The Ball is Rolling: The UK to ratify the Hague Judgments Convention?

On 15 December 2022, the UK government published a public consultation paper on the possible ratification of the Hague Judgments Convention 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (HJC). With the UK-wide call open in all three jurisdictions by 9 February 2023, the Government is seeking expert views from practitioners, academics, businesses, and any other persons with an interest in or who may be affected by cross-border civil and commercial litigation in the UK on its very welcome plan to become a Contracting State to the Convention. Besides the open call and public responses, the officials including experts from the Lord Chancellor’s Advisory Committee on Private International Law will get involved in the consultation before the publication of the outcomes.

The Hague Conference on Private International Law (HCCH) adopted the HJC on 2 July 2019 – 27 years after the initial proposal of a mixed instrument covering both jurisdiction and recognition and enforcement rules. Indeed, to guarantee the effectiveness of court judgments similar to what the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention) ensured for arbitral awards, the HJC has become a game-changer in the international dispute resolution landscape. As the HCCH announced, “the Convention will increase certainty and predictability, promote the better management of transaction and litigation risks, and shorten timeframes for the recognition and enforcement of a judgment in other jurisdictions.”

In August 2022, with the subsequent ratifications of the Convention by the EU and Ukraine, its entry into force became a long-awaited reality and indeed, the Convention is about to enter into force from 1 September 2023 (see my earlier blog post here: Hague Judgments Convention to enter into force! – The Institute of International Shipping & Trade Law (IISTL) Blog).

As the jurisdiction is well-known for its strong legal traditions and robust private international law rules, the UK instantly enhances its routes of international judicial cooperation to ensure certainty and predictability for citizens and businesses involved in cross-border commercial relationships. Most likely, the EU’s opposition to the UK’s application to ratify the Lugano Convention will impede the ratification of the HJC for the provision of continuing civil judicial cooperation.

The HJC provides recognition and enforcement of judgments given in civil and commercial cases excluding the carriage of passengers and goods, transboundary marine pollution, marine pollution in areas beyond national jurisdiction, ship-source marine pollution, limitation of liability for maritime claims, and general average. As a complementary instrument to the Hague Convention on Choice of Court Agreements 2005 (HCCCA), the HJC shares the same goals to ensure commercial certainty and access to justice, serve legal certainty and uniformity by providing free circulation of judgments and parties’ autonomy, also, advances multilateral trade, investment, and mobility. The HJC also aims at judicial cooperation and recognition and enforcement of judgments given by the courts designated in the parties’ agreement, other than an exclusive choice of court agreement whereas the HCCCA applies to exclusive jurisdiction agreements and resulting judgments.

The HJC is the only global instrument for mutual recognition and enforcement of judgments in civil and commercial disputes. It will significantly contribute to legal certainty in the post-Brexit era with its sister instrument HCCCA. Indeed, it is the UK’s turn to take appropriate measures to accede to the treaty for facilitating the free movement of judgments in civil and commercial cases between the UK and the EU.

Following the analysis, the Government will make its final decision on becoming a Contracting State to the HJC and on whether to make any reservations. If signed and ratified, the Convention would be implemented in domestic law under the terms of the Private International Law (Implementation of Agreements) Act 2020, subject to appropriate parliamentary scrutiny. As provided in Articles 28 and 29 of the HJC, the Convention would enter into force for the UK 12 months after the date it deposits its instrument of ratification.

Further details of the paper and consultation questions are available here: Consultation on the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (Hague 2019) – GOV.UK (www.gov.uk).

What’s coming in 2023?

What’s coming in 2023?

Nearly two weeks into the New Year and the IISTL’s version of ‘Old Moore’s Almanack’ looks ahead to what 2023 is going to have in store us.

Brexit. EU Retained EU Law (Revocation and Reform) Bill will kick in at end of the year. It will be a major surprise if the two Conflicts Regulations, Rome I and Rome 2 aren’t retained, but not the Port Services Regulation.

Ebury Partners Belgium SA/NV v Technical Touch BV, Jan Berthels [2022] EWHC 2927 (Comm) is another recent decision in which an ASI has been granted to restrain proceedings in an EU Member State (Belgium) in respect of a contract subject to English jurisdiction.

Electronic bills of lading. Electronic Trade Documents Bill. Likely to become law in 2023 and to come into effect two months after getting Royal Assent. The Law Commission will publish a consultation paper “Digital assets: which law, which court?” dealing with conflicts of law issues in the second half of 2023.

Autonomous vessels. The Department for Transport consultation on MASS and possible amendments to the Merchant Shipping Act 1995 closed in November 2021. Maybe some results in 2023?

Supreme Court cases

Okpabi v Royal Dutch Shell. The case may well go to trial in 2023, although in May 2022 the High Court EWHC 989 (TCC), held it was premature to grant a  Group Litigation Order and directed that each individual claimant should specify additional details to formulate a proper cause of action for the defendants to respond to.

In similar proceedings in the Netherlands in which the Court of Appeal in the Hague gave judgment in January 2021 relating to multiple oil pipeline leaks in the Niger Delta, it was announced just before Christmas 2022 that Shell will pay 15 million euros ($15.9 million) to the affected communities in Nigeria in full and final settlement on a basis of no admission of liability.

The Eternal Bliss appeal to the Supreme Court is likely to be heard in 2023, with possibility of judgment given in 2023.

But there must be a question mark over London Steam-ship Owners’ Mutual Insurance Association Ltd (Respondent) v Kingdom of Spain (Appellant), Case ID: Case ID 2022/0062 where it is stated “This appeal has been adjourned by request of the parties.”

Climate Change

IMO  Two measures aimed at reducing shipping’s contribution to GHG emissions,   EEXI and Cii, both came into force as from 1 January 2023 and will be in the forefront of the minds of those negotiating new time charters.

EU. Shipping is likely to come into the ETS system with the amendments to the 2003 ETS Directive with phasing in from 1 January 2024. Here and here.

BIMCO has produced time charter clauses to deal with all three of these measures.

Ewan McGaughey et al v. Universities Superannuation Scheme Limited is a case involving whether the investments in fossil fuels by a large pension fund in the UK breach the directors’ fiduciary duties and duties towards contributors of the pension fund. On 24 May 2022, the High Court refused permission to bring a derivative action against USSL, but the Court of Appeal gave permission to appeal in October 2022, so a hearing in 2023 is “on the cards”.

European Union

On 15 July 2022, the EU Taxonomy Complementary Climate Delegated Act covering certain nuclear and gas activities came into force on 4 August 2022 and has applied from 1 January 2023. A legal challenge against the Commission before the CJEU by various NGOs and two member states, Austria and/or Luxembourg has been threatened in connection for the inclusion of nuclear energy and natural gas in the Delegated Act. Climate mitigation and adaptation criteria for maritime shipping, were included in the EU Taxonomy Climate Delegated Act adopted in April 2021.

Previous requests from other NGOs asking the Commission to carry out an internal review of the inclusion of certain forestry and bioenergy activities in the EU green taxonomy had already been rejected by the Commission in 2022.

The Corporate sustainability reporting directive came into effect on 16 Dec, 2022

For EU companies already required to prepare a non-financial information statement, the CSRD is effective for periods commencing on or after 1 January 2024. Large UK and other non-EU companies listed on an EU regulated market (i.e. those meeting two of the three following criteria: more than €20 million total assets, more than €40 million net turnover and more than 250 employees) will be subject to the CSRD requirements for periods commencing on or after 1 January 2025. 

UK and other non-EU companies that are not listed in the EU but which have substantial activity in the EU will be subject to the CSRD for periods commencing on or after 1 January 2028.

Finally, a very happy 2023 to all our readers.

ANTI-SUIT INJUNCTIONS: BACK IN STOCK?

On 18 November 2022, the English High Court handed down a judgment in Ebury Partners Belgium SA v Technical Touch BV [2022] EWHC 2927 (Comm) in favour of an anti-suit injunction against the Belgian proceedings breaching the English exclusive jurisdiction agreement. Mr. Justice Jacobs provided some welcome clarification and confirmation of the principles applicable upon breaches of exclusive jurisdiction agreements in the altered legal landscape post-Brexit. Indeed, the decision might be considered a continuing development following the anti-suit injunction granted by the English Commercial Court against the Spanish court proceedings in QBE Europe SA/NV and another v. Generali Espana de Seguros y Reaseguros [2022] EWHC 2062 (Comm).

A brief glimpse of the factual background

The dispute arose between Ebury Partners Belgium SA/NV (Claimant) and Technical Touch and Jan Berthels (Defendants) in April 2021 following their Relationship Agreement for foreign exchange currency services which was consented to electronically through the claimant’s website. The hyperlink attached to the box ticked by Mr. Berthels (director of the company) would have taken onto the webpage containing a pdf file with the terms and conditions of the claimant applicable to their business dealings. Indeed, Clause 27 entitled “Other important terms” included governing law and exclusive jurisdiction clauses as follows:

“[27.11] This Agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation, interpretation, performance and/or termination (including non-contractual disputes or claims) shall be exclusively governed by and construed in accordance with the laws of England and Wales.

[27.12] Each party irrevocably agrees that the courts of England shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this Agreement or its subject matter or formation, interpretation, performance and/or termination (including non-contractual disputes or claims). For such purposes, each party irrevocably submits to the jurisdiction of the English courts and waives any objection to the exercise of such jurisdiction. Each party also irrevocably waives any objection to the recognition or enforcement in the courts of any other country of a judgment delivered by an English court exercising jurisdiction pursuant to this Clause 27.12.”

The parties further concluded a Guarantee Agreement signed by Mr. Berthels as a guarantor regarding TT’s obligations to Ebury. The latter agreement also contained English law and choice of court clauses as follows:

“[15] This guarantee and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by, and construed in accordance with, the law of England and Wales. If any provision hereof or part thereof shall be held invalid or unenforceable no other provisions hereof shall be affected and all such other provisions shall remain in full force and effect.

[16] Each party irrevocably agrees that subject as provided below, the courts of England and Wales shall have exclusive jurisdiction over any dispute or claim arising out of or in connection with this guarantee or its subject matter or formation (including non-contractual disputes or claims). Nothing in this clause shall limit the right of Ebury to take proceedings against the Guarantor in any other court of competent jurisdiction, nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdictions, whether concurrently or not, to the extent permitted by the law of such other jurisdiction.”

When TT failed to pay a margin call and further sums under their Relationship Agreement and no amicable settlement was achieved, TT brought the Belgian proceedings to seek negative declaratory relief and challenge the validity of the two agreements under Belgian law. In response to the Belgian proceedings, Ebury brought an action in England as agreed between the parties. In addition, Ebury also applied for a grant of an anti-suit injunction in breach of the exclusive jurisdiction clause.

A short recap of the judge’s legal reasoning and decision

As expressed by Mr. Justice Jacobs, the arguments brought by the parties – Ebury’s application for an anti-suit order, and the Defendants’ applications challenging the court’s jurisdiction or inviting the court not to exercise it, were pretty much different sides of the same coin.

Indeed, by considering the claimant’s application first, the judge swept away the defendant’s counter arguments. It was emphasised that, while it would not have been possible to grant an anti-suit relief upon the presence of the proceedings at an English and any other European Member State court pre-Brexit, the principles applicable upon such a request were already well-settled. In this context, the court particularly underlined Mr. Justice Foxton’s reasonings in QBE Europe SA/NV v Generali España de Seguros Y Reaseguros [2022] EWHC 2062 (Comm) at para [10]. Indeed, the judgment was based on Section 37(1) of the Senior Courts Act 1981 giving power to the court to grant an anti-suit injunction for restraining foreign proceedings when it was required by the ends of justice, therefore, was “just and convenient”, furthermore, a “high degree of probability” about the existence of a jurisdiction was established.

Being the touchstone of the reasoning, and referring to already established prior authorities, the judge rejected the defendants’ application challenging the English court’s jurisdiction and seeking a stay or a relief to that end. It was confirmed that there was a good arguable case for service out (in line with CPR 6.33 (2B) (b), also pursuant to the application of the Hague Convention on Choice of Court Agreements 2005) and the English court had exclusive jurisdiction per the agreements between the parties.  Accordingly, there were no strong reasons for the English court to decline its jurisdiction – in contrast, the court was bound to accept its jurisdiction per Article 5 of the Convention.

Significance of the judgment

This decision is of high importance for several reasons: It reiterates the emphasis that has been traditionally placed on party autonomy and authentic consent in English law and practice be it in a conventional or an electronic form by incorporation of the standard terms and conditions which would bring a useful reference point for businesses.  Indeed, the Court asserted the principles of English law regarding the dealings in e-commerce and particularly click-wrap agreements.

The judgment also reasserts the termination of the prior authorities preventing the English courts from granting anti-suit injunctions against the proceedings at the European Member State courts (re: West Tankers and Turner Grovit). Indeed, the judgment follows up the Qbe reasoning which was a grand opening of a fresh chapter for anti-suit reliefs post-Brexit. It is worth noting that the availability of such reliefs might also stimulate the European courts to issue similar orders against the English courts bringing the effects of a double-edged sword.

Last but not least, the high value of the judgment derives also from the fact that it addresses the Hague Choice of Court Agreement 2005. While there is still an unreasonable lack of relevant authorities referring to this global convention, the judgment brings hope about more case law and precedents built upon by virtue of the HCCCA 2005.   

Contribution claims are nothing special: UKSC

Today’s Supreme Court decision in SSAFA v Allgemeines Krankenhaus Viersen GmbH [2022] UKSC 29 on the applicability of the Civil Liability (Contribution) Act 1978, while eminently sensible, is not of enormous practical significance. Nevertheless it is still worth noting, especially by indemnity insurers.

As long ago as 2000 Harry Roberts, a British forces’ child, suffered a mishap at the time of his birth in Germany, owing allegedly due to the negligence of a midwife employed by SSAFA (behind whom stood the MoD). SSAFA, having been sued in tort, argued that the fault, or at least part of it, was that of the German hospital where Harry had been born, and sought contribution from it. At this point a problem arose. Under the then English conflict of laws rules the contribution claim, like the claim against SSAFA, was governed by German law; and whereas it would have been in time in England under the Civil Liability (Contribution) Act 1978, under the equivalent German law it was statute-barred.

Nothing daunted, SSAFA claimed over in England against the German hospital under the 1978 Act. Moreover, much to the discomfort of conflicts lawyers here, they succeeded, both at first instance and on appeal. The reason was a holding by Soole J and a and a majority of the Court of Appeal, that the 1978 Act by its wording was applicable as a matter of overriding law to all proceedings in England, however tenuous their connection with this jurisdiction, and to that extent excluded any reference to foreign law under what would otherwise be our rules of private international law. This conclusion, it was said, followed both from the fact that the Act provided for contribution arising out of liabilities arising under foreign law, and expressly superseded all other non-contractual rights to contribution.

Such an exercise in projecting the English private law of contribution willy-nilly onto foreigners involved in transactions abroad is of course theoretically possible, given Parliamentary sovereignty. But it seems, to put it mildly, hard to justify such exorbitancy. Moreover it certainly appears nowhere expressly in the 1978 Act, as pointed out by Lord Lloyd-Jones, giving the Court’s judgment. The Court were unanimous in discountenancing the holdings below, and confirmed, much to everyone’s relief (except that of the MoD, who may well now have to foot a much bigger bill than they thought) that there was nothing so special about the 1978 Act. It was simply an ordinary brick in the edifice of English private law, apt like any other to be pulled out where some other system of law fell to be chosen to govern a transaction under the rules of private international law.

Roberts was a pre-Rome II case: but as regards litigation today its upshot is that we are back to art.20 of Rome II, which says that claims for contribution are governed by the same system of law that controls the original claim out of which the contribution claim arose. This could be significant. Take, for example, the case where because of the negligence of one of the investor’s local advisers, a real estate transaction undertaken by an English investor in Ruritania fails or money is stolen from an account held in Ruritania. The indemnity insurers of the adviser now at least know where they stand. Even if they sue in England any claim against others in Ruritania, whether the fraudster or someone else, will fall to be governed by whatever passes for a contribution regime in Ruritania, whether this is more or less generous than the regime here. Simple. And right.

Brexit, the endgame. The Retained EU Law (Revocation and Reform) Bill 2022.

On 22 Sept 2022 the UK Government introduced The Retained EU Law (Revocation and Reform) Bill 2022 which provides for two sunset dates for existing retained EU law. On 31st December 2023, all retained EU law will expire, unless otherwise preserved. Any retained EU law that remains in force after this date will be assimilated in the domestic statute book, by the removal of the special EU law features previously attached to it. The Bill provides a second sunset date by including an extension mechanism for delaying the expiry of specified pieces of retained EU law until 2026. The Bill will also reinstate domestic law as the highest form of law on the UK statute book. In case of conflict with retained EU law domestic law will prevail.

There is very little by way of retained EU law that is relevant to the maritime practitioner. The Brussels Regulation and Lugano Convention both ceased to have effect as at the end of the implementation period. The Port Services Regulation survived but is currently on death row and is the subject of a government consultation as to its repeal.

What does remain, however, are the two conflicts of law regulations, Rome I for contracts and Rome II for tort/delict, both now suitably domesticated as UK law, and also the Rome Convention 1980 which was brought into UK law by the Contracts Applicable Law Act 1990, now amended so that it will continue to apply to existing contracts entered into between 1 April 1991 (the date on which the Rome Convention came into force) and 16 December 2009 (after which Rome 1 replaced the Convention in the relevant EU Member States). 

It is likely that these three pieces of retained law will either be specifically retained, or their expiry delayed until the end of 2026, but who knows? Should they disappear into the sunset, conflicts of law will return to the common law rules for contracts made after the sunset date and the rules in Part III of the Private International Law (Miscellaneous Provisions) Act 1995 for torts committed after the sunset date.

Hague Judgments Convention to enter into force!

On 29 August 2019, the European Union deposited its instrument of accession to the Hague Judgments Convention 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (HJC). On the same day, Ukraine ratified the Convention.

According to Articles 28 and 29 of the HJC, the Convention shall enter into force on the first day of the month following the expiration of the twelve months after the second State has deposited its instrument of ratification, acceptance, approval, or accession. On this occasion, the Convention has already two Contracting States, and as a practically effective tool, it will be utilised by commercial parties for the swift resolution of international disputes from 1 September 2023.

The Hague Conference on Private International Law (HCCH) adopted the HJC on 2 July 2019 – 27 years after the initial proposal of a mixed instrument covering both jurisdiction and recognition and enforcement rules. Indeed, with the aim of guaranteeing the effectiveness of court judgments similar to what the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention) ensured for arbitral awards, the HJC has become a game-changer in the international dispute resolution landscape. As the HCCH announced, “the Convention will increase certainty and predictability, promote the better management of transaction and litigation risks, and shorten timeframes for the recognition and enforcement of a judgment in other jurisdictions.”

The HJC provides recognition and enforcement of judgments given in civil and commercial cases, excluding the carriage of passengers and goods, transboundary marine pollution, marine pollution in areas beyond national jurisdiction, ship-source marine pollution, limitation of liability for maritime claims, and general average. As a complementary instrument to the Hague Convention on Choice of Court Agreements 2005 (HCCCA), the HJC shares the same goals to ensure commercial certainty and access to justice, serves legal certainty and uniformity by providing free circulation of judgments and parties’ autonomy, also, advances multilateral trade, investment and mobility. The HJC also aims at judicial cooperation and recognition and enforcement of judgments given by the courts designated in the parties’ agreement, other than an exclusive choice of court agreement whereas the HCCCA applies to exclusive jurisdiction agreements and resulting judgments.

The HJC is the only global instrument for the mutual recognition and enforcement of judgments in civil and commercial disputes and it will significantly contribute to legal certainty in the post-Brexit era together with its sister instrument HCCCA. Now, it is the UK’s turn to take appropriate measures to accede to the treaty for facilitating the free movement of judgments in civil and commercial cases between the UK and the EU. Indeed, the EU’s opposition to the UK’s application to ratify the Lugano Convention will most likely impede the ratification of the HJC for the provision of the continuing civil judicial cooperation.

The anti-suit injunction and state immunity.

UK P&I Club NV and Another v República Bolivariana de Venezuela (The RCGS Resolute) – [2022] EWHC 1655 (Comm), raises, for the first time, the question of the effect of a claim to state immunity when a party claims an anti-suit injunction against a State.

A Venezuelan navy patrol intercepted a cruise liner, ‘Resolute’, in March 2020. A collision resulted and the navy vessel suffered hull damage and eventually sank. ‘Resolute’ was insured by UK P&I Club NV, a subsidiary of United Kingdom Steam-Ship Assurance Association. The Club’s Rules contained the two usual provisions relating to coverage: a “pay to be paid” clause under which liability to provide indemnity was postponed until actual payment of damages by the owners; and an English law and London arbitration clause.

In 2020 Venezuela brought civil claims in the courts of Dutch Curaçao and Venezuela against Resolute, the owners, head managers and the Clubs. The Clubs obtained an ex parte interim anti-suit injunction against Venezuela in the High Court and then sought a permanent anti-suit injunction against Venezuela to restrain it from pursuing both sets of foreign proceedings, on the basis that its direct action claim against them was subject to London arbitration.

Sir Ross Cranston held that Venezuela’s claim against the Clubs had been made under local legislation permitting a direct action. If the local law treats the claim as derived from the insurance policy the arbitration clause would be binding. He concluded that this was the case here and by pursuing judicial proceedings Venezuela was in breach of the arbitration clause. This was a ‘quasi-contractual’ claim which would be treated in the same way as a contractual claim. The court would ordinarily exercise its discretion to restrain the pursuit of proceedings brought in breach of an arbitration or jurisdiction clause, unless the injunction defendant could show strong reasons to refuse the relief.

However, there was the question of state immunity to consider. Although the commercial activity exception in s.3(1)(a) and the arbitration exception in s9(1)(a) of the State Immunity Act 1978 applied and meant that Venezuela did not have adjudicative immunity, it did have enforcement immunity under section 13(2)(a) which clearly states “relief shall not be given against a State by way of injunction …” Adjudicative immunity and enforcement immunity were separate and did not stand or fall together.

Article 6 of the European Convention on Human Rights applied in that s.13(2) deprived the Clubs of a remedy otherwise available to them. However Article 6 was not infringed as under customary international law there was no generally recognised right to an anti-suit injunction and section 13(2)(a) lies within the range of possible rules consistent with current international standards. Section13(2)(a) could also be justified as well by reference to legitimate domestic policy, if pursued by proportionate means.

Sir Ross Cranston noted [124]: “Finally, the fact that the Clubs will not have an injunction preventing parallel proceedings does not render worthless their right to have Venezuela’s claims determined by way of London arbitration. As well as an order to this effect, there may also be supportive remedies available to the Clubs including, at least in a contractual context, the compensation for breach of the arbitration agreement and declaratory relief which the Clubs are seeking in the arbitration, and which could be relied upon to resist enforcement of any judgment which Venezuela obtains in the foreign proceedings.”

The position may be different in respect of an anti-suit injunction ordered by arbitrators pursuant to their powers under s48(5) of the Arbitration Act 1996. In The London Steam-Ship Owners’ Mutual Insurance Association Ltd v The Kingdom of Spain [2020] EWHC 1582 (Comm) Henshaw J held that this was a matter for the arbitrators at first instance, but stated [188]:  “I consider the better view to be that SIA section 13 governs the exercise but not the existence of the court’s power to grant an injunction, and that AA 1996 section 48 permits an arbitrator to grant an injunction against a state.”

The Prestige case. Victory for Spain in the CJEU.

Back in March we noted the reference to the CJEU of three questions regarding the application of Article 34 in the London P&I Club’s appeal against the recognition of the Spanish judgment against it in The Prestige case. https://iistl.blog/2022/03/25/the-prestige-20-years-on-cjeu-reference-may-be-withdrawn-at-last-gasp/

The High Court stayed proceedings and referred three questions to the CJEU for a preliminary ruling:

1. Is a judgment granted pursuant to s.66 of the Arbitration Act 1996 capable of constituting a relevant “judgment” of the Member State in which recognition is sought for the purposes of Article 34(3)?

2. Is a judgment falling outside the material scope of Regulation No 44/2001 by reason of the Article 1(2)(d) arbitration exception, capable of constituting a relevant “judgment” of the Member State in which recognition is sought for the purposes of Article 34(3)?

3. If Article 34(3) does not apply, can Art 34(1) be relied on as a ground of refusing recognition and enforcement of a judgment of another Member State as being contrary to domestic public policy on the grounds that it would violate the principle of res judicata by reason of a prior domestic arbitration award or a prior judgment entered in the terms of the award granted by the court of the Member State in which recognition is sought?

The Court of Appeal set aside the Judge’s order referring the questions to the CJEU. However, only the referring judge has jurisdiction to withdraw the reference. The Court of Appeal referred to Butcher J, pursuant to CPR 52.20(2)(b), the question of whether, in the light its judgment, he should withdraw the reference he made to the CJEU on 21 December 2020.

  The reference was not withdrawn and on Monday the CJEU gave its decision on the three questions referred [2022] EUECJ C-700/20.

The answer to the first two questions is that Article 34(3) of Regulation No 44/2001 must be interpreted as meaning that a judgment entered by a court of a Member State in the terms of an arbitral award does not constitute a ‘judgment’, within the meaning of that provision, where a judicial decision resulting in an outcome equivalent to the outcome of that award could not have been adopted by a court of that Member State without infringing the provisions and the fundamental objectives of that regulation.

The infringement would be two fold. First, as regards the relative effect of an arbitration clause included in an insurance contract which does not extend to claims against a victim of insured damage who bring a direct action against the insurer, in tort, delict or quasi-delict, before the courts for the place where the harmful event occurred or before the courts for the place where the victim is domiciled (as per the CJEU judgment of 13 July 2017 in Assens Havn, C 368/16, EU:C:2017:546).

Second, as regards the rules on lis pendens in Article 27 which favour the court first seised where there are parallel proceedings between the same parties, and does not require effective participation in the proceedings in question. The proceedings in Spain and in England involved the same parties and the same cause of action, and the proceedings were already pending in Spain on 16 January 2012 when the arbitration proceedings were commenced. It is for the court seised with a view to entering a judgment in the terms of an arbitral award to verify that the provisions and fundamental objectives of Regulation No 44/2001 have been complied with, in order to prevent a circumvention of those provisions and objectives, such as a circumvention consisting in the completion of arbitration proceedings in disregard of both the relative effect of an arbitration clause included in an insurance contract and the rules on lis pendens laid down in Article 27 of that regulation. No such verification took place before either the High Court or the Court of Appeal and neither court made a reference to the CJEU for a preliminary ruling under Article 267 of the CJEU.

The answer to the third question is that Article 34(1) of Regulation No 44/2001 must be interpreted as meaning that, in the event that Article 34(3) of that regulation does not apply to a judgment entered in the terms of an arbitral award, the recognition or enforcement of a judgment from another Member State cannot be refused as being contrary to public policy on the ground that it would disregard the force of res judicata acquired by the judgment entered in the terms of an arbitral award.

Nineteen years on — the Prestige saga, continued

Nearly twenty years after the VLCC Prestige broke up and sank off the Galician coast, spreading filth far and wide, Spain and France remain locked in battle with the vessel’s P&I club Steamship Mutual. Put briefly, they want to make Steamship pay out gazillions on the basis of judgments they have obtained locally on the basis of insurance direct action statutes. Steamship, by contrast, refers to the Prestige’s P&I entry, and says that both states are bound by “pay to be paid” clauses and in any case have to arbitrate their claims in London rather than suing in their own courts.

The background to the latest round, The Prestige (Nos 3 and 4) [2021] EWCA Civ 1589, is that Steamship, having got a declaratory arbitration award in its favour substantiating the duty to arbitrate, which it has transmuted into a judgment under s.66 of the Arbitration Act 1996, now wants to take the battle to the enemy. It wants (a) to commence another arbitration claiming damages for breach of the original arbitration agreement, reckoned by the damages and costs represented by the court proceedings in France and Spain; (b) damages for those states’ failure to abide by the declaratory award; and (c) damages for failure to abide by the s.66 judgment. Spain and France resist service out on the basis that they are entitled to state immunity, and that the claims based on the award and the judgment must in any case fail.

The High Court held, in two different proceedings (see here and here), that sovereign immunity did not apply; that claims (a) and (b) succeeded; and that claim (c) failed because of the effect of the insurance provisions in what is now Articles 10-16 of Brussels I Recast (this being, of course, a pre-Brexit affair). Both sides appealed, and the appeals were consolidated.

On sovereign immunity the Court of Appeal have now sustained the judgment of non-applicability and as a result allowed claim (a) to go ahead. They have equally upheld the first instance judgment against Steamship on claim (c): although in name a claim under a judgment this is, it says, still in substance a claim by an insurer against its insured which, under what is now Art.14 of Brussels I Recast, can only be brought in the domicile of the latter. On claim (b), however, it has held (contrary to an earlier suggestion in this blognostra culpa, we can’t be right every time) that while the jurisdiction rules of the Brussels regime do not stand in the way, the claim is bound to fail. The award being merely declaratory, there can be no duty to perform it because there is nothing to perform, and hence no liability for disregarding it.

The arbitration will now therefore go ahead. Assuming it leads to an award in Steamship’s favour, Steamship will then no doubt seek New York Convention enforcement and/or get a s.66 judgment which they will oppose to any attempt by France and Spain to get judgment here, and doubtless also try to weaponise in order to get their Spanish and French costs back. (Meanwhile they may rather regret not having asked in the original arbitration proceedings for a positive order not to sue in France or Spain, rather than a mere declaration: but that’s another story.)

There’s little to add at this stage. But there is one useful further confirmation: s.9 of the State Immunity Act, removing state immunity in the case of a written agreement to arbitrate, applies not only to a direct contractual obligation to arbitrate, but also to an indirect duty to do so Yusuf-Cepnioglu-style. Useful to know.

Will France and Spain now come quietly, thus putting an end to this saga (which has already appeared in this blog here, here, here, here and here)? It’s possible, but We’re not betting. We have a sneaking suspicion that the events of November 2002 may well continue to help lawyers pay their children’s school fees for some little time yet.