Thursday, 19 May 2011

West Tankers Inc v Allianz SpA & anor [2011] EWHC 829 (Comm): thwarting Europe

You may remember earlier I referred to the Italian Missile.  To stop a claim against you, just issue in Italy.  The legal system there is so chaotic it takes years before they suss out it’s nothing to do with them.  And thanks to our European masters you can’t get an anti-suit to stop the Italian proceedings – you have to let the Italians sort it out first.

Well, this is what Allianz did in the above case.  A ship hit a pier and an insurance claim was made.  The insurance contract had a term saying disputes would be considered via arbitration in England; this is what West therefore did.  The response?  Allianz sued in Italy.

Now, let’s see just how quick the Italian court system is.  Once Allianz sued in Italy, West sought an anti-suit injunction, got it, had it kicked up to Europe, lost it, won the arbitration and won this case.  This has taken nearly six years.  What progress has been made in Italy?  Apparently, none.

The anti-suit injunction would have stopped Allianz continuing with its claim in Italy.  The English court was pretty clear – it should stand, because the Italian proceedings were a breach of contract, therefore European law would not allow the breacher to get a benefit.  The geniuses in the European court decided that the breacher should get a benefit.  The grounds for finding this are obscure, as they usually are with the EU.

So, West had to get around it somehow.  Easiest way – turn the arbitration result into a court document.  You can’t enforce an arbitration award as of right, you have to have the Court’s permission to do so; this is literally the oldest rule in the book (the Distress Act 1267).  But what a neat manoeuvre!  By getting an English judgment stating that the arbitration award was binding, the Italian court would be forced to accept it.  Judgments from one EU court are enforceable as of right in other EU courts.

And this is what West did.  The Court was happy to award such a judgment; Allianz’s appeal was slung out.

This is pure genius.  And shows the folly, and paucity of reasoning, of the European Court judgment.  The EU decided an anti-suit injunction was in some way a breach of an EU treaty.  So now we have the prospect of Italian proceedings, which the EU considers valid, rendered pointless by an English judgment, which the Italian Court must consider valid.  The speed of the English court has defused the Italian Missile.

Doubtless it won’t stop there; doubtless there will be an appeal.  And it is very possible it’ll go back to Europe, as this judgment kicks forum-leaping where there’s an arbitration clause into the boondocks.   The EU won’t like that.  But how can the EU say that a slow Italian court trumps a fast, accurate, honest English one?  Under the EU’s own rules, Italy here must cede to England…

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