May 11
2021

International Commercial Arbitration in the EU

Chukwudi Ojiegbe

review by

David Ingle

The stated purpose of Chukwudi Ojiegbe’s recently published book, entitled International Commercial Arbitration in the European Union: Brussels I, Brexit and Beyond, is to analyse two issues. The first is the impact of Brexit on international commercial arbitration in the UK. The second is the effect of the Brussels Regulation 1215/2012 (the ‘Brussels Recast’) on what Ojiegbe refers to as the ‘EU arbitration/litigation interface’.

With respect to the first issue, Ojiegbe’s book concludes that Brexit should have no adverse impact on arbitration in the UK. This conclusion is in line with most existing commentary on this point. The UK and each of the 27 EU Member States are among the 167 signatories to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the ‘New York Convention’).  The UK and the 27 EU Member States’ obligations under the New York Convention are separate to and independent from their obligations under EU law. Consequently, the UK’s departure from the EU should have no effect on the enforcement of arbitral awards within the UK, and nor is Brexit expected to impair London’s status as a preferred seat of arbitration.

The second issue addressed in International Commercial Arbitration in the European Union: Brussels I, Brexit and Beyond – the arbitration/litigation interface within the EU – is less straightforward. Ojiegbe provides an extensive account of the evolution of the Brussels regime governing jurisdiction and enforcement issues in civil and commercial matters and the approach this regime has taken with respect to international commercial arbitration.

As Ojiegbe explains, prior to the Brussels Recast the key instrument in this area was Regulation 44/2001 (the ‘Original Brussels Regulation’). The Original Brussels Regulation contained a carve-out excluding arbitration from its scope. The Brussels Recast came into force on 10 January 2015 and replaced the Original Brussels Regulation with respect to legal proceedings commenced on or after that date. It maintained the arbitration exclusion and aimed to reinforce it by including a new recital seeking to explain its nature and scope.

Ojiegbe suggests that the decision to exclude arbitration from the Brussels regime arose as a result of two factors. First, the majority of EU Member States considered that international commercial arbitration was sufficiently governed by the provisions of the New York Convention and their own national laws.  Secondly, EU Member States wished to avoid EU regulation in this area since this could result in international commercial arbitration being deemed to have been transferred to the external competence of the EU. EU Member States preferred to ensure that they retained competence in this area so that each Member State was free to establish its own legal framework aimed at attracting commercial parties to choose to arbitrate within its jurisdiction.

International Commercial Arbitration in the European Union: Brussels I, Brexit and Beyond argues that the arbitration exclusion in the Brussels regime is problematic. In particular, in Ojiegbe’s view it creates the risk of parallel proceedings and conflicting decisions, which promote legal uncertainty and increase the costs of dispute resolution. This risk is particularly evident following the Court of Justice of the EU’s (CJEU) prohibition of anti-suit injunctions in its West Tankers decision (C-185/07).  Anti-suit injunctions are an important tool that courts may deploy to prevent a party breaching an arbitration agreement.  Where a party seeks to avoid arbitration proceedings by bringing court proceedings in a foreign jurisdiction, the courts of the seat of arbitration may issue an injunction restraining the foreign legal proceedings.  In West Tankers, the CJEU held that a Member State court cannot issue an anti-suit injunction to restrain legal proceedings in another EU Member State, even when brought in breach of an arbitration clause, where the proceedings in question fall within the scope of the Original Brussels Regulation.

Against this backdrop, Ojiegbe contends that the Brussels Recast does not go far enough to avoid the possibility of parallel proceedings and conflicting decisions where a party is alleged to have commenced litigation in breach of an arbitration agreement. Ojiegbe therefore proposes the implementation of specific rules to allow the Member State court with jurisdiction under the Brussels regime the possibility of staying the litigation in favour of the arbitral tribunal.  To address the obstacle of EU Member States’ reluctance to confer on the EU competence in the area of international commercial arbitration, Ojiegbe proposes that the EU Treaties be amended to clarify the precise means by which external competence is transferred to the EU.  This amendment would confirm that the EU’s limited regulation in the field of international commercial arbitration does not result in a transfer of competence. Ojiegbe does not address how feasible it is to seek to amend the EU Treaties to achieve this purpose.

While the Brussels Recast remains in its current form, Ojiegbe suggests that Brexit offers the UK a comparative advantage in the field of international commercial arbitration. Following the UK’s withdrawal from the EU, the UK courts are no longer bound by the CJEU’s prohibition on anti-suit injunctions against legal proceedings commenced in an EU Member State in breach of an arbitration agreement.  Consequently, London may become a more attractive seat of arbitration for commercial parties seeking to avoid the cost and uncertainty caused by parallel legal proceedings.

 

David Ingle is a Senior Associate at an international law firm, specialising in commercial and investment treaty arbitration. 

 

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