Arbitration agreements — for once, perhaps we should be the world’s policeman

Whatever the position as regards English jurisdiction clauses, we’ve known for nigh on a quarter-century that you can’t get an ASI in London to protect the agreed jurisdiction of a foreign court. In 1998 Airbus Industrie G.I.E. v Patel [1999] 1 A.C. 119, our judges firmly eschewed the idea that they should operate as a kind of Global Good Litigation Police, and said that that foreign fora wanting to guard their jurisdiction as a choice of place to litigate could be expected to do their own dirty work.

But what about arbitration? Does a similar rule apply to complaints that a defendant is blithely suing away in Ruritania under a contract containing on the face of it a clause calling for arbitration in Utopia? A decision a week ago from Sir Nigel Teare suggests a possible Yes.

In G v R [2023] EWHC 2365 (Comm) suit was brought in Russia on a performance bond governed by English law. The claimant pointed out that the bond provided for any disputes to be settled by ICC arbitration in Paris, and to make sure this happened sought an ASI from the High Court. Could it get it? The answer was a fairly resounding no. In fact the claimant fell at the first fence; having failed to show that the agreement to arbitrate, as against the main contract, was governed by English law, he failed to seise the court of the matter in the first place.

But apart from that, even if the contract to arbitrate had been governed by English law, the judge thought England was not shown to be the appropriate jurisdiction. The fact that England could grant ASI relief whereas the French court, as the court of the seat, could not, went for little: the parties having chosen a French seat, there was nothing wrong with saying that having made their bed they should lie in it, and thus be stuck with the limited remedies available in France. Nor was there much relevance in a (hypothetical) English governing law, even if that had been chosen, since there was unlikely to arise any serious issue of English law that it would be difficult for a foreign tribunal to determine.

We have, if we may say so with great respect, our doubts about this decision.

First, there is an argument that if parties choose to have an arbitration agreement governed by English law, that should incline a court in favour of doing their best to make available the remedies normally applying in English law for breach of it. If so it should actually be a strong pull in favour of the English courts being an appropriate venue. The parties in G v R, had they (as the claimant argued) chosen English law as the lex arbitri, would one suspects have been somewhat nonplussed at the information that the English courts were nevertheless closed to them as an inappropriate forum. To that extent, the differing view of the Court of Appeal on an interlocutory appeal in SQD v QYP, decided the day before G v R (and noted here), and also a similarly divergent view expressed in March this year by Calver J (noted here), seem to carry more conviction.

Secondly, unlike choice of court agreements, there is something approaching an agreed international regime in force for international arbitration agreements under the New York Convention, which very strongly favours giving the most robust protection possible to such agreements. (Indeed, it was the notoriously casual attitude of the Russian courts towards the New York Convention that spawned the satellite litigation in G v R in the first place.) There is something to be said for an “all hands to the pumps” approach here, with the English courts doing their best to uphold the New York system.

This issue is clearly heading fast towards the Court of Appeal, if not further. Meanwhile, what should practitioners do if they wish to feel secure in reserving their seat on the Eurostar for that ICC session in Paris? First, they must make clear, preferably expressly, that the lex arbitri is English – something doubly important, if the Law Commission’s recommendation is enacted that the presumptive lex arbitri should always be that of the seat, rather than that of the matrix contract.

They should also – as some already do — expressly confer at least non-exclusive jurisdiction on the English court in matters related to the arbitration agreement. Not only will this make service out easier: it will make it much harder for another party to deny that the English court is indeed the appropriate one to seek relief in. True, the parties cannot force the court by agreement to exercise its discretion in favour of the always-discretionary remedy of an injunction. But they can sure use tactful means to smooth its way to that destination.