Law of International Commercial Arbitration - Essay Example

Law of International Commercial Arbitration In general, parties to commercial arbitrations bring anti-suit injunctions in other jurisdictions with the intention of circumventing lawsuits. They claim that the original forum, where the lawsuits are filed against them, does not apply to their dispute under the concept of forum non conveniens (A Choice of Law Approach for International Antisuit Injunctions). It is common practice for US and UK courts to decide, on the basis of their own perspective regarding equity; in respect of requests for anti – suit injunction against a plaintiff who had initiated legal action in a foreign forum. Such application of forum equity is uncharacteristic in the jurisprudence relating to common law. This is on account of the fact that any action with international connotations generally comprises of a choice of law analysis (A Choice of Law Approach for International Antisuit Injunctions). In common law countries, domestic courts, which retain or attempt to retain their jurisdiction; employ anti – suit injunctions for this purpose. These courts direct a party to abstain from preferring a claim before the courts of some other Member State (Gaillard, 2005). These orders can also be used to prevent parties from bringing in actions before arbitral tribunals. In instances wherein the parties had already initiated such claims, the jurisdiction forum that emerges as the most appropriate, will issue orders that compel the parties to withdraw their claims. Anti – suit orders can also be issued to the arbitrators to suspend proceedings, in such claims (Gaillard, 2005). The Supreme Court Act 1981 provides the legal basis for the High Court to grant anti – suit injunctions in the United Kingdom. Consequently, the High Court can issue anti – suit injunctions, in respect of proceedings of foreign courts that breach arbitration agreements. Therefore, arbitration claimants should be in readiness to issue arbitration proceedings swiftly and circumspectly (The future of anti - suit injunctions, 2009). In instances, where legal proceedings had already been initiated by the other party, a claimant has to submit his arguments in the Member State’s court, wherein the arbitration agreements have to be enforced and recognised. However, the practice of defending proceedings in the court of some other Member State, and the practice of hastily issuing arbitration proceedings are undesirable outcomes of the ruling of the European Court of Justice (ECJ). Such parallel proceedings invariably serve to result in delay and entail an enhancement in expenditure (The future of anti - suit injunctions, 2009). The compatibility of anti – suit injunctions with the Brussels Regulation or Regulation 44/2001, regime attracted considerable debate. The ruling of the ECJ in Turner has brought to the fore the compatibility of anti – suit injunctions with this regulation. The referral by the House of Lords, in West Tankers to the ECJ, stressed this issue. It is the opinion of many that anti – suit injunctions relating to arbitration agreements, could meet with failure in the EU (George, 2007). In order, to study and assess the compatibility of anti – suit injunctions in arbitration agreements with the Brussels Regulation; a thorough study was conducted by some eminent scholars. The conclusion reached by these scholars was that anti – suit injunctions made in support of arbitration agreements, were incompatible with not only the Brussels Regulation, but also the general principles of the EC law (George, 2007). The ECJ joined forces with the Advocate General’s opinion, by ruling that claimants were disallowed from initiating anti – suit injunctions to contain court proceedings in another Member State; despite the fact that such suits infringed arbitration agreements (Cuniberti, 2009). The House of Lords had referred the West Tankers Case to the ECJ for clarification regarding the admissibility of anti – trust injunctions in arbitration agreements. Courts in England and other Member States of the EU fall under the jurisdiction of the Brussels Regulation. Therefore, arbitration proceedings in these courts would have to be postponed till the stay of proceedings of a foreign court. This was held to be an apparent breach of the arbitration agreement. This is the essence and practical effect of the ECJ’s ruling. It is a protracted process, during which the courts have to thoroughly review agreements and appeals (Cuniberti, 2009). The practical effect of this ruling has some negative outcomes. One of these is that the party’s autonomy is undermined; which would prevent the party from choosing the jurisdiction for his dispute for minimising the pre – awards in arbitration. The above cited ruling is inconsistent with the freedom of such choice. As such, the fundamental objective of this decision is to ensure that the courts of Member States respect the decisions and procedures of the courts of other Member States. Moreover, each and every Member State should respect the legal proceedings of other Member States, irrespective of the nature of the dispute resolution. This principle also applies to arbitration related to commercial agreements; and this decision was made in the context of proceedings relating to the apparent breach of exclusive jurisdiction clauses (Cuniberti, 2009). It is common for parties to choose the UK as the appropriate forum for arbitration proceedings. The reason for this is that English courts are more receptive to granting anti – arbitration agreements. In addition, these courts readily grant such agreements, so as to prevent other parties to the agreement from bringing lawsuits in some other country. (Mandarka – Sheppard, 2007. Pp. 243 – 244). In general, anti – suit injunctions are issued with regard to disputes arising out of arbitration agreements The central objective of anti – suit injunctions is to enforce arbitration agreements. In a recent decision the ECJ ruled that English courts should not issue anti – suit injunctions, if arbitration proceedings had commenced in another Member State of the EU. It also held that the Member States should respect the Brussels Regulation. Therefore, the court where the lawsuit was first filed constitutes the appropriate forum to decide the jurisdiction and to resolve the dispute (Mandarka – Sheppard, 2007. Pp. 243 – 244). Anti – suit injunctions have negative implications for foreign jurisdictions. On account of this, many courts do not issue such injunctions, at the request of the parties. However, courts in common law countries grant anti – suit injunctions, quite frequently in order to protect arbitration agreements. Moreover, these courts adopt this practice, because it is in conformity with public policy in such countries. Furthermore, these courts grant anti – arbitration agreements, if there is no agreement to be arbitrated. In addition, if a party selects a different forum for arbitration, from that accepted by the remaining parties, then the courts grant anti – arbitration agreements (Moses, 2008, Pp 93-94). The use of anti – suit injunctions has been on the increase in international arbitration claims, over quite some time. The outcome of these claims has served to provide a disquieting environment for international arbitration agreements. This trend has become frequent in most of the common law countries and in some of the civil law countries. The courts in these countries encourage the parties to use this device to dislocate the arbitration proceedings or prevent enforcement of an award. List of References (n.d.). Retrieved May 3, 2009, from A Choice of Law Approach for International Antisuit Injunctions: http://www.utexas.edu/law/journals/tlr/abstracts/81/81kerwin.pdf Cuniberti, G. (2009, February 10). ECJ Judgement in West Tankers. Retrieved May 4, 2009, from Conflict of laws: http://conflictoflaws.net/2009/ecj-judgment-in-west-tankers/ Gaillard, E. (2005, March). Anti-Suit Injunctions in International Arbitration . Retrieved May 2, 2009, from http://www.jurispub.com/225/anti-suit-injunctions-in-international-arbitration George, M. (2007, November 1). Arbitration Agreements, Anti-Suit Injunctions and the Brussels Regulation. Retrieved April 30, 2009, from http://conflictoflaws.net/2007/arbitration-agreements-anti-suit-injunctions-and-the-brussels-regulation/ Mandarka – Sheppard, A. (2007. Pp. 243 – 244). Modern Admirality Law. Routledge. ISBN 1859418953. Moses, M. L. (2008, Pp 93-94). The principles and practice of international commercial arbitration. Cambridge University Press. ISBN 0521866669, 9780521866668. The future of anti - suit injunctions. (2009, February). Retrieved April 30, 2009, from http://www.freshfields.com/publications/pdfs/2009/feb09/25206.pdf Read More