Damages for breach of arbitration agreement


There has been a further judgment at the Commercial Court in West Tankers v Allianz SpA [2012] EWHC 854 (Comm).

The case originally came to prominence because the European Court of Justice held that the English court was not entitled to make an anti-suit order to prevent proceedings in Italy in breach of an arbitration agreement providing for arbitration in London. The European Court of Justice held that it was for the Italian court to decide whether the proceedings should be stayed, under the terms of the Brussels Regulation, despite that Regulation being generally inapplicable to arbitration.

The next reported judgment of the English court was that it was prepared to make a declaratory judgment to confirm that the Claimant would be able to rely on article 34(3) of the Brussels Regulation, which precludes the enforcement of a judgment of another European state if it is irreconcilable with a judgment given in a dispute between the same parties in a Member State in which recognition is sought.

The most recent judgment is that there is no principle of EU law that requires the arbitral tribunal to decline to entertain a claim for damages for breach of an arbitration agreement, even if the tribunal’s award would be inconsistent with the decision of another EU Member State court. The court concluded that, because the Brussels Regulation did not apply to arbitration, the tribunal’s jurisdiction was unaffected by the Regulation, and there was no obligation on an arbitral tribunal to defer to courts in another Member State.

Paul Howcroft, Partner, Fladgate LLP (phowcroft@fladgate.com)

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