Private International Law of Reinsurance and Insurance

Raymond Cox; Louise Merrett and Marcus Smith

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8 REINSURANCE AND INSURANCE JURISDICTION IN ARBITRATION DISPUTES

8.1 Reinsurance and insurance agreements will often contain a clause agreeing to arbitration. The aim of an arbitration agreement is, plainly, to remove a dispute from the primary jurisdiction of the state-court system, for adjudication according to a process determined or selected by the parties.1 This does not, of course, mean that the courts’ role is excluded. Rather, the courts’ role changes to that of supporting the arbitration agreement, e.g. by deciding whether or not court proceedings should be stayed because of the existence of the arbitration agreement, or to enforce the attendance of witnesses at an arbitration, or to enforce an award. The relationship between arbitration proceedings and court proceedings has aptly been described as a “relay race” in which from time to time the baton passes to the courts from the arbitral tribunal for specific reasons.2 8.2 The conflict of laws issues which arise in the context or arbitration are different, and altogether more complex from those which arise generally. This is because, in addition to the jurisdiction rules so far considered, there are specific rules determining the courts’ role and powers in relation to arbitration disputes. For the English courts, these rules are contained in the Arbitration Act 1996. 8.3 How these arbitration specific rules interact with the general jurisdiction rules hither-to described is the subject of this chapter. More specifically:

(1) Section 2 considers the substantive juridiction of the English courts over arbitration proceedings.
(2) Section 3 then considers how these provisions interact with the Brussels Regulation. For example, what happens if an EU court is already seised of the matter, or where the defendant is domiciled abroad? What rules determine priority as between the Brussels Regulation and the Arbitration Act 1996? As will be seen, the answer is contained in the Brussels Regulation itself, which (by its own provisions) expressly limits its own application to arbitration disputes. Although it can be said that many disputes as to arbitration will not involve the application of the Brussels Regulation, it would be wrong to say that the Regulation will never have effect.
(3) Finally, there is a further complication which ought to be borne in mind from the outset. In a case not involving arbitration, if the English court has jurisdiction in relation to a particular matter there will obviously be a further question as to which law is applicable to that dispute. There is often only one choice of law to contend with. Where arbitration is concerned, however, three (or more) choices of law may well need to be considered. In addition to the choice of law governing the substance of the dispute between the parties, the law governing the arbitration agreement, and the procedural law of the arbitration need to be considered separately (see Chapter 13 below).3

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B. THE JURISDICTION OF THE ENGLISH COURTS IN RELATION TO ARBITRATION PROCEEDINGS

1. The Arbitration Act 1996

8.4 The substantive jurisdiction of the English courts is primarily governed by the Arbitration Act 1996.4 In general, the English courts have a number of powers enumerated in the Act provided the seat of the arbitration is in England, Wales or Northern Ireland, and a few specific powers even if the seat is not.5 8.5 Where the seat is in England, Wales or Northern Ireland the main powers include the power to stay legal proceedings, extend agreed time limits, remove an arbitrator, determine a preliminary point of jurisdiction, secure the attendance of witnesses and determine a challenge to the award for lack of substantive jurisdiction or irregularity.6 These powers are mandatory which means they have effect even if the parties agree otherwise.7 The court has other non-mandatory powers, that is, powers subject to the parties’ agreement,8 including the power to appoint an arbitrator, to enforce orders of the arbitral panel, and determine a challenge to the award on a point of law. 8.6 Where the seat of the arbitration is not in England, Wales or Northern Ireland the court has more restricted powers. These powers include the power to stay legal proceedings, enforce an award, make orders for securing the attendance of witnesses and make other orders in support of arbitral proceedings.9 8.7 The seat of the arbitration is determined “(a) by the parties to the arbitration agreement, or (b) by any arbitral or other institution or person vested by the parties with powers in that regard, or (c) by the arbitral tribunal if so authorised by the parties, or determined, in the absence of any such designation, having regard to the parties’ agreement and all the relevant circumstances”.10 In some cases there may be a dispute about which is the appropriate court to decide the seat.11 8.8 An arbitration agreement is an agreement in writing to submit to arbitration present or future disputes (whether they are contractual or not).12 References in the Arbitration Act 1996 to a party to an arbitration agreement include any person claiming under or through him.13 8.9 The procedure for applications to the English court in relation to arbitration is governed by CPR Part 62 which applies to any application affecting arbitration proceedings.14 An arbitration claim is begun by an arbitration claim form, except where the application is to stay existing English court proceedings in which case the application is made in those proceedings.15

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8.10 Permission is required to serve the arbitration claim form out of the jurisdiction.16 It may be given under CPR 62.5 if:

(a) the claimant seeks to - (i) challenge; or (ii) appeal on a question of law arising out of, an arbitration award made within the jurisdiction;
(b) the claim is for an order under section 44 of the 1996 Act17; or
(c) the claimant - (i) seeks some other remedy or requires a question to be decided by the court affecting an arbitration (whether started or not), an arbitration agreement or an arbitration award; and (ii) the seat of the arbitration is or will be within the jurisdiction or the conditions in section 2(4) of the 1996 Act are satisfied.

8.11 The applicant must show a good arguable case that there is a substantive dispute falling within the arbitration agreement.18 The ground at (c) does not enable the court to give power to serve proceedings out of the jurisdiction on a non-party to the arbitration agreement.19

2. Proceedings brought in breach of an arbitration agreement

(i) Proceedings before an English court

8.12 Where legal proceedings are brought before an English court, the court is obliged to grant a stay of those proceedings unless satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed.20 The court has no discretion. This is an important distinction between the law relating to exclusive jurisdiction agreements (where the court may still choose not to stay proceedings in breach of a jurisdiction agreement where there are special reasons) and arbitration agreements.

(ii) Anti-suit injunction in respect of foreign proceedings

8.13 The Arbitration Act 1996 does not make provision for anti-suit injunctions which are therefore governed by the ordinary principles considered at para. 7.95 above. 8.14 Plainly, this is an area where the interaction between English municipal law and the Brussels Regulation is critical. The following paragraphs consider the general approach of the English courts absent the Regulation. The effect of the Regulation on arbitration jurisdiction is considered at para. 8.21 below. 8.15 The application for a stay is not made under the Arbitration Act 1996.21 The court has a discretion to order an anti-suit injunction, but will do so readily where foreign proceedings are in breach of an arbitration agreement, provided that the other requirements for the exercise of the power are met.22 In Toepfer v. Societe Cargill 23 Phillips LJ in holding that

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the judge did not err in principle in granting an anti-suit injunction in protection of an agreement to arbitrate observed:

“The 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards article II.3 requires the court of a Contracting State to refer the parties to arbitration when an action is commenced in disregard of a binding arbitration clause. It might be thought that there would be much to be said, both as a matter of comity and in the interests of procedural simplicity, if a defendant who was improperly sued in disregard of an arbitration agreement in the court of a country subject to the New York Convention were left to seek a stay of the proceedings in the court in question. It seems, however, that litigants in cases governed by English arbitration clauses are not prepared to trust foreign courts to stay proceedings in accordance with the New York Convention, for it has become the habit to seek anti-suit injunctions such as that sought in the present case. In The Angelic Grace the Court of Appeal gave its approval to this practice.”

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