In West Tankers Inc v Allianz SpA & Generali Assicurazione Generali SpA [2012] EWCA Civ 27, the Court of Appeal has affirmed powers under the Arbitration Act 1996 (the “Act”) to enforce awards made in arbitration. The decision reflects the English Courts’ generally pro-arbitration stance, upholding an arbitral award despite the possibility of an inconsistent judgment in related proceedings.

Background

The dispute arose after the Front Comor, a vessel owned by West Tankers Inc (“West Tankers”) collided with a jetty in Syracuse, Italy.   The charterparty agreement was governed by English law and contained an agreement to arbitrate in London.  The jetty owner’s insurers, Allianz SpA & Generali Assicurazione Generali SpA (“Generali”), were subrogated to arbitration proceedings against West Tankers.

Whilst the arbitration was pending, Generali commenced separate proceedings in the Italian Courts in respect of the same incident. West Tankers applied for an anti-suit injunction to enforce the arbitration clause and this was initially granted by the High Court, restraining Generali from proceeding with their claim in Italy.

Generali appealed and the ECJ subsequently held that the anti-suit injunction was incompatible with the Brussels Regulation, as contrary to principles that a Court has power to rule on its own jurisdiction, and that Member States accord mutual trust to one another’s judicial institutions.  The anti-suit injunction was discharged by the English Courts and the Italian proceedings continued.

The arbitrators made an award declaring that West Tankers was under no liability to Generali in respect of the collision. West Tankers sought to enforce the award by entering judgment in England under Section 66 of the Arbitration Act (“the Act”), to protect themselves against any subsequent ruling by the Italian Court.  At first instance, Field J. enforced the award.

The Appeal

On appeal, Generali argued that the Act did not allow for judgment to be entered in this case.  They said that a negative declaratory award did not require anyone to do anything and was incapable of being enforced.

The Court of Appeal unanimously dismissed the appeal. Toulson LJ applied a broad interpretation of Section 66 of the Act, concluding that the phrase “enforced in the same manner as a judgment to the same effect” was not confined to one of the normal forms of execution of judgments, but could extend to other means of giving judicial force to an award. The purpose of Section 66 was to simplify enforcement.

Comment

The decision provides confirmation and support for the enforcement of an arbitration award in the same manner as a Court judgment. However, the Court of Appeal did not specifically confirm that its decision was a judgment for purposes of Article 34 of the Brussels Regulation, which would depend on whether it falls within the arbitration exemption.  It remains to be seen therefore how the pending Italian proceedings will be determined and whether an inconsistent judgment in favour of insurers could be enforced. It is hoped that proposed reform of the Brussels Regulation will comprehensively address these areas of uncertainty and clarify how arbitration agreements are to be protected in future.

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