Summary
After some damage was caused to a vessel, a cargo of coal was discharged short of destination.
In the morning on 23 January 2008, a Spanish company, Endesa, made an application for the Spanish court to order the arrest of the vessel, to be used as a guarantee regarding the expenses incurred in the course of delivery of the cargo to the agreed place of delivery.
In the afternoon on 23 January 2008, an action was initiated in England. The claimant in the English proceedings was an Egyptian company, NNC. The defendant was Endessa. NNC sought from the English court a non-liability declaration.
On 8th July 2008, NNC issued an arbitration claim form, seeking a declaration that the arbitration clause contained in the Voyage charter is valid as well as seeking an anti-suit injunction against Endessa.
However, judgments of the Spanish courts were rendered on 8 September 2008 and 9th December 2008, refusing to stay its proceedings despite the existence of an arbitration agreement. Were the Spanish judgments within the scope of the Regulation? Mrs Justice Gloster stated:
“94 […] although the judgments of the Almería Court are Regulation judgments, they are not required to be recognised, pursuant to Article 33(1) of the Regulation, in proceedings in another Member State, which are not themselves proceedings within the Regulation, because, in the latter proceedings, the Regulation simply does not apply. As the Court of Appeal pointed out in Through Transport , at this stage (and before any separate proceedings to enforce a substantive judgment of the Almería Court on the merits of the case), such a decision is no more than a decision as to that Court's jurisdiction to entertain Endesa's Article 5(1) claim.
[…]
98 If I am wrong in the conclusion which I have reached above, and the Almería Court's judgments are prima facie required to be recognised in the Arbitration Action, notwithstanding that the latter is an action outside the Regulation, then the further sub-issue arises as to whether this Court entitled nonetheless to refuse to recognise the judgments pursuant to Article 34(1) of the Regulation on the grounds that “such recognition would be manifestly contrary to public policy” in the United Kingdom.
[…]
120 In my judgment, principles of comity should not prevent this court from exercising its discretion to make the declaration sought by NNC. I have already expressed my views as to why, notwithstanding the decision in The Front Comor , the grant of such a declaration would not be incompatible with the Regulation. As I have already said, the fact that arbitration is excluded from the scope of the Regulation means that, from time to time, there are likely to be conflicting judgments in different Member States in relation to “arbitration” issues such as those under consideration in the present case.” [94 and 120]
An appeal was made. On 17th December 2009, the appeal was allowed by the English Court of Appeal, holding that the English court should have recognised the Spanish judgments and should have dismissed the application in the arbitration action. Lord Justice Moore-Bick stated
“104 […] In my view, the proceedings can be treated as relating to two or more different subject matters and the consequent judgment as falling partly within and partly outside the scope of the Regulation only in cases where they embrace more than one principal subject matter, so that the determination of one is not a step on the way to the determination of another and cannot therefore be classed as a preliminary issue. In the present case it was necessary for the Spanish court to determine whether an arbitration agreement existed as a step on the way to determining the substantive dispute between the parties. It was therefore a preliminary issue within the principle enunciated in the cases to which I have referred and therefore the proceedings relating to it take their character from the substantive issue.” [2009] EWCA Civ 1397 (CA) [104].