Declarations

Ever since the decision of the European Court of Justice in Allianz SpA v West Tankers Inc (The Front Comor) Case C-185/07 [2009] 1 Lloyd’s Rep 413, ruling that a court may not grant an anti-suit injunction to prevent a person from pursuing judicial proceedings elsewhere in the European Union where those proceedings are in breach of an English arbitration clause, the search has been on to find a device which removes the risk that a foreign judgment given in breach of the clause has to be recognised and enforced in England under the Brussels Regulation, Council Regulation (EC) No 44/2001. A partial solution has now been found. Rather than seeking to restrain the foreign proceedings, the claimant in the arbitration must press ahead with the arbitration, obtain an award and then apply to the English court for an enforcement order. Such an order operates as a judgment of the English court, which means that any subsequent inconsistent judgment from another EU court does not have to be afforded recognition. The main difficulty with this procedure is that the party bringing the arbitration proceedings may be the natural defendant, in which case the award can consist of no more than a declaration that that party is under no legal obligation to the other. The question for the Court of Appeal in West Tankers Inc v Allianz SpA (The Front Comor) [2012] 1 Lloyd’s Rep 398 was whether it is possible to obtain a judgment enforcing a declaratory award. That question, much to the relief of the UK arbitral community, was given an affirmative answer.

West Tankers: the facts

This case has featured in Lloyd’s Law Reports on so many occasions that its facts will now be familiar to many readers. The vessel Front Comor was chartered by its owners to voyage charterers under a charterparty which contained a London arbitration clause. The vessel collided with a pier and caused extensive damage. The insurers indemnified the charterers and exercised subrogation rights against the owners by suing in the Italian courts. Attempts, by means of anti-suit injunction, to restrain the insurers from pursuing the claim in Italy in the light of the arbitration clause were rejected by the European Court of Justice on the ground that the Italian court was first seised of the dispute and was the sole court entitled to rule on the validity of the arbitration clause. In the meantime the charterers had commenced arbitration proceedings for the uninsured sum, and the arbitrators had ruled by means of declaration that the owners were immune by the terms of the charterparty. The outcome was that the owners had an arbitral decision that they were not liable, but subrogated insurers were pursuing a claim based on the same facts (albeit for a different sum) in the Italian courts.