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English court refuses anti-suit injunction where Italian arbitration proceedings already underway


The High Court in England has prevented an insurer from blocking its Italian broker from continuing arbitration proceedings in Italy, in a follow-up to a complex commercial dispute over the alleged misappropriation of client money.

The decision follows a separate judgment in favour of the insurer, AmTrust Europe Ltd (ATEL), by the Court of Appeal in April. The court upheld an earlier High Court judgment allowing ATEL to pursue the broker, Trust Risk Group, in the English courts for the return of the money as it had a "good arguable case" that the English courts had jurisdiction over the dispute, despite competing Italian and English law jurisdiction clauses.

"It is one thing for the court to decide that the English courts had jurisdiction to determine a dispute as to whether money had to be paid into a designated account in accordance with the terms of business agreement (TOBA) between the parties, which was expressed to be governed by English law and subject to English jurisdiction," said international arbitration expert Richard Dickman of Pinsent Masons, the law firm behind Out-Law.com.

"It is quite another to restrain a party from commencing or continuing arbitration proceedings, particularly where those proceedings are in another jurisdiction," he said.

ATEL is the UK subsidiary of American insurer AmTrust Group, and at the time of the dispute had a business relationship with Milan-based Trust Risk Group involving the sale of its medical malpractice insurance to Italian hospitals and other prospective clients in Italy. In 2014, this relationship broke down over around €32 million in client premiums, which were supposedly held in a trust account governed by the TOBA on behalf of ATEL. ATEL claimed that Trust Risk had misappropriated almost all of the money in this account, and began proceedings in the English courts for the return of his money.

Trust Risk denied that the money had been misappropriated, and claimed that it was also owed commission by ATEL. Further, it argued that all disputes between the two parties were governed by a framework agreement which post-dated the TOBA, and which contained an Italian law and jurisdiction clause.

The newer framework agreement provided for an exclusive relationship between the parties regarding the distribution of ATEL's medical malpractice insurance in Italy. The TOBA was included in the framework agreement as an appendix. Trust Risk argued that this meant that the TOBA and framework agreement now formed a single agreement, while ATEL maintained that the two agreements were freestanding and that the English jurisdiction clause in the TOBA applied to any disputes arising out of the TOBA. It was on this point that the Court of Appeal ruled in April that ATEL had a "good arguable case" for pursuing Trust Risk in the English courts.

The current dispute arose after ATEL applied for an 'anti-arbitration' injunction preventing Trust Risk from pursuing arbitration proceedings in Italy under the framework agreement. ATEL said that Trust Risk's behaviour was "vexatious, oppressive and unconscionable" given the outcome of the previous jurisdictional dispute. However, Mr Justice Andrew Smith said that ATEL had misunderstood the High Court and Court of Appeal's rulings in that case.

"The decision of [the High Court] and the Court of Appeal determined only that ATEL had made out a sufficient case for the purposes of establishing jurisdiction that the dispute about the monies in the designated account was not covered by the framework agreement and its arbitration provision and was covered by the jurisdiction provision in the TOBA," he said in his ruling. "Accordingly, the English courts have not decided that [Trust Risk] is pursuing arbitral proceedings when there is no relevant arbitration agreement, nor have they examined whether the arbitration provision in the framework agreement covers the disputes that have been referred to the Italian tribunal."

"Of course, if the tribunal's analysis of the contractual position accords with the views expressed by [the Court of Appeal], some of the claims would (at the least) face difficulties, but that is not a sufficient basis to restrain [Trust Group]. It does not follow that the claim is vexatious, oppressive or unconscionable. Even if I considered the claims to be unarguable, the court has no supervisory jurisdiction to dismiss unarguable claims brought in an English arbitration ... and there is no proper basis for assuming it in respect of a foreign arbitration," he said.

International arbitration expert Richard Dickman said that the remedy sought by ATEL was a "draconian" one, "normally given only in exceptional circumstances and with caution, and typically where there is no valid arbitration agreement at all".

"Here, there clearly was a binding arbitration clause in the framework agreement and the claims were arguably brought under that agreement, rather than under the TOBA," he said.

"Therefore, although it was unsatisfactory to have concurrent proceedings in the English court and in Italian arbitration covering aspects of the parties' relationship, the court had to defer to the Italian arbitration tribunal – supervised, if necessary, by the Italian courts – to rule on its own jurisdiction to hear the claims, applying the well-known 'kompetenz-kompetenz' principle," he said.

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