West Tankers Inc. v Ras Riunione Adriatica Di Sicurta Spa and Others
| Jurisdiction | England & Wales |
| Judge | COLMAN J. |
| Judgment Date | 21 March 2005 |
| Neutral Citation | [2007] EWHC 2184 (Comm),[2005] EWHC 454 (Comm) |
| Docket Number | Case No: 2004 FOLIO 574 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 21 March 2005 |
[2005] EWHC 454 (Comm)
Colman J.
Case No: 2004 FOLIO 574
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Mr Timothy Brenton QC and Mr David Bailey (instructed by Ince & Co) for the Claimant
Mr Stephen Males QC and Ms Sara Masters (instructed by Moore Fisher Brown) for the Defendant
Hearing dates: 1 and 2 March 2005
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice Colman::
Introduction
This is an application to set aside an interim anti-suit injunction granted by Gross J. on 20 September 2004. By that order the defendant Insurers were restrained from proceeding with their claim against the claimant Owners of the Front Comor before the Tribunale di Syracuse in Sicily. The Insurers were not present at the hearing before Gross J.
The Insurers had insured Erg Petroli SpA ("Erg") who were owners of an oil refinery in Syracuse. Erg were also charterers of the vessel Front Comor under an Asbatankvoy charterparty dated 24 July 2000. The claimants were the Owners of the vessel. In August 2000 the vessel collided with an oil jetty at the Erg refinery and caused a great deal of damage. The jetty was put out of operation. Erg suffered losses not only in respect of repair costs, but also by reason of disruption of refinery operations and liabilities to pay demurrage to third parties. The Insurers have paid to Erg a total of Euros 15,587,292.66 under the policies.
The charterparty contained an agreement to arbitrate in clause 24 which provided as follows:
"Any and all differences and disputes of whatsoever nature arising out of this charter shall be put to arbitration in the City of New York or in the City of London whichever place is specified in Part 1 of this charter pursuant to the laws relating to arbitrations there in force before a board of three persons, consisting of one arbitrator to be appointed by the owners, one the charterer and one by the two so chosen."
The place specified in Part I was London. It also expressly provided by line 105 of the ISAB/ERG PETROLI CLAUSES that English Law was to apply.
In August 2000 Erg commenced arbitration proceedings against the Owners in London, confining their claims to uninsured losses. In respect of the insured losses the Insurers have in their own name commenced court proceedings against the Owners in the Tribunale di Syracuse in Sicily. In so doing they rely on their rights of subrogation under Article 1916 of the Italian Civil Code and claim the amount which they paid to Erg. These proceedings were started on 6 October 2003. They were served on the Owners' registered office in Liberia but do not appear to have come to the Owners' attention until May 2004. The Insurers then arrested the vessel at Fujairah and security was provided by the Owners' hull insurers extending to the Insurers' claim security which it had already put up to secure Erg's claim in the arbitration.
It is clear that the issues of liability which arise between the Insurers and the Owners in the Syracuse court proceedings are substantially the same as those which arise in the arbitration. The main issue is in both cases whether the Owners are protected by the errors of navigation exclusion in clause 19 of the charterparty or by Article IV rule 2(a) of the Hague Rules. Although Erg's claim is confined to its uninsured losses, there is a complete overlap between the arbitration and the Syracuse proceedings in as much as the Owners counterclaim a declaration in the arbitration that they are under no liability for damage caused by the collision.
In the arbitration the pleadings are closed and disclosure is substantially complete.
In the Syracuse court proceedings the first hearing was fixed for 16 February 2004 but was adjourned by the court because the lawyers were on strike. On 5 October 2004 the Owners entered their appearance and rejoinder by which they disputed jurisdiction and applied for a stay on the grounds of the arbitration agreement. At a hearing on 8 October 2004 the court was informed of the injunction granted by Gross J. and the Owners asked the court to suspend its proceedings. The Insurers did not take part in that hearing so as not to be in breach of the injunction. The Court on that occasion set 1 April 2005 as the date for the next hearing but the judge is not recorded as having made any reference to the injunction. He clearly declined to suspend the proceedings in the sense of granting a stay.
The Insurers put forward the following grounds for their application for discharge of the injunction:
"(1) Because the proceedings before the Tribunale di Syracuse ("the Italian proceedings") are civil or commercial matters falling within the scope of the Jurisdiction Regulation, the anti-suit injunction is incompatible with the Jurisdiction Regulation in the light of Turner v. Grovit [2004] 2 Lloyd's Rep 169.
(2) Because the proceedings before this Court are civil or commercial matters falling within the scope of the Jurisdiction Regulation, the anti-suit injunction is incompatible with the Jurisdiction Regulation in the light of Turner v. Grovit, supra.
(3) As a matter of discretion (in the light of the reasoning in Turner v. Grovit, supra, Article II of the New York Convention and the fact that issues of Italian Law are said to arise), the court should not grant an anti-suit injunction.
(4) Because the subrogated Insurers are not bound by the arbitration clause contained in the Charterparty."
In advancing these grounds the Insurers recognise that this court is bound by the decision of the Court of Appeal in Through Transport Mutual Insurance Association (Eurasia) Ltd v. New India Assurance Association Co Ltd [2005] 1 Lloyd's Rep 67. However, they reserve their right to argue that the Through Transport Case was wrongly decided. In particular, they wish to argue that:
i) the Syracuse Court proceedings, being civil or commercial proceedings, fall within the scope of EU Regulation 44/2001;
ii) the arbitration exception in Article I.2(d) of the Regulation does not apply to those proceedings nor does it exclude the application of the Regulation from the present proceedings in the English courts;
iii) the Regulation (Article 71) covers the situation in this case by preserving the operation of the New York Convention 1958;
iv) the application of Turner v. Grovit to the present case has the result that it could be contrary to principle for the English Court to assume jurisdiction to determine whether the Insurers should continue to pursue the Syracuse proceedings it being for the Owners to raise objections to jurisdiction in those proceedings and for the Syracuse Court to determine that issue.
The Insurers alternatively submit that, quite apart from the correctness or otherwise of the Through Transport decision, this court should discharge the injunction because:
i) upon this application the issue whether the Insurers are bound by the arbitration agreement is governed by Italian law—the law of the insurance contracts;
ii) under Italian law, on the evidence of the Insurers' expert, a subrogated insurer would not be bound by an arbitration agreement between the assured and a third party debtor.
If the issue whether the Insurers are bound is not governed by Italian Law or Italian Law provides that they are so bound, then it is submitted that as a matter of discretion the injunction should be discharged because:
i) it would be the duty of the Syracuse Court to stay the proceedings before it if it concluded that the Insurers were bound to arbitrate, having regard to Article II.3 of the New York Convention;
ii) that being the jurisdictional duty primarily cast by the Convention on the Syracuse Court, the English court should not pre-empt that jurisdiction for to do so would be inconsistent with the philosophy underlying Turner v. Grovit.
Finally, it is submitted that, if English law applies, the Insurers are not in actionable breach of the arbitration agreement and consequently in accordance with the decision in the Through Transport Case, supra, the approach to anti-suit injunctions identified by the Court of Appeal in The Angelic Grace [1995] 1 Lloyd's Rep 87 does not apply and this court must approach the issue of discretion to grant an injunction, not on the basis that strong cause must be shown for its discharge but that, as a matter of general discretion, such an injunction is neither just nor necessary. In particular, the tort is governed by Italian Law and it is Italian Law which governs the issue of subrogation. In this discretionary exercise it is also necessary to bring Turner v. Grovit or comity principles into the discretionary balance.
I therefore consider the following issues which arise on this application:
i) What is the law which governs the question whether the subrogated insurers are bound by the arbitration agreement?
ii) How that law is to be applied on the facts of this case.
iii) Findings as to Italian Law on the effect of subrogation.
iv) Should the Anti-Suit Injunction be discharged? The Insurers' submissions.
v) The Attitude of the Italian Courts to anti-suit injunctions and its relevance.
vi) Article 11.3 of the New York Convention.
vii) The Insurers' Submission that there was no actionable breach of the Agreement to arbitrate.
The Law Governing the Issue of Transfer by Subrogation of the Duty to Arbitrate.
It is submitted on behalf of the Insurers that the body of law which determines the question whether subrogated insurers are bound by the...
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