West Tankers Inc. v Allianz SPA and Another
| Jurisdiction | England & Wales |
| Judge | Field J |
| Judgment Date | 06 April 2011 |
| Neutral Citation | [2011] EWHC 829 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Claim No 2010 Folio 1265 |
| Date | 06 April 2011 |
[2011] EWHC 829 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
IN AN ARBITRATION CLAIM
Before : Mr Justice Field
Claim No 2010 Folio 1265
Mr David Bailey QC (instructed by Ince & Co) for the Claimant
Mr Stephen Males QC and Ms Sara Masters (instructed by MFB Solicitors) for the Defendants
Hearing date: 11 March 2011
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 Field :
This is an application by the Defendants to set aside the order of Simon J dated 15 November 2010 whereby: (i) leave was granted to the Claimant pursuant to s. 66 (1) of the Arbitration Act 1996 ("the 1996 Act") to enforce an arbitration award dated 12 November 2008; and (ii) judgment was entered against the Defendants pursuant to s. 66 (2) of the 1996 Act in the terms of the award.
The award was made pursuant to an arbitration agreement contained in a charterparty on an amended Asbatankvoy form between Erg Petroli SpA ("Erg") as Charterer and the Claimant as Owner, under which the vessel "Front Comor" was chartered to carry a cargo of crude oil to Erg's refinery in Italy. The Charterparty provided, as did the ISAB/ERG Petroli Clauses incorporated therein, that all disputes arising out of the charter were to be referred to arbitration in London with English law to apply.
Following a collision between the "Front Comor" and a pier at Erg's refinery, claims were asserted by Erg against the Claimant which were referred to arbitration in accordance with the arbitration agreement. As the reference was progressing, the Defendants, who are Erg's subrogated insurers, brought a claim against the Claimant in the Tribunale di Siracusa, in Italy, in respect of the same incident. On 21 March 2005, Colman J granted an anti-suit injunction restraining the Defendants from taking any steps to prosecute their claims except by way of London arbitration. On an appeal direct to the House of Lords, their Lordships referred to the ECJ the question whether it was consistent with EC Regulation 44/2001 ("the Regulation") for a court of a Member State to make an order to restrain a person from commencing or continuing proceedings in another Member State on the ground that such proceedings are in breach of an arbitration agreement. 1 At the same time, their Lordships made it very clear that they thought that this question should be answered in the affirmative.
In the reference the Claimant denied liability and counterclaimed for a declaration against Erg and the Defendants that it was under no liability arising out of the collision with the pier; and on 7 May 2008 Andrew Smith J ordered and directed that the Defendants were bound by the arbitration agreement and that the dispute between Erg, the Claimant and the Defendants was to be determined as a single reference by the arbitral tribunal that had already been appointed.
Although Erg continued to participate fully in the reference, the Defendants declined to take any part in the London arbitration.
On 12 November 2008, the arbitral tribunal 2 published its third final award in which, inter alia, it held and declared that the Owners (the Claimant) were under no liability to the Insurers (the Defendants) in respect of the collision. 3
It is this award that Simon J gave leave to enforce as a judgment.
On 10 February 2009, the ECJ answered the question referred to it by the House of Lords in the negative, holding that an anti-suit injunction enforcing an arbitration agreement was incompatible with the Regulation. 4
Following the subsequent discharge of the anti-suit injunction, the Defendants have continued to prosecute the proceedings brought in the Tribunale di Siracusa despite the arbitral tribunal's third final award. In these proceedings, in which the issues at stake are the same as those in the reference, the Claimant has denied liability and has denied that the court has jurisdiction.
The Claimant is concerned that the Defendants may obtain a judgment in their favour from the Tribunale di Siracusa and then seek to have that judgment recognised and enforced in England pursuant to Chapter III of the Regulation. The Claimant apprehends that on the back of such a judgment, the Defendants will seek to enforce in England a Club Letter of Undertaking subject to English law and to the exclusive jurisdiction of the English Courts which, by a side letter agreement, has been made applicable to the Claimant's liabilities (if any) to the Defendants. It is these concerns that are behind the Claimant's application to have the award enforced as a judgment, the thinking being that once the award has been converted into a judgment, any subsequent Italian judgment in favour of the Defendants would not be recognised in England pursuant to Article 34 (3) of the Regulation which provides:
A judgment will not be recognised:
…..
3. if it is irreconciliable with a judgment given in a dispute between the same parties in the Member State in which recognition is sought.
The Claimant also intends to resist enforcement of any judgment against it given by the Tribunale di Siracusa by relying on Art 34 (1) of the Regulation on the ground that recognition of such a judgment is manifestly contrary to public policy in England and Wales.
Section 66 (1) and (2) of the 1996 Act provide:
(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 given, judgment may be entered in terms of the award.
When making the order giving leave to enforce the award, Simon J said:
So far as the s. 66 application is concerned, I am satisfied that this is an appropriate case and the Tribunal had jurisdiction to make the award, as indeed appears from the order of the House of Lords, to which I have been referred. I am also satisfied that
there is utility in making the order to protect the integrity of the arbitral process and the award, and there is no real ground for doubting the validity of the order, at least at this stage.
The relevant part of the judgment ordered to be entered by Simon J was a declaration "that the Claimant is under no liability (whether in contract or tort or otherwise howsoever) to the Defendants 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."
Mr Males QC for the Defendants argued that leave can only be given under s. 66 (1) & (2) if a judgment in terms of the award would be capable of being "enforced" by use of one or more of the available means of execution, such as a writ of fi.fa. or a charging order or a third party debt order. Since a declaratory judgment is no more than a declaration of the parties' rights, it is not susceptible, argued Mr Males, to being enforced through the established execution process, except in highly exceptional circumstances such as obtained in Webster v Southwark London Borough Council [1983] QB 698 (see below). No such exceptional circumstances exist in the instant case. It follows that the court had no power to make the order it did under s. 66 (1) & (2) of the 1996 Act.
Mr Males relied on the decision of the Court of Appeal in Margulies Brothers, Ltd v Dafnis Thomaiedes & Co (UK) Ltd [1958] 1 Lloyd's Rep 205. Here, a dispute concerning cocoa deals had been referred to an arbitrator and the victorious party had obtained leave to enforce the resulting award, as amended by the London Cocoa Association Appeal Board, under s.26 of the Arbitration Act 1950 5. The award provided that certain identified contracts should be applied against certain other identified...
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