In a complex shipping case that went to the House of Lords the
owner of a ship tried to stop a court case against it happening in
Italy. The insurers of a company that had chartered the ship had
paid out when the ship collided with a jetty in Italy and sought to
recover that money from the ship's owners, West Tankers.
West Tankers took action in London because the charter agreement
had said that disputes would be settled by arbitration in London.
The House of Lords asked the European Court of Justice (ECJ) if a
UK court was allowed to order the insurance companies, Allianz and
Generali, not to take action in Italy because there was an
arbitration agreement in place.
The ECJ said that such an order would be against the principles
of EU law. If a UK court ordered for litigation in another country
to cease it would obstruct the powers of that other court to carry
out its functions, the ECJ said.
No court can decide whether another Member State's court has
jurisdiction in a matter, it said.
Such an order would also undermine the legal recourse which
companies or individuals have a right to even when there is
agreement on arbitration.
If one party to an arbitration agreement thought it void then to
stop it taking court action would be to ensure that that company
was "deprived of a form of judicial protection to which it is
entitled".
The ECJ concluded that it was not possible for "a Member State
to make an order to restrain a person from commencing or continuing
proceedings before the courts of another Member State on the ground
that such proceedings would be contrary to an arbitration
agreement".
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