Originally from European International Arbitration Review (EIAR)

I. Introduction

In the latest round in the long-running West Tankers shipping insurance dispute, the English Court of Appeal has held that a negative declaratory award can be enforced under section 66 of the Arbitration Act 1996.

II. Background

In August 2000, whilst on charter to Erg Petroli SpA, West Tankers’ vessel Front Comor collided with an oil jetty at Erg’s refinery in Syracuse, Italy, causing damage and disrupting the operation of the refinery. The charterparty was governed by English law and contained a London arbitration clause. Erg claimed compensation from its insurers (receiving in excess of €15m) and commenced arbitration proceedings in London against West Tankers for its uninsured losses. The insurers then brought a subrogated claim (in Erg’s name) against West Tankers in the Tribunale di Siracusa in Italy to recover their outlay.

West Tankers made an ex parte application to the Commercial Court in England and obtained an anti-suit injunction restraining the insurers from pursuing any proceedings other than arbitration and requiring them to discontinue the Italian proceedings. The insurers unsuccessfully applied to have the anti-suit injunction set-aside.1 On a direct appeal, the House of Lords referred to the European Court of Justice the question whether it was consistent with the Brussels I Regulation2 for a court of a Member State to restrain a party from continuing proceedings before the courts of another Member State on the ground that such proceedings would be contrary to an arbitration agreement. Their Lordships made it very clear that they thought the question should be answered in the affirmative. Lord Hoffman said: