusive jurisdiction of the arbitral body requires an effective arbitration agreement covering the subject matter concerned.

10

The Advocate General expressed concern that the effect of an anti-suit injunction would prevent the court of the member state in which litigation was commenced from considering the validity of the arbitration agreement and she was also concerned about the possible repercussions if member states were to issue anti-suit injunctions in such circumstances. At paragraph 71 she acknowledged the deficiency of the present state of the Brussels Regulation in that there is no mechanism to co-ordinate its jurisdiction with the jurisdiction of the national courts in relation to arbitration, since arbitration is not within the scope of the Regulation. She considered that a unilateral anti-suit injunction was not a suitable measure to rectify the situation, but she did stress that divergent decisions should be exceptional, because if an arbitration clause is clearly formulated and not open to any doubt as to its validity, the national courts have no reason not to refer the parties to the appointed arbitral body.

11

The Grand Chamber of the Court agreed with the Advocate General but stated its reasons much more shortly. It too recognised the importance of party autonomy, observing at paragraph 33 that its conclusion (that an anti-suit injunction was not compatible with the Regulation) was:

"…supported by article 2(3) of the New York Convention, according to which it is the court of a contracting state, when seised of an action in a matter in respect of which the parties have made an arbitration agreement, that will, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed."

12

The anti-suit injunction preventing the insurers from prosecuting their claim against the owners in the Tribunale di Siracusa was therefore set aside. The independent observer might expect the principles recognised by the Advocate General and the Grand Chamber to result in the dismissal of the insurers' claims in Italy, since (i) there has never been cause to doubt that the issue of liability between the owners and the charterers for the collision fell within the arbitration agreement, (ii) that issue has been determined by the arbitrators appointed under the contract and (iii) any subrogated claims of insurers are ex hypothesi dependant on the owners having a liability against the insured giving rise to subrogated rights in the insurer. However, that is not the view of the insurers, presumably based on advice which they have obtained, and they intend to proceed with their action against the owners. In these circumstances the owners want the...

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