Anda di halaman 1dari 39

Submitted for publication to

Journal of Private International Law, Hart Publishing

ARBITRATION AND THE DRAFT REVISED BRUSSELS I REGULATION:


SEEDS OF HOME COUNTRY CONTROL AND OF HARMONIZATION?

Luca G. Radicati di Brozolo(*)

A.
The freedom of member States in relation to arbitration and the potential for parallel proceedings
and conflicting decisions................................................................................................................................................. 3
B.
The momentum towards reform........................................................................................................................ 5
C.
The policy options ................................................................................................................................................ 7
C.1
The abolition of the arbitration exception ............................................................................................ 8
C.2
The expansion of the arbitration exception and the resurrection of anti-suit injunctions ........... 8
C.3
The partial abolition of the arbitration exception and the introduction of some rules relating
to arbitration in the Regulation..............................................................................................................................11
C.4
An ad hoc instrument for the harmonization of arbitration law.....................................................12
C.5
Maintaining the status quo .....................................................................................................................13
D. The Proposal........................................................................................................................................................13
D.1
The new draft Article 29(4) and the related provisions ....................................................................13
D.2
The avoidance of parallel proceedings and abusive litigation..........................................................15
D.3
The non-seat courts obligation to stay proceedings. ........................................................................19
D.3(a)
The mechanism.............................................................................................................................19
D.3(b)
The conditions for the stay: the definition of arbitration agreement..............................20
E.
The implications of the proposed rule............................................................................................................23
E.1
An innovative model for assessing the effects of arbitration agreements .....................................23
E.2
The seeds of home country control in arbitration? ...........................................................................24
E.3
The rule in practice: the essential role of the choice of the seat......................................................26
F.
Other matters ......................................................................................................................................................27
F.1
Jurisdiction on ancillary and setting aside proceedings.....................................................................27
F.2
The circulation of judgments.................................................................................................................28
F.2(a)
Judgments on the validity and effects of arbitration agreements.........................................28
F.2(b)
Judgments on the validity and effects of arbitral awards.......................................................30
F.2(c)
Judgments on the enforcement of arbitral awards .................................................................31
F.2(d)
Judgments on the merits .............................................................................................................32
G. An assessment .....................................................................................................................................................34
G.1
Success in avoiding parallel actions and conflicts ..............................................................................34
G.2
The view from a pro-arbitration perspective..................................................................................35
G.3
The view from a conflicts purism perspective ...............................................................................38
G.4
Conclusion ................................................................................................................................................39

The relation between arbitration and the Brussels I Regulation (Reg. (EC) 44/2001, the
Regulation) has been controversial for years and was probably the most contentious facet

(*)

Professor, Catholic University of Milan; Partner, Bonelli Erede Pappalardo, Milan-London; member
of the European Commissions Expert Group on the Interface between the Brussels I Regulation and
Arbitration. This article is based on a presentation delivered at the fourth Journal of Private International Law Conference, Milan, April 14-16, 2011. The views expressed are personal to the author who
would welcome comments: Luca.Radicati@beplex.com.

of the debate on the review of the Regulation.1 The discussion at times took on highly emotional and ideological overtones, seemingly implying a clash of cultures between the so-called
arbitration community and the European Commission, which at one point was portrayed as
bent on imposing its vision of arbitration and on reining in the freedom of member States in
this area.
In its proposal for a review of the Regulation (the Proposal),2 the Commission follows a moderate course, addressing only one, albeit the most serious, of the many debated
issues, i.e. the prevention of parallel proceedings.3 On the whole the proposed solution enshrined in Article 29(4) is workable, although it may not meet with unanimous approval, as
indicated by the radically negative position of the European Parliament.4
This paper assesses the Proposal against the background of the discussion that preceded it and of the available options, and highlights its main features as well as the broader
implications for the relationship between arbitration and the Regulation and more generally
EU law.

The literature on this topic is very extensive. In addition to the seminal contribution of H Van Houtte,
Why not include arbitration agreements in the Brussels jurisdiction regulation (2005) Arb. Intl 509,
see for instance: A Mourre, Faut-il un statut communautaire de larbitrage ? (2005) ASA Bulletin 408;
C Kassedjan, Le Rglement 44/2001 et larbitrage (2009) Rev. arb. 699; A Pullen, The Future of International Arbitration in Europe: West Tankers and the EU Green Paper (2009) Int. Arbitration L. Rev.
56 seq.; B Hess, Improving the Interface Between Arbitration and European Procedural Law: The
Heidelberg Report and the EU Commissions Green Paper on the Reform of Regulation Brussels I
(2010) Les Cahiers de lArbitrage/The Paris Journal of International Arbitration 17 (elaborating on a guest editorial on ConflictofLaws.net of 14 February 2010, followed by a discussion with A Mourre on KluwerArbitrationblog, posts of 3, 12 and 22 March; P Schlosser, Europe - Is it Time to Reconsider the Arbitration Exception from the Brussels Regulation ?(2009) Intl. Arb. Law Rev. 45; Ph Pinsolle, The Proposed Reform of Regulation 44/2001: A Poison Pill for Arbitration in the European Union ? (2009)
Intl Arb. Law Rev. 62; R Fentiman, Arbitration and the Brussels Regulation(2007) Cambridge Law
Journal 493; Ph Pinsolle, Les problmes cachs de la suppression de lexception darbitrage du Rglement 44/2001 (2010) Les Cahiers de lArbitrage/ The Paris Journal of International Arbitration 31; U Magnus, P Mankowski, Brussels I on the Verge of Reform (2010) Zeitschrift fr Vergleichende Rechtswissenschaft, 1, at 21-28; For an earlier contribution by the author on this topic see LG Radicati di Brozolo,
Choice of court and arbitration agreements and the review of the Brussels I Regulation(2010) IPRax
121. See also D Joseph, Choice of court and arbitration agreements, 2nd ed. (2010).

COM(2010)748 Final of December 14, 2010.

For a first assessment of the Proposal see M Illmer, Brussels I revisited - The European Commissions Proposal COM(2010) 748 final, (2011) Rabels Zeitschrift 645; C. Kessedjan, Commentaire de la
refonte du rglement n 44/2001, (2011) Rev. trim. dr. eur. 1 at 6-10; M. Benedettelli, Communitarisation of international arbitration: a new spectre haunting Europe, forthcoming in (2011) Arb. Int.

See the draft report of the Committee on legal affairs (reporter T. Zwiefka) 2010/0383 (COD),
http://www.contentieux-international.net/offres/file_inline_src/358/358_A_4254_17.pdf which
contains a radical rejection of the Proposals solutions on this point, and specifically requests the elimination of recital 20 and of Article 29(4) discussed below, as well as a broadening of recital 11 (see n 28
below). See also the earlier Resolution of September 7, 2010 (2009/2140(INI)), para. 9-10. In contrast
to this the opinion of the European Economic and Social Council of May 5, 2011 (INT/566) is much
more positive, and actually calls for creating, as soon as possible, a supranational legal instrument for
the recognition and enforcement of arbitration decisions (see para. 4.5 and 4.5.1).

A.

The freedom of member States in relation to arbitration and the potential for
parallel proceedings and conflicting decisions
Today States, including EU member States, enjoy a very broad freedom in matters of

arbitration5. The most important international instrument in this field, the New York Convention6 to which all member States are parties, does not provide for a complete regulation
of arbitration and of arbitration-related court litigation and thereby leaves most issues to be
determined by national law. As a matter of fact, the Convention does not even contain a precise definition of an arbitration agreement or govern the conditions of its validity. At the
same time, arbitration has remained outside the scope of harmonization within the European
Union. Thus all questions relating to arbitration are addressed by the courts of member
States applying their respective domestic law and the New York Convention, with no regard
for how those questions are dealt with in other States. Moreover, there is no mechanism for
the uniform application of the New York Convention, so that in practice there is considerable room in different States for divergent interpretations and applications of the Convention itself. The convergence in the approaches of national laws to arbitration has by far not
eliminated all differences in how specific issues are addressed in each member State.
The fact that States remain largely unhampered in the way they and their courts deal
with arbitration, and in particular with arbitration agreements and awards and with judgments relating to arbitration, has permitted a vigorous competition between legal systems,
which has furthered the progress of arbitration, particularly in the member States. On the
other hand, even within the European Union this leaves a potential for discrepancies as to
the treatment of a given arbitration and, in turn, a risk of parallel proceedings and irreconcilable decisions.
So far these issues have remained outside the scope of the Brussels jurisdiction and
judgments regime (the 1968 Brussels Convention first and now the Regulation) by virtue of
the so-called arbitration exception of Article 1(2)(d). The justification for the exception was
in part that arbitration is governed by the New York Convention and by the 1961 European
Convention on International Commercial Arbitration, which, however, are structurally inca5

For a comparative overview of the law of arbitration in different legal systems see J-F Poudret, S Besson, Comparative Law of International Arbitration (London, Sweet & Maxwell, 2nd edn. 2007); G Born, International Commercial Arbitration (The Netherlands, Kluwer, 2009). For a further analysis by the author
of the broader implications of the relations between arbitration and national legal systems see LG
Radicati di Brozolo, The impact of national law and courts on international commercial arbitration
(Mythology, physiology, pathology, remedies and trends) (2011) Cahiers de larbitrage/The Paris Journal
of International Arbitration, []; L G Radicati di Brozolo, The control system of arbitral awards: Reflections on Michael Riesmans Normative architecture of international commercial arbitration, forthcoming in (2011) ICCA Congress Series No 16, Proceedings of the 50th Anniversary Conference, [].
Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958.

pable of dealing with these conflicts, and was to be the subject of a stillborn ad hoc harmonization instrument.7 That exclusion can be taken as an indication of the original understanding that it was impossible to deal with arbitration in an instrument focused on jurisdiction
and recognition of court judgments due to the lack of homogeneity between the two situations. 8
Whatever the reasons for the exclusion, it is useful to list the main potential conflicts
that derive from it.
The first set of consequences relates to jurisdiction. For a start, the lack of harmonized
jurisdictional criteria applicable to arbitration-related proceedings means that in principle
there is no certainty as to which member State courts will have jurisdiction over the different
types of proceedings that may be brought before a domestic court in relation to a given arbitration agreement or arbitration proceedings. These include proceedings for the granting of
measures in support of arbitration (e.g. appointing or replacing arbitrators, evidentiary and
provisional measures) and proceedings relating to the validity of arbitration agreements and
to the validity of arbitral awards (typically setting aside proceedings). Combined with the absence of an EU-wide lis pendens rule for arbitration-related court proceedings, this allows for
the bringing of concurrent proceedings in different member States on these matters, which
in turn is likely to lead to conflicting court judgments.
Perhaps more importantly, the absence of jurisdictional criteria, and more specifically
of a harmonized approach to arbitral Kompetenz-Kompentenz, permits concurrent proceedings
before arbitrators and national courts on the validity of an arbitration agreement and on the
merits of a given dispute submitted concurrently to an arbitral tribunal and to a court. The
outcome can be an award that is irreconcilable with a judgment of a member State court. The
award will have to be recognized in the member States pursuant to the New York Convention, while the judgment will circulate pursuant to the Regulation.
As to judgments, the Brussels regimes inapplicability to arbitration entails that a member State is not required to recognize the judgments of other member States on the validity
and invalidity of arbitration agreements and of arbitral awards. This dovetails with the leeway
that States have in assessing the criteria for recognizing and enforcing awards even under the

See the European Convention Providing a Uniform Law on Arbitration, done at Strasbourg, January
20, 1966, European Treaty Series, No. 56.

See P Schlosser, Report on the Convention on the accession of the Kingdom of Denmark, Ireland and the United
Kingdom of Great Britain and Northern Ireland to the Convention on jurisdiction and the recognition and enforcement
of judgments in civil and commercial matters and to the Protocol of its interpretation by the Court of Justice, [1979] OJ
C 59, 92, para. 61; see also P Jenard, Report on the Convention on jurisdiction and the enforcement of judgments
in civil and commercial matters signed at Brussels, 27 September 1968, id., 13.

New York Convention9, which can result in an award being treated differently for these purposes in different member States.
With reference to judgments, it has also been debated whether under the Regulation
member States are required to recognize a judgment on the merits rendered in another
member State in disregard (or, more precisely, in alleged disregard) of an arbitration agreement. A further query is whether the obligation to recognize judgments under the Regulation
applies to judgments conflicting with an award rendered in the requested State or recognized
therein under the New York Convention.

B.

The momentum towards reform


In practice this situation has not given rise to widespread problems, and for many years

the few that did arise were easily and non-controversially dealt with by the Court of Justice.10
More recently there have been some well publicized cases of intra-EU conflicts on issues of
arbitration. Interestingly, some have been between two jurisdictions that hold themselves out
to be the most pro-arbitration within the EU, i.e. England and France.
Amongst the best known cases one may recall the Putrabali11 and Cytec v. SNF12 cases in
which awards set aside respectively by the English and Belgian courts were enforced in
France; the West Tankers and similar cases in which English courts enjoined the continuation
of proceedings before the courts of other EU member States in alleged disregard of arbitration agreements;13 the Fincantieri case14 in which the French courts declined recognition of an
9

See Radicati di Brozolo, The control system of arbitral awards, supra n 5.

10

See Van Uden Maritime BV v Deco Line (Case C-391/95) [1998] ECR I- 7091 and Marc Rich & Co. AG v
Societ italiana Impianti PA (Case C- 190/89) [1991] ECR I- 3855. Mention must also be made of Eco
Swiss v. Benetton (Case C-126/97) [1999] ECR I- 3055, which did not involve the then Brussels Convention, but nonetheless impacts on the relations between courts and arbitration, in that it lays down
an obligation for member State courts to consider European competition law as a component of public policy when reviewing arbitral awards. See also the judgments mentioned infra, n 74. The judgments
which denied the possibility for arbitral tribunals to request preliminary references to the European
Court of Justice (starting from Nordsee v Reederei (Case C-102/81) [1981] ECR I- 1095) are not directly
relevant to the present debate.

11

Socit PT Putrabali Adyamulia v. Socit Rena Holding, French Court of Cassation, 29 June 2007, (2007)
Rev. arb. 507 (annotated by E. Gaillard); (2007) JDI 1236 (annotated by Th. Clay).

12

SNF v. Cytec, French Court of Cassation, 4 June 2008, (2008) Rev. arb. 473 (annotated by I. Fadlallah);
SNF v. Cytec , Brussels Court of First Instance, 8 March 2007, (2007) Rev. arb. 303; Cytec v. SNF,
Brussels Court of Appeal, 22 June 2009, (2010) Cahiers de larbitrage/Paris J. Intl Arb. 1818 (annotated by Radicati di Brozolo).

13

West Tankers Inc. v RAS Riunione Adriatica di Sicurta SpA (The Front Comor), [2005] EWHC (Comm) 454;
West Tankers Inc. v RAS Riunione Adriatica di Sicurt Spa [2007] UKHL 4, [2007]. On a preliminary reference by the House of Lords the issue was decided by the European Court of Justice, Allianz Spa (formerly Riunione Adriatica di Sicurt Spa) & Anor v West Tankers Inc. (Case C-185/07) [2009] ECR I-663

Italian judgment that had refused to uphold an arbitration agreement15; the National Navigation case in which the English courts reached the opposite conclusion admitting the applicability of the Regulation to the recognition of a member State judgment even if supposedly
disregarding an arbitration agreement16. A recent addition to this collection is the Dallah saga
in which the English and French courts reached conflicting decisions as to the effects of an
arbitration agreement on a non signatory, leading to the upholding of the award by the Paris
Court of Appeal17 and its refusal of enforcement in England.18
An even more recent case is Yukos v. Rosnef which, insofar as relevant here, raises the
question of the effects before the courts of a member State (specifically England) of certain
pronouncements contained in a decision of another member State, which declared the enforceability of an award annulled in a third State.19 To this list must be added a decision on
the possibility of recognizing an award in England despite the fact that proceedings were
pending in Spain on the validity of the underlying contract and of the arbitration agreement
contained in it.20

(ECJ). The West Tankers decision has spurred a surfeit of commentary: see for instance P Sanmauro,
Sense and Sensibility: reviewing West Tankers and dealing with its implication in the wake of the reform of EC Regulation 44/2001, (2010) Journal of Private International Law 281, with further citations.
The last act of this saga for the moment is West Tankers v. Allianz s.p.a. and Generali Assicurazioni S.p.a.,
[2011] EWHC 829 (Comm): for a brief preliminary comment see K Davies, Whereto now, the Italian
Torpedo, Kluwerarbitrationblog, 16 May 2011.
14

Legal Department du Ministre de la Justice de la Rpublique dIrak v Fincantieri Cantieri Navali Italiani et alii,
Paris Court of Appeal, 15 June 2006, (2007) Rev. arb. 90 (annotated by S Bolle); Soc. Fincantieri v Gov.
Iraq, Genoa Court of Appeal, 7 May 1994, (1994) Rivista dellarbitrato, 505 (annotated by La China).

15

The same solution was upheld in ABCI c. Banque Franco-Tunisienne, [1996] 1 Lloyds Rep, 485, 488 and
in National Navigation v. Endesa Generacion SA, [2009] EWHC 196 (Comm).

16

See National Navigation v. Endesa Generacion SA, [2009] EWCA Civ 1397. The Court of Appeal rejected,
inter alia, the idea that a judgment which failed to give effect to an arbitration agreement alleged to be
applicable in the case would be contrary to public policy for the purposes of Article 33 of the Regulation, which is of course in line with Article 35(3). See also Bundesgerichtshof, February 5, 2009, IX
ZB 89/06, (2009) IPRax, 428 holding that a member State judgment ordering the issue of a bank
guarantee in respect of a claim recognized by an arbitral award does not for that reason alone fall outside the scope of the Regulation.

17

Gouvernement du Pakistan c. Socit Dallah Real Estate & Tourism Holding Co, Paris Court of Appeal, 17
February 2011, (2011) Cahiers de larbitrage/Paris Journal of International Arbitration [].

18

Dallah Estate and Tourism Holding Company v The Ministry of Religious Affairs, Government of Pakistan, [2010]
UKSC 46, on appeal from : [2009] EWCA Civ 755. See G. Born, Dallah and the New York Convention, Kluwerarbitrationblog, 7 April 2011; D Khanna, Dallah: The Supreme Courts Positively ProArbitration No to Enforcement(2011) J. Intl Arb. 127.

19

See Amsterdam Court of Appeal, April 28 2009, Rev. arb., 2009, 557 ss. (upheld by the Supreme Court
of the Netherlands, June 25 2010, in Yearbook of Commercial Arbitration, 2010, 423 ss. and Yukos Capital
v. OJSC Rosnef Oil Company [2011] EWHC 1461 (Comm), as to which see Radicati di Brozolo, The
control system, supra n. 5, para. D.3.

20

Sovarex S.A. v. Romero Alvarez, [2011] EWHC 1661 (Comm).

Regardless of the actual frequency of such conflicts, observed through the prism of
EU law this situation may appear as an unacceptable anomaly liable to breed chaos and,
worse still, in conflict with the elegant and well crafted order of the Regulation and with the
ideal of a Union-wide space of justice. It is not surprising that the Commission began to focus on the issue, probably in part under the influence of a subtle distrust for arbitration. The
issue was laid squarely on the table by the Heidelberg Report commissioned by the European
Commission, which came out in favor of the outright suppression of the arbitration exception.21 The report provided the inspiration for the Commissions Green Paper and Report
which put forward for discussion several proposals aimed, in its opinion, to ensure the
smooth circulation of judgments in Europe and prevent parallel proceedings.22
The Heidelberg Report and the Green Paper provoked conflicting reactions, many
openly hostile.23 The debate was further exacerbated by the European Courts West Tankers
judgment24 which outlawed anti-suit injunctions in support of arbitration. The solution enshrined in that judgment was largely predictable and logical in the light of the spirit of the
Regulation and of the underlying principle of mutual trust as evidenced in the Gasser and
Turner judgments.25 Nonetheless, the decision was viewed by some almost as a tragedy and
the product of an anti-arbitration bias that, by emasculating a cherished tool of English litigators, would provoke havoc and favor anti-arbitration torpedoes, parallel litigation and conflicting decisions.

C.

The policy options


There are several policy options to tackle this conundrum. Each one has at some point

been considered in the course of the past years.26 A brief analysis of their pros and cons
serves as a useful premise to assess the Proposal.

21

B Hess, T Pfeiffer, P Schlosser, Report on the Application of the Regulation Brussels I in the Member States,
Study JLS/C4/2005/03, p. 49 seq.

22

COM(2009) 175 final.

23

See the works referred to in n 1 above.

24

Supra, n 13. The West Tankers case has been the subject of endless academic discussion: for an overview with the main references see P Santomauro, Sense and Sensibility: Reviewing West Tankers and
Dealing with its Implications in the Wake of the Reform of EC Regulation 44/2001 (2010) JPIL 281325.

25

Gasser GmbH v MISAT Srl (Case C-116/02) [2003] ECR I- 14693; Turner v Grovit (Case C-159/02)
[2004] ECR I- 3565.

26

For a review of some of the options from the perspective of the European Commission see the
Commissions Impact Assessment of the proposal for the revised Regulation (SEC(2010) 1547 final).

C.1

The abolition of the arbitration exception


One option is the pure and simple abolition of the arbitration exception contained in

Article 1(2)(d) of the Regulation. This would presumably have the effect of bringing all arbitration-related proceedings and judgments under the purview of the Regulation. However,
given the peculiarities of arbitration, the lack of a uniform approach to arbitration in the legal
systems of member States and the fact that the Regulation is conceived to deal with court
proceedings and not with arbitration, the mere abolition of the exception is unworkable
without the introduction of some new rules to deal specifically with arbitration. As such, this
solution was never seriously advocated and is therefore usually considered in the context of
more far-reaching innovations, as discussed in Section C.3 below.
C.2

The expansion of the arbitration exception and the resurrection of anti-suit injunctions
At the opposite end of the spectrum is the expansion of the exclusion, to the point

even of reversing the West Tankers decision and of reintroducing the power of member State
courts to issue anti-suit injunctions in aid of arbitration, and to refuse recognition to judgments rendered in alleged disregard of an arbitration agreement.27 Not unsurprisingly, this
position was inspired by English legal circles, preoccupied by the effects of the demise of
anti-suit injunctions on the London arbitration market, and has been endorsed by the European Parliament.28
Such a solution is unacceptable because it is irreconcilable with the principle of mutual
trust between member State courts, which is at the core of the entire system of the Regulation, as confirmed by the Court of Justice in West Tankers.29 It is also unpalatable from a
broader policy standpoint. Particularly since anti-suit injunctions are used almost only by
English courts, allowing them would be tantamount to condoning what is viewed elsewhere
as an imperialistic and condescending policy, whereby the courts of one country take it upon
27

A variant of this option is the one that consists in the sharpening of the wording of the expression:
See Magnus, Mankowski, supra n 1, 22 ff.

28

According to the draft report (supra n 4) the following wording should be added in recital 11 of the
Commissions recast version: The whole matter of arbitration should be excluded from the scope of this Regulation. Consequently, this Regulation does not apply to any dispute, litigation or application which the parties have subjected to an arbitration agreement or settlement or which relates to arbitration by virtue of an international treaty.
Likewise, this Regulation does not apply to any dispute or decision concerning the existence or validity of an arbitration
agreement or settlement, or to any provisional or preventive measure adopted in the context of a dispute, litigation or application which the parties have subjected to an arbitration agreement or settlement or which relates to arbitration by virtue of an international treaty.

29

West Tankers (ECJ), supra n 13, para 30. The Court in West Tankers was, however, plainly wrong (at para
33) in referring to Article II(3) of the New York Convention in support of the prohibition of the
granting of anti-suit injunctions in support of arbitration by States other than the one where the validity of the arbitration agreement is contested.

themselves to decide whether foreign courts or litigants are correctly applying the law of arbitration or fail to respect the basics of arbitration agreements and good faith.
In the flurry of arguments against abusive interference with arbitration it is sometimes
overlooked that, in the absence of an objective overarching standard binding on all States for
the assessment of the validity and effects of arbitration agreements, not all recourse to a
court in the presence of an arbitration agreement is necessarily abusive. There are instances
where the application of different laws and conceptions of arbitration by member State
courts may lead to perfectly genuine divergences in solutions with regard to the same situations (for example the existence, validity and effects of a given arbitration agreement). Therefore the fact that a party alleged to be bound by an arbitration agreement has recourse to the
court of one member State, and that that court rejects an arbitration objection and decides to
entertain jurisdiction, is not necessarily the product of bad faith litigation tactics or of a
courts amenability to condone such tactics or of a lack of understanding of arbitration on
the part of that court. In an identical situation, a more progressive30 vision of arbitration
may consider valid and effective an agreement to arbitrate that would not be considered to
exist or to be valid or binding on certain parties according to a more traditional or conservative vision. The more progressive vision may rely on the need to give effect to the parties
agreement and to the needs of international business. The more conservative vision might
rely on the need for special evidence of consent to arbitration, or on the inarbitrability of
certain types of disputes. Against such a backdrop, a dose of arrogance is implied in classifying a priori as an anti-arbitration torpedo what may simply be a more cautious approach taken
by certain systems or the bringing of an arguably legitimate action.31
The possibility of a genuine diversity of positions on the same factual circumstances is
interestingly illustrated by the Dallah case,32 with the added feature that this time it is the
English courts that emerged as arbitration-unfriendly, at least on the reading of the situation

30

This term, like others used in this article, implies no value judgment. They are used simply as shorthand definitions to refer to different conceptions of arbitration, all of which are equally legitimate in
the absence of a detailed and binding uniform regime of arbitration for all States.

31

Given the lack of any generally applicable rule on jurisdiction over actions on the existence, validity
and effects of arbitral agreements, there is manifestly no basis for the proposition that the courts of
the seat (or of any other country for that matter) would have exclusive jurisdiction in respect of such
actions, or even a sort of preferential title to adjudicate over them. A unilateral exercise of jurisdiction
aimed at pre-empting the jurisdiction of other courts to rule on such matters is difficult to reconcile
with the spirit of the Regulation. Since decisions on such questions impact directly on the jurisdiction
of States, an exclusivity binding on all States can only derive from an international obligation. This is
precisely the problem that the proposed draft Article 29(4) of the Proposal discussed below is designed to overcome. The same, incidentally, is true as well for forum selection agreements, so much so
that a corresponding amendment to Article 23(1) of the Regulation is included in the Proposal.

32

See, supra nn 17-18.

by another member State court. In an ironic reversal of roles, the English courts ended up
appearing conservative and anti-arbitration from the progressive French stance. That is
because they took a position on the validity of an arbitration agreement that, from the viewpoint of the French system, appears formalistic and wrong as well as unfavorable to arbitration.
In the light of this, and given that the same game can be played by different players,
the liberty to resort to anti-suit injunctions is a recipe for chaos, which would be assured
were other member State courts to resort to techniques similar to anti-suit injunctions or
counter-anti-suit injunctions or even anti-arbitration injunctions to obtain the opposite result.33 Once again Dallah provides food for thought if one imagines a somewhat different
scenario based on similar circumstances, in which the Ministry of Religious Affairs, which
the English courts held not to be bound by the arbitration agreement, instituted proceedings
on the merits before those courts (for instance for negative declaratory relief). At that point
the French courts would, from their perspective, have been justified in issuing an anti-suit
injunction for breach of the purported arbitration agreement, assuming of course such a
remedy were available to them. In a strange nemesis, it would have been the English courts
that would have found themselves on the receiving end of an injunction in support of arbitration.34
However much one may criticize the Commissions initial proposals, a resurrection of
the power of member State courts to use anti-suit injunctions implied in an expansion of the
Regulations arbitration exception has nothing to recommend it either and cannot provide an
acceptable antidote to the problems at hand.

33

The fact that English courts tend to use anti-suit injunctions sparingly (see for instance Excalibur Ventures v. Texas Keystone Inc., [2011] EWHC 1624 (Comm)) is not of itself sufficient to resolve the problem of principle inherent in the perceived interference by the courts of one member State in the decisions of another court and in the fact that such inevitably judgments imply an assessment of the actions of the courts of other member States.

34

The argument that anti-suit injunctions are necessary to protect arbitration is considerably weakened
by Excalibur Ventures v. Texas Keystone Inc., [2011] EWHC 1624 (Comm). In that case an English court
issued an injunction restraining arbitration in Texas, allegedly on the grounds of lack of evidence of
the existence of an arbitration clause binding third parties. The decision may appear surprising when
contrasted with the West Tankers case where the English courts adopted the opposite position, taking
exception with the exercise of jurisdiction by the Italian courts in a case where there was likewise an
issue of applicability of an arbitration clause to a third party. In Excalibur the English court seeking to
exercise jurisdiction on the merits was in a similar anti-arbitration position as the Italian court in
West Tankers, with the difference that the English court felt entitled to interfere with the foreign proceedings. Disrespectful non English observers will certainly be quick to note that in Excalibur the enjoined arbitration was competing with the jurisdiction on the merits of the English courts whilst in
West Tankers the enjoined court proceedings were competing with London as the seat of the arbitration. This further example of the inherent subjectivity of the decisions of all courts and of the fact that
at times they are not (or appear not to be) immune from mundane and self-serving considerations is
the best evidence of the unacceptability within the Union of anti-suit injunctions.

10

C.3

The partial abolition of the arbitration exception and the introduction of some rules relating to
arbitration in the Regulation
Another solution, which is the one proposed by the Heidelberg Report and considered

in the Commissions Green Paper, is the so-called partial abolition of the arbitration exception and the introduction of a number of specific rules into the Regulation to deal with the
arbitration-related problems of jurisdiction and circulation of judgments.
That proposal has been the subject of so much discussion that it need not be dealt
with in detail here. As sketched in the Green Paper, it contemplated a special rule allocating
jurisdiction in relation to proceedings in support of arbitration to the courts of the member
State of the seat of the arbitration (particularly on the appointment of arbitrators and the setting up of the arbitral tribunal). As to jurisdiction, it would likewise have provided for the
priority of the courts of the member State of the seat of the arbitration to decide on the existence, validity and scope of arbitration agreements. This would have been coupled with a
uniform conflict rule on the validity of such agreements submitting them to the law of the
seat. It would have allowed the extension of the rules on provisional measures to arbitration.
It would have brought under the Regulation the circulation of judgments on the validity of
arbitration agreements and of judgments setting aside an award and merging (i.e. recognizing)
an award into a judgment. Finally, it would have allowed the refusal of enforcement of judgments irreconcilable with an award enforceable under the New York Convention or, alternatively, have given exclusive jurisdiction to the courts of the seat to certify the enforceability
of the award.
Such a proposal implied a significant regulation of several aspects of arbitration so far
exclusively governed by national law and rightly came under heavy criticism35. To mention
just some of the more problematic consequences, it would have entailed the repudiation of
arbitral Kompetenz-Kompetenz, probably the most fundamental tenet of arbitration law,36 it
would have introduced a conflict of laws rule which clearly has no place in an instrument on
jurisdiction and circulation of judgments, it would have precluded altogether the enforcement of annulled awards.37
Overall, the initial proposal was dogmatic and inspired by an insufficient understanding
of the peculiarities and needs of arbitration, of the differences between the member States
35

See e.g. Pinsolle, supra, n 1; for this authors criticism see Radicati di Brozolo, supra n 1, 124 seq.

36

See Born, supra n 5, []; Poudret, Besson, supra, n. 5, []

37

As is well known, this is a very complex issue, rich also in theoretical implications on the nature of
international arbitration: see, also for the requisite citations, Radicati di Brozolo, The control system
of arbitral awards, supra n 5.

11

arbitration laws, as well as of the underlying conceptual and practical complexities of the subject matter which do not deserve to be brushed away by an inadequately pondered stroke of
the legislators pen. Although touted as being inspired by a desire to favor arbitration38 and
not for the sake of regulating arbitration,39 in the end the proposal would have done just
that. It would have backhandedly rammed through a pervasive regulation of arbitration that
would have prematurely stifled the freedom of member States in this realm and the healthy
competition that goes with it, with the added complication of possibly leading to situations
which in some cases member States might have found incompatible with their obligations
under the New York Convention. It would have jeopardized the arbitration law acquis of
some member States, which has contributed to the progress of arbitration and has been important for the role of Europe on the world arbitration stage.
Some backers of the initiative tended to demonize the criticism leveled against the
Commissions original proposal portraying it as the self-serving product of a libertarian and
plutocratic lobby of arbitration practitioners. That does not take into account the fact that
arbitration is an efficient dispute settlement tool greatly appreciated by business, but in the
development of which States themselves have an interest. Because of the uncertainty generated by it and the perception that it would have been harmful for arbitration in seats within
the member States, at least in the short run the Commissions initial proposal might also
have jeopardized the appeal of arbitration within the EU, to the advantage of competing arbitration venues outside the EU.

C.4

An ad hoc instrument for the harmonization of arbitration law


Taking stock of the difficulties in addressing the problems of arbitration in the Regula-

tion, some have suggested that the only solution to tackle them is through a comprehensive
regulation of arbitration, which would have to be introduced by way of harmonization. Leaving aside the problem of the legal basis for any intervention of the EU in this area, the idea is
unworkable for an even more fundamental reason. As mentioned, the law and perhaps
even more the conceptions of arbitration still differ conspicuously between member
States, with some adopting a considerably more pro-arbitration stance than others for a variety of reasons. At the present time any attempt at harmonization would either be doomed to
failure or, worse, could result in a harmonization which would be unlikely to be at the more

38

This was certainly the spirit of the initial doctrinal proposal of Van Houtte, supra n 1, 517.

39

Green Paper, Sec. 7, first paragraph.

12

progressive levels. The result would be a setback for arbitration, with effects comparable to
those of the Commissions proposal mentioned above, with no noticeable upside given the
relative scarcity of major practical problems. The conceivable alternative of permitting flexibility to allow solutions more favorable to arbitration than the harmonized regime would not
be viable, since it would not eliminate the risk of divergent outcomes that are at the heart of
the proposals purporting to eliminate intra EU conflicts related to arbitration.
C.5

Maintaining the status quo


The last option was obviously to maintain the status quo. This course was inspired, on

the one hand, by the belief that the problems that the advocates of change sought to address
were not serious enough to justify tinkering with the existing solution. More fundamentally,
it was inspired by an underlying pessimism as to the Commissions willingness to refrain
from a maximalist approach and by a fear that the inclusion of rules on arbitration into the
Regulation would prove to be a Trojan horse to bring arbitration within the EUs competence, with the drawbacks discussed above.
It soon became apparent that this solution was not viable due to the strong political
agenda of the Commission, for which a proposal on arbitration seemed to be an essential
component of success in its drive for the review of the Regulation. Acknowledging this, and
inspired by an if you cant beat them join them approach, many opponents of addressing
arbitration in the Regulation felt compelled to convert to a mild reformism which was reflected in the Commissions Group of Experts. Largely thanks to that Groups success in
elaborating a minimalist solution that found its way into the Proposal, the original fears have
been allayed for the moment.

D.

The Proposal

D.1

The new draft Article 29(4) and the related provisions


The aim and scope of the Proposal on arbitration is set out in a new Recital 20 in the

draft recast Regulation, which states that the the effectiveness of arbitration agreements should []
be improved in order to give full effect to the will of the parties and foresees the introduction of special
rules aimed at avoiding parallel proceedings and abusive litigation tactics where the agreed or designated seat of the arbitration is in a Member State.

13

This goal is achieved essentially by the introduction of one new provision, Article
29(4), which lays down a specific lis pendens rule for arbitration and the first sentence of which
reads as follows:
Where the agreed or designated seat of an arbitration is in a
Member State, the courts of another Member State whose jurisdiction is contested on the basis of an arbitration agreement
shall stay proceedings once the courts of the Member State
where the seat of the arbitration is located or the arbitral tribunal have been seised of the proceedings to determine, as
their main object or as an incidental question, the existence,
validity or effects of that arbitration agreement40.
The following two sentences state, respectively, that the court whose jurisdiction is
contested may decline jurisdiction immediately, if so prescribed by its national law,41 and
must do if and when the existence, validity or effects of the arbitration agreement are established.42
This rule is complemented by a purely instrumental rule (Article 33(3)) whose only aim
is to define the moment when an arbitral tribunal is deemed to be seized for the purpose of
establishing lis pendens,43 and serves the same purpose as Article 33(1) of the Proposal for
court proceedings. A further ancillary, and non-controversial, amendment is introduced in
Article 36 (31 of the current text) on provisional and protective measures to codify the Van
Uden44 solution according to which member State courts are permitted to grant such measures even if the merits of the dispute are subject to arbitration.
For the rest, the draft maintains intact the arbitration exception of Article 1(2)(d), the
wording of which had to be slightly modified to include a reference to the new lis pendens rule
and its ancillary provision. For the avoidance of doubt, the extent of the exclusion is driven
home in Recital 11, which clarifies that the Regulation does not apply to the form, existence, validity and effects of arbitration agreements, the powers of arbitrators, the procedure before arbitral tribunals, and

40

The last paragraph of Article 29(4) excludes the applicability of the provision to disputes relating to
insurance, employment and consumer contracts.

41

This is the case notably in France: see Article 1448 of the French Code of Civil Procedure in force as
of May 1, 2011.

42

Although the third sentence of Article 29(4) is silent on this, the only reasonable interpretation is that
the finding on the arbitration agreement which imposes on the court seized to decline jurisdiction can
come both from the court of seat and from the arbitral tribunal (subject, in the latter case, to the review of the arbitral tribunals finding by the court of the seat).

43

That moment is defined as the one when a party has nominated an arbitrator or has requested the
support of an institution, authority or a court for the constitution of the tribunal.

44

Van Uden, supra n 10.

14

the validity, annulment, and recognition and enforcement of arbitral awards. This provisions makes explicit the principles expressed in the Reports to the Brussels Convention.45
D.2

The avoidance of parallel proceedings and abusive litigation


On the whole, the adoption of the draft Article 29(4) can be an effective tool to avoid

parallel proceedings and abusive litigation tactics, thereby achieving the more realistic goal
embraced by the Commission once it abandoned its initial plan to establish hegemony over
arbitration.
The way in which Article 29(4) does this is by requiring the courts of member States
other than those of the seat of the arbitration (the non-seat courts )46 to stay proceedings
when an arbitration objection to their jurisdiction is raised, provided that proceedings on the
existence, validity or effects of the arbitration agreement are brought either before the courts
of the seat or before an arbitral tribunal.
It is worth noting that the new rule does not expand the scope of the Regulation in relation to arbitration agreements. Already under the current regime the verification of the

validity of an arbitration agreement that arises as an incidental question in proceedings


covered by the Regulation (which is how the issue usually arises) falls within the scope of
the Regulation. This principle was expressed by the Court of Justice in West Tankers,47 and is
consistent with the holding in Marc Rich48 that, to determine whether a dispute falls within
the scope of the Convention (now the Regulation), regard must be had to the scope and
main subject of the proceedings. Under the new rule a court seized with the validity of arbitration agreement as an incidental question loses the power to make the first decision on that
question if it is brought before the court of the seat or an arbitral tribunal.
The obligation to stay applies only if the seat is in a member State. This limitation is
natural, given that the obligation to stay implies an element of mutual trust between the
courts involved, since in most cases the seat courts role will ultimately be crucial to the decision on the arbitration agreement. Such trust is not necessarily warranted when the courts of
third countries are involved.

45

See above, n 8.

46

This term to indicate the national court seized in the presence of an arbitration agreement is more
neutral than the one torpedo court (used by Illmer, supra n 3) which is unjustifiably derogatory for
the reasons explained in Section C.2 above.

47

West Tankers (ECJ), supra n 13, para. 26. On this point the Court referred to the Evrigenis-Kerameus
Report, [1986] OJ C 298, 1, at para. 35.

48

Supra n 10, para. 26.

15

A further limitation to the obligation to stay is that it applies only if the seat in a member State is agreed or designated. As specified in Recital 20, this in principle means that the
parties have specifically designated the seat in a member State themselves, or that such designation has been made by the arbitral tribunal or by a third party agreed upon by the parties
(typically by reference to arbitration rules)49 or by a national court competent under its law to
designate the seat of the arbitration in the absence of agreement, which may have been
seized by the party relying on the arbitration to designate the seat.50 Although in marginal
cases this rule may prevent the proper functioning of the lis pendens rule, at least it avoids the
convoluted and highly objectionable rule for the identification of the seat foreseen in the
Heidelberg Report.51 In practice is simply puts an additional onus on the parties wishing to
rely on arbitration agreements to decide on the seat up front.
The obligation to stay arises once the arbitral tribunal or the court of the seat has
been seized.52 The term once indicates that the stay is mandatory also if the seizing occurs
after the proceedings are brought in the non-seat court. No time limit is specified for the
seizing, but is it arguable that this must occur within the ordinary time limits for challenging
jurisdiction under the law of the non-seat State, in order to ensure efficiency and predictability and to forestall wait and see strategies.53
As mentioned, this mechanism essentially eliminates the danger of parallel proceedings
and abusive litigation and should put to rest the concerns of the orphans of anti-suit injunctions after West Tankers. A party that relies on an arbitration agreement need not worry that
the agreement will be thwarted by abusive recourse to the courts, because it has the ability to
prevent the exercise of jurisdiction by such courts simply by starting arbitration proceedings.
It will then be the party contesting the validity of the agreement or its applicability in the case

49

See for instance Article 16 of the LCIA Arbitration Rules; Article 14 of the ICC Rules of Arbitration;
Article 4 of the Milan Arbitration Chamber Rules; Article 16 of the Swiss Rules.

50

See for instance Article 816 of the Italian Civil Procedure Code; Article 1717(1) Code Judiciaire Belge;
Article 1073(2) WBR.

51

Supra n 21, para. 125 and Radicati di Brozolo, supra n 1, 125.

52
53

As mentioned, that moment is defined by Article 33(3) of the draft.


See Illmer, supra n 3, 663. The draft Article 29(4) does not set a time limit for the court of the seat to
decide on the validity and effects of the arbitration agreement, similar to the new draft Article 29(2)
which applies to lis pendens between courts and fixes a six month deadline and provides for consultation between the courts concerned if the deadline cannot be respected. If the solution were considered
workable in practice and adopted for lis pendens between courts, it would be reasonable to assume that
the same rule should apply also in the case under discussion where the validity of the arbitration
agreement is submitted to the court of the seat (so Illmer, ibid., 663). If it were assumed to apply also
where jurisdiction is vested in an arbitral tribunal, the adoption of that rule would amount to introducing a form of communication between the tribunal and a court which is not customary in arbitration.

16

at bar that will have the onus of resorting to the court of the seat if it is not content to fight
the matter out before the arbitral tribunal.
This solution strikes a sensible middle ground between the Heidelberg proposal, which
seemed to impose on the party relying on the arbitration agreement the unreasonable obligation to seize the courts of the seat, and the perhaps excessively pro-arbitration solution of the
first scholarly proposal, which would have devolved the matter exclusively to the arbitral tribunal,54 thus adhering in full to the negative Kompetenz-Kompetenz which is unpalatable to most
member States.55
The Proposal assumes that the courts of the seat will have jurisdiction to assess the validity and the effects of the arbitration agreement. This assumption cannot necessarily be
taken for granted. Since the criteria for jurisdiction in matters of arbitration are not covered
by the Regulation due to the arbitration exception, and the lis pendens rule in Article 29(4)
cannot be interpreted as attributing jurisdiction to the court of the seat, the issue would seem
to have to be governed by the jurisdictional rules of the member State concerned. Since the
seat of the arbitration is arguably the place of performance of the arbitration agreement, that
might be a sufficient jurisdictional connecting factor under most member State laws.56 If,
however, in a given case the seat court were not to have jurisdiction under its own rules, under Article 29(4) it would seem to be required to defer to the decision of the arbitral tribunal.
That said, before the court of the seat the party contesting the arbitration (i.e. the original plaintiff in the non-seat court) will usually petition for negative declaratory relief on the
applicability of the arbitration agreement. This will probably be its only option in light of the
ordinary lis pendens rule applicable to court proceedings (Article 29(1) of the draft, currently
Article 27(1) of the Regulation), which will prevent the court of the seat from exercising jurisdiction on the merits given that it will be second seized with respect to the non-seat court
initially seized of the dispute. Even if the arbitration agreement is declared invalid, proceedings on the merits before the court of the seat will be possible only if the first proceedings
are discontinued or the first court has declined jurisdiction. Moreover, the court of the seat
may often lack jurisdiction over the merits pursuant to the Regulation if the seat was chosen
for its neutrality with respect to the dispute.
54

Van Houtte, supra n 1, 520.

55

Negative Kompetenz-Kompetenz postulates that national courts must always refer the question of arbitral
jurisdiction to the arbitrators, regardless of when the arbitrators are seized: See Born, supra n 5, 855;
Poudret, Besson, supra n 5, para 458.

56

The fact that under most national laws the courts of the seat have jurisdiction over annulment actions
does not necessarily mean that they also have jurisdiction over the validity of the arbitration agreements in the absence of jurisdiction on the merits: see Poudret, Besson, supra n 5, para []; Born, supra
n 5, []; Radicati di Brozolo, The impact of national law and courts, supra n 5, [].

17

Whether bringing proceedings on the validity and effects of the arbitration agreement
before the court of the seat is an option once the arbitration has been initiated will depend
on the law of the member State concerned and on the particular variant of arbitral KompetenzKompetenz to which it subscribes. This is because, since the Regulation only deals with conflicts among member State courts, conflicts between the arbitration and the courts of the seat
remain outside its scope and are left to the lex arbitri. That law may allow both proceedings to
proceed in parallel or may require the court to stay its proceedings (or to decline jurisdiction)
if the arbitration is already pending when it is seized.57 The combination of these factors may
significantly raise the hurdles for the party seeking to contest the arbitration.
Once the arbitral tribunal or the court of the seat (or even both) has been seized, the
non-seat court must suspend proceedings and await the decision on the existence or validity
or effects of the arbitration agreement. If the validity is upheld, the non-seat court must decline jurisdiction, as required by the third paragraph of Article 29(4).58 The second paragraph
of Article 29(4) permits the non-seat court to decline jurisdiction as soon as its jurisdiction is
contested on the strength of the arbitration agreement, if its national law so prescribes, as is
for instance the case of French law.59
If, on the other hand, the arbitration agreement is not upheld by the court of the seat,
proceedings on the merits may be resumed in the non-seat court where they were originally
brought. However, as discussed below,60 the Regulations inapplicability to the recognition of
judgments relating to arbitration allows for the possibility that the arbitration agreement will
be upheld by the non-seat court when proceedings are resumed before the non-seat court
following the negative decision of the court of the seat on the validity or relevance in the
given case of the arbitration agreement. This could occur if, contrary to the pessimistic expectations of the party invoking the arbitration agreement, which induced it to seek a stay in
the non-seat court and to bring the matter before the court of the seat, it turns out that the
formers assessment of the arbitration agreement is more favorable than that of the latter.

57

On the different approaches of national laws to this question see Poudret, Besson, supra n 5, para 495;
Born, supra n 5, 1020.

58

Were the court of the seat subsequently to hold the agreement invalid in a setting aside action (which
would probably only occur if the decision on the validity of the arbitration agreement was made by the
arbitral tribunal), the non-seat court would again be free to exercise jurisdiction.

59

See Article 1448(1) of the French Code of Civil Procedure.

60

Section F.2(a).

18

D.3

The non-seat courts obligation to stay proceedings.

D.3(a) The mechanism


The goal of protecting arbitration agreements pursued by Article 29(4) could in principle also have been achieved by means of a rule similar to the current Article 23 on choice of
court (and its counterpart for arbitration agreements, i.e. Article II of the New York Convention), coupled with the equivalent of the new Article 32(2) which gives priority to the chosen
court in case of lis pendens. Such a solution would have had the advantage of preventing the
exercise of jurisdiction by a member State court in contravention of the arbitration agreement simply by invoking the latter.
Under Article 29(4), instead, invoking the arbitration agreement is not enough. If the
party relying on the agreement wishes to avoid litigating in a State court where it is summoned, it is almost forced to start proceedings itself. This it can do by going to arbitration,
but this can be awkward, also from the point of view of costs, if it has no claims against the
plaintiff in the non-seat court proceedings.61 In that case it may be more straightforward for
it to bring declaratory proceedings on the existence, validity or scope of the arbitration
agreement before the court of the seat. Of course, if the party relying on the arbitration
agreement is convinced that its position will be upheld by the non-seat court, it retains the
option it has today (when it is the only option), i.e. to fight the matter out before that court.
However, if it is unsuccessful on the point, it risks a final judgment on the merits that would
be enforceable under the Regulation.62
The perceived advantage of the lis pendens rule of Article 29(4) over the other solution
is that it does not require the introduction of rules on the validity and effects of arbitration
agreements, such as those contained in Article 23 on choice of courts and in Article II of the
New York Convention. Introducing such rules into the Regulation would imply some measure of harmonization of the rules on arbitration agreements, which are significantly different
from one State to the other63 and thereby a curtailment of the freedom of each member State
in this matter. The insertion of such rules in the Regulation would inevitably also permit and
61

Although the language of Article 29(4) would seem to require that the arbitral tribunal has been seized
of proceedings to determine, as their main object or as an incidental question, the existence, validity
or effects of the arbitration agreement, a reasonable reading of the provision would not require the
claimant in the arbitration to raise itself the issues relating to the arbitration, since the issue of the validity would normally be brought up by the respondent (i.e. the plaintiff in the non-seat court). Nor of
course could one reasonably maintain that, if the respondent failed to contest the arbitration agreement before the arbitrators the obligation to stay proceedings provided by Article 29(4) would not apply.

62

Infra Section F.2(d).

63

For an overview see Born, supra n 5, 563; Poudret, Besson, supra n 5, para 300.

19

even invite references to the European Court on issues of interpretation of the substantive
and formal requirements of arbitration agreements.64 All that would be orthogonal to the
intention not to regulate arbitration in the Regulation clearly asserted in Recital 11, according
to which the Regulation does not apply to the form, existence, validity and effects of arbitration agreements. The fear is obviously that any harmonization or intervention by the Court
would result in a watering down of the more liberal conceptions on the notion and effects of
arbitration agreements. These are a central element of the arbitration laws of some member
States with a pre-eminent role in the world of international arbitration.
Under the Article 29(4) mechanism, it is the simple raising of an objection to jurisdiction on the score of an arbitration agreement, together with the bringing of proceedings on
the arbitration agreement before the courts of the seat or the arbitrators, that blocks the nonseat court proceedings. This would seem to make a specific definition of an arbitration
agreement unnecessary, and accordingly the freedom of member States to govern arbitration
agreements as they want would seem to remain intact.
D.3(b) The conditions for the stay: the definition of arbitration agreement
It is not a foregone conclusion that, despite the intentions, this issue can in the long
run be kept completely outside the scope of the Regulation, and of the jurisdiction of the
Court of Justice. The proposed Article 29(4) poses a number of issues that might not insulate
it completely from the scrutiny of the Court and that arise essentially from the lack of a definition of arbitration agreement.
Particularly in the presence of still divergent conceptions on fundamental issues relating to such agreements, a non-seat court in a member State without sophisticated knowledge
of arbitration, or that does not espouse the more progressive and arbitration-friendly views
on the nature, existence and scope of arbitration agreements, may legitimately find certain
concepts alien. Confronted with what it could consider an outlandish objection, it could be
puzzled, for instance, as to whether it must stay proceedings pursuant to Article 29(4) even
where, for example, the very existence of the arbitral agreement raised before it is doubtful
or the agreement is not in writing or is invoked against a non-signatory or in respect of a dispute that would not seem to be covered by the agreement on a strict construction or where
there are potentially competing arbitration agreements. Similarly, with regard to arbitrability,
the non-seat court could be perplexed as to whether the new provision actually requires it to
64

Such as those which led to the judgments of the European Court of Justice on the form in forum selection clauses: Group Josi v Universal (Case C-412/98) [2000] ECR I- 5925; Coreck Maritim v Handelsveem
(Case C- 387/98) [2000] ECR I- 9337; Mainschiffahrtsgenossenscharft v Le Gravires Rhnanes (Case C106/95) [1997] ECR I- 911.

20

stay proceedings even where the arbitration objection is raised in relation to a matter not
considered arbitrable under the lex fori.65
There is more. Article 29(4) seems to provide that the mere raising of an arbitration
objection is sufficient to force a non-seat court to stay proceedings. This could lend itself to
abuses, which are the flip side of the ones decried by the opponents of court intervention in
arbitration, and by the advocates of anti-suit injunctions in support of arbitration, that Article
29(4) is aimed to prevent. Taken literally, the rule would mandate the suspension of proceedings in the non-seat court even in the face of far-fetched or even spurious objections based
on the existence of an arbitration agreement raised merely for tactical reasons. Examples of
such objections would be the case where a party invokes an arbitration agreement contained
in a contract that has absolutely nothing to do with the dispute (perhaps even one between
third parties) or an agreement that is patently null and void or whose existence it is impossible to demonstrate. It is therefore legitimate to query whether the non-seat court can be required to stay proceedings whenever faced with a mere allegation, even if manifestly spurious, that such an agreement is applicable to the dispute at hand. At present no system requires this, including the New York Convention66 or French law.67
Since such doubts would revolve around the interpretation of a provision of the Regulation, according to the principles on preliminary rulings the non-seat court could not be
prevented from referring them to the Court of Justice.68 The simple statement in draft Recital 11 that the Regulation does not to apply to the form, existence, validity and effects of
arbitration agreements, could hardly be taken to preclude the Court from ruling on the
meaning of a term (arbitration agreement) of the Regulation, which is crucial to the functioning of the lis alibi pendens rule and, more generally, on the scope of the obligation to stay
the proceedings before a member State court.
It is difficult to foresee how the Court would rule at that point. Prescribing recourse to
some form of autonomous approach to the interpretation of the notion of arbitration
agreement and of its substantive and formal requirements would be at odds with the postu65

Although arbitrability may be assessed under different laws depending on the context in which it
arises, there is little doubt that it falls to be assessed under the lex fori when it comes to assessing the
validity of an arbitration objection (see Born, supra n 5, []).

66

See Article II(3) pursuant to which the courts obligation to refer the parties to arbitration does not
apply if the arbitration agreement is null and void, inoperative or incapable of being performed. On
this provision see Born, supra n 5, 95.

67

Supra n 41.

68

The problem would not be avoided by assuming that a general principle prohibiting abus de droit could
to come into play in this situation. Convincing as this solution may seem, there is clearly nothing to
stop a national court from submitting a preliminary reference on the bearing of that principle in the
case before it.

21

late that the Regulation, and European Union law, do not cover the form, existence, validity
and effects of arbitration agreements and that such notions are to be left to national law.
Nor, of course, is it conceivable to allow the non-seat court to rely on its own law, as was the
case until now even under the New York Convention. Such a solution would defeat the entire exercise, because it would put the decision on the stay back in the hands of the non-seat
court, thereby reopening the door to parallel actions.
One way out would be to compel the non-seat court to decide on the stay by assessing
the merit of the arbitration objection according to the law of the member State of the seat.
Such a solution, which amounts to a new conflict rule, would be analogous to the one followed for forum selection agreements by the 2005 Hague Convention on Choice of Court
Agreements69 and introduced in Article 23 of the draft revised Regulation.70 This solution is
unsatisfactory too because it still leaves the matter largely to the discretion of the non-seat
court. The risks of such an approach are evidenced once again by the Dallah case,71 where
the English courts purporting to apply French law reached a decision completely at odds
with that reached by the French courts.
The only interpretation consistent with the letter and the spirit of the new provision is
probably that the mere raising of an arbitration objection, together with the bringing of proceedings before the arbitrators or the court of the seat, suffices to trigger the obligation to
stay, leaving it to the arbitral tribunal or the court of the seat to decide whether there is a
valid arbitration agreement applicable in the case at bar.
However, this would leave open the risk of abuse. That risk is not easy to eliminate,
precisely due to the lack of consensus on the requirements for the validity and effects of arbitration agreements amongst the laws of member States, which may make it difficult to pinpoint an abuse. As indicated above,72 an arbitration objection that may appear perfectly
straightforward and genuine under a more conservative arbitration law may appear abusive
under a more arbitration-friendly law. In this respect the situation is different from that of
Article 23 on forum selection agreements, since in that case the conditions that must be satisfied by such agreements are spelled out directly in the Regulation itself. Nor can recourse be
69

See Article 6(1).

70

According to the revised Article 23, the chosen court shall have jurisdiction unless the [forum selection] agreement is null and void as to its substance under the law of that [i.e. the one of the chosen court]
Member State (emphasis added).

71

Supra, n 18. The fact that the differences in national laws on arbitration agreements are considerably
greater than those on choice of court agreements (admittedly because those have been harmonized for
years by the Brussels regime) makes the solution envisaged for the latter less acceptable for arbitration
agreements.

72

Section C.2.

22

had to the extremely pro-arbitration solution of French law, which caters for abuse by allowing the court not to defer to arbitration where the arbitration agreement is manifestly inexistent or invalid73. Here again the prima facie test would be left to the non-seat court, with the
potential for overly restrictive interpretations of the existence and validity of the arbitration
agreement.
The lack of an easy and obvious fix to this conundrum leaves open the prospect of an
intervention of the Court of Justice, which may well be forced to lay down some guiding
principles that could eventually transmute into an embryonic regulation of the requirements
of arbitration agreements. It can only be hoped that the Court will not be too heavy-handed
and will adopt an approach that will avoid suppressing the more liberal conceptions regarding arbitration agreements, although there is no certainty that that will be the case. The
Courts recent restrictive rulings on the effects of arbitration clauses in consumer contracts74
should not in themselves be viewed with excessive concern, as indicating an anti-arbitration
bias, since consumer arbitration is a special case understandably viewed with suspicion in
several legal systems.75

E.

The implications of the proposed rule

E.1

An innovative model for assessing the effects of arbitration agreements


The proposed new lis pendens rule to settle conflicts between arbitration and court pro-

ceedings within the EU has profound implications and a very innovative potential. Until now
arbitration agreements and arbitrability were assessed by member State under their own law,
including its conflict rules. The only standard to decide challenges to jurisdiction based on
arbitration agreements, to stay proceedings and to compel arbitration was the forums arbitration law, which could differ significantly from other national laws given the considerable
leeway States enjoy in interpreting Article II of the New York Convention. As a result, at
present certain disputes, which some would argue should be submitted to arbitration, can
73

Supra n 41.

74

Elisa Maria Mostaza Claro v Centro Mvil Milenium (Case C- 168/05) [2006] ECR I- 10421; Asturcom Telecomunicaciones SL v Maria Cristina Rodrguez Nogueira (Case C- 40/08) [2009] ECR I- 9579 (all ECJ).For
the record, the validity of arbitration clauses in consumer contracts has very recently been upheld by
the US Supreme Court in AT&T Mobility LLC v Conception, No. 09-893 of April 27, 2011.

75

See for instance R Drahozal, J Friel, Consumer Arbitration in the European Union and the United
States (2002) 28 N.C. J. Intl L. & Comm. Reg. 357; M Bates, A Consumers Dream or Pandoras
Box: Is Arbitration A Viable Option for Cross-Border Consumer Dusputes? (2004) 27 Ford. Intl L. J.
823. See also A Johnson, I Wildhaber, Arbitrating Labor Disputes in Switzerland (2010) J. Intl Arb.
631; B Castellane, Arbitration in Employment Relationship in France (2009) J. Intl Arb. 293.

23

end up being decided by courts or being the subject of disruptive courts proceedings. The
potential for disturbance is increased by the occasional resort to questionable litigation tactics
and by the inefficiency of certain courts.
To prevent such occurrences the Commissions project eliminates the freedom of
member State courts to decide themselves, applying their own law, on challenges to their jurisdiction based on arbitration agreements, and bestows the power to resolve that issue upon
the courts of the seat, as well as upon the arbitrators. Hence, unless by coincidence they are
also the court of the seat, under Article 29(4) member State courts faced with an arbitration
objection to their jurisdiction will be obliged to stay proceedings and to bow to the decision
of the arbitrators or of another member State court on the validity of arbitration agreements
and on their effects on the forums power to adjudicate the dispute. In deciding on this issue
the court of the seat is entitled to apply its own law, a foreign law identified by means of conflict of laws or transnational rules (rgles matrielles). The arbitrators enjoy even more freedom.
Such an approach is unprecedented and may appear almost revolutionary, in that it deprives courts of their traditional power to determine the scope and validity of arbitration
agreements, and thus their own jurisdiction, according to their own standards.
Giving to the arbitrators the decision on the validity of an arbitration agreement, and
therefore in practice on the ability of the agreement to oust the jurisdiction of the forum, is
of course not a complete novelty, since it reflects the broadly recognized principle of Kompetenz-Kompetenz. Nevertheless, in the context of the new draft Article 29(4) Kompetenz-Kompetenz
takes on almost the negative form accepted in France, but not, as recalled above, in most
other countries. Under the new rule the non-seat member State court seized with the dispute
does not even have the power to review the arbitrators decision which may oust its jurisdiction.
The solution laid down by Article 29(4) is even more innovative insofar as it imposes
reliance on the decisions of the court of the seat. It is as yet unheard of that the court seized
of the dispute must defer to the courts of another State to determine whether its own jurisdiction can be ousted by an arbitration agreement.

E.2

The seeds of home country control in arbitration?


The curtailment of the freedom of member State courts to determine the effects of ar-

bitration agreements on their jurisdiction is the price to pay for enhancing the effects and the
protection of arbitration agreements, and more generally of arbitration as an efficient dispute

24

settlement mechanism. As discussed below,76 the new mechanism has the ability to achieve
this objective and to prevent concurrent proceedings before courts.
The proposed mechanism is novel in terms of arbitration law because it entails a significant increase in the role of the courts, and of the arbitration law, of the seat. Indeed,
whilst the lex arbitri notoriously plays an important role in governing the arbitration,77 until
now it could never influence the jurisdiction of courts of other countries. In this respect the
new lis pendens rule, which requires deference to the decisions of foreign courts,78 presupposes an element of mutual trust amongst courts. For this reason such a rule cannot be extrapolated on a general level, but it seems justified in the context of the EU, one of the
founding elements of which is precisely the mutual trust by member States in each others
courts and legal systems.
Thus, albeit new in terms of arbitration law, the proposed solution falls broadly into
the classic mold of the home country control paradigm that is a central feature of much of
EU law.79 As where it is applied in other sectors, so also in the context of arbitration this
principle has a considerable innovative and liberalizing promise because it unleashes a further
competition between legal systems beyond the one already determined by the New York
Convention, and should lead to an evolution towards more pro-arbitration regimes as States
compete to attract arbitrations seated on their territories.
The peculiarity in this case is that, contrary to the traditional model, the home country
control of arbitral agreements by the courts of the seat is not accompanied by a minimum
harmonization of the rules on such agreements. This means that member States must now
rely entirely on the arbitration laws of other member States where the arbitrations are seated,
and cease to be able to rely on their own conceptions, even for example when it comes to
arbitrability, despite the absence of any Union-wide harmonization. On the other hand, it can
be argued that there already exists a de facto minimum harmonization as to the protection and
enforcement of arbitration agreements, which derives from the obligation to respect such
agreements laid down by the New York Convention that is binding on all member States.
This should dispel undue concerns that, in exercising their power to decide whether an arbitration agreement trumps the jurisdiction of the courts of another member State, the courts
of the seat will decide on arbitrary or completely unforeseeable criteria. This admittedly does
76

See Section E.3.

77

See Radicati di Brozolo, The impact of national law and courts, supra n 5, [].

78

Mutual trust is owed to the decision of the court of the seat both if has decided itself on the validity
and effects of the arbitration agreement and if it has upheld a decision of the arbitrators on this point.

79

F Berry, S Hargreaves, European Union law (New York, Oxford University Press, 2nd edn, 2007), [].

25

not rule out that, as indicated above, in some cases the results can go further, in terms of the
acceptance of the effects of arbitration agreements, than might be expected from the perspective of some member States. This is consistent with home country control.
At least as regards arbitrability, the concern as to the lack of harmonization is to some
extent assuaged by the fact that the proposed new mechanism does not apply to arbitration
in areas which might be particularly problematic, such as consumer, employment and insurance contracts.80
E.3

The rule in practice: the essential role of the choice of the seat
In the short term and in individual cases, the new system will not always be capable of

ensuring the highest level of protection of arbitration agreements and of preventing concurrent proceedings. The outcome of the potential conflicts will depend on the laws that come
into play from time to time.
The result more favorable to the validity and effects of the arbitration agreement will
be achieved when the seat is in a member State that takes a liberal stance in assessing those
agreements. In such a case, proceedings before the courts of any other member State will be
impossible even if they are brought in a State with a less favorable law or, put otherwise, with
a more restrictive or formalistic interpretation of the requirements of such agreements, not
to mention in a member State amenable to condoning spurious actions. The likely proarbitration decision of the courts of the seat will oblige the courts of the other States to grant
a stay or to decline jurisdiction altogether, provided that the party relying on the arbitration
agreement seizes the seat court or goes to arbitration. In that case the arbitration will not be
threatened by concurrent court proceedings, at least within the EU.
The new rule may prove less helpful if the seat is in a member State whose proarbitration attitude cannot be taken for granted for whatever reason. If the court of the seat
declines to uphold the arbitration agreement, the suit will be allowed to proceed before the
courts first seized in another member State, or even before the courts of the State of the seat
if the proceedings on the merits have been brought before them and they have jurisdiction
under the Regulation. In that case it will be impossible to avoid concurrent proceedings if the
arbitration goes on despite the courts refusal to uphold the arbitration agreement81.
The conclusion is evidently that much will depend on the choice of the seat by the parties. That choice is already extremely important today, but under the new provision it will be
80

Supra n 40.

81

For the implications of this situation see infra Section F.2(d).

26

even more so because, if well considered, it should avert the risk of court proceedings which
are either concurrent with the arbitration or may discourage the bringing of arbitration for
fear of resultant complications. Even more than today, therefore, the parties would do well
to ponder that choice carefully, also in the perspective of precluding court actions that risk
derailing the arbitration.
Unfortunately the parties do not always pay sufficient attention to this issue. Additionally, in some circumstances at least one of them may not have a true ability to choose the
seat, as may happen when contracting with a State or a public entity. In such cases the new
draft rule of the Regulation is almost powerless to support the arbitration in the face of a
hostile attitude of the courts of the seat. This is the unwanted consequence of foregoing the
harmonization of arbitration law. Whilst this solution avoids diluting the more proarbitration achievements of some laws, it likewise does not avoid the possible pitfalls of the
less favorable laws. The problem may slowly disappear if the competition inherent in the new
mechanism leads to a pro-arbitration evolution in the member States that adopt a different
attitude today. If it does not, the importance of the seat will remain paramount and parties
will have to remain aware that, even within the EU, seating an arbitration in certain States
will continue to entail risks for the arbitration.
The important difference compared to the present situation will be that seating the arbitration in a pro-arbitration member State will, instead, provide a robust protection for the
arbitration that was heretofore not available.

F.

Other matters
As discussed above, the draft revised Regulation contains no other material rules be-

yond the one on lis pendens, and is therefore much more limited in scope than the original
proposals. The consequence of this, combined with the restatement of the inapplicability of
the Regulation to arbitration in Article 1(2)(d), is that all other matters pertaining to arbitration will continue to be governed by the national laws of the member States.
F.1

Jurisdiction on ancillary and setting aside proceedings


Specifically, the draft does not contain rules on jurisdiction either for ancillary proceed-

ings or for setting aside proceedings. Neither of these omissions is liable to lead to particularly serious conflicts or is otherwise problematic. Today the jurisdictional criteria for these
proceedings are in practice harmonized in the laws of most States, and notably the member

27

States, in that as a rule their courts will exercise jurisdiction exclusively in respect of arbitrations seated on their territory. Positive or negative jurisdictional conflicts on these points are
therefore likely to arise only in the relatively exceptional cases in which the seat has not been
designated by the parties or by the arbitrators or an arbitral institution82. In such a situation it
is conceivable that the parties will resort to the courts of different member States, claiming
that the arbitration is seated there, and each court could decide the matter differently based
on its national law and entertain proceedings on the same matter. This risk can reduced by
competent drafting of arbitration agreements which implies the designation of the seat, also
for a variety of other reasons. The other possible conflicts83 are perhaps even more remote in
practice. There would therefore be no practical justification for dealing with this matter in
the Regulation.
F.2

The circulation of judgments


What may, instead, be seen as more problematic is the continued inapplicability of the

Regulation to the recognition of arbitration-related judgments. This is relevant in particular


for four categories of judgments.
F.2(a) Judgments on the validity and effects of arbitration agreements
The first category is that of judgments of the courts of the seat State on the validity
and effects of arbitration agreements. With regard to such judgments the situation is different depending on whether they uphold or deny the validity of the arbitration agreement.
If the seat court upholds the arbitration agreement, it follows without discussion from
the third sentence of draft Article 29(4) that the decision is conclusive and that the courts of
the non-seat State cannot adjudicate the dispute and must decline jurisdiction. The opposite
would not seem to hold true. In the logic of lis pendens, the object of the judgment of the seat
court is simply to prevent concurrent court and arbitration proceedings. Since the Regulation
is not otherwise applicable to arbitration, and explicitly is not applicable to the form, existence,
validity and effects of arbitration agreements (Recital 11), it would seem to follow that the non-seat
court first seized should remain free to uphold the validity of the arbitration agreement and

82

As recalled (supra, n 51), contrary to the much criticized earlier proposals, the Proposal does not contain rules for the identification of the seat of the arbitration.

83

Another situation could be the one in which the courts of the State of the seat decline to exercise such
jurisdiction (as for instance in the well known case Titan Corp. v. Alcatel CIT. SA., Svea Court of Appeal, 28 February 2005, (2005) XXX Y. B. Com. Arb. 139). A partial cure to that situation can be
found in Article 1505(4) of the French Code of Civil Procedure as amended as of May 1, 2011 which
codifies the earlier jurisprudential rule conferring jurisdiction on the French courts to act as juge dappui
in the face of a risk of denial of justice, such as when no State is willing to provide assistance.

28

to decline jurisdiction.84 In other words, it would seem impossible to draw from the lis
pendens rule an obligation for the non-seat court to exercise jurisdiction if, under its own parameters for the assessment of such agreements, it considers valid the agreement invoked in
support of an arbitration objection to its jurisdiction. The opposite conclusion would also
risk putting the non-seat member State in violation of the New York Convention, were it
held that the agreement deserves to be upheld in accordance with Article II, and specifically
that there is no valid reason not to uphold it under Article II(3). Thus, the non-seat court
should retain the same freedom to uphold the validity of the arbitration agreement that it
would have had absent the suspension of the proceedings before it pursuant tp Article 29(4).
The situation should be no different if, for whatever reason, the proceedings in the court
first seized are discontinued and are subsequently brought before the courts of another
member State, which remains likewise free to uphold the agreement.
Although this seems to be the only solution consistent with the limited scope of the reform of the Regulation and with its inapplicability to arbitration, it contains the germs of a
problem. If the non-seat court upholds the arbitration agreement despite the negative finding
of the court of the seat as to its applicability, the parties have little alternative but to resort to
arbitration.85 However, if the court of the seat has already ruled on the invalidity or inapplicability of the arbitration agreement, there is a strong likelihood that it will rule negatively on
the validity of the award in the highly probable challenge proceedings. Of course also today it
is conceivable that the courts of the seat will eventually annul an award on grounds of the
invalidity of an arbitration agreement on the strength of which another court has declined
jurisdiction. The difference is that today such an outcome is uncertain, since at the outset
there is no decision of the court of the seat, whereas under the new framework it is almost a
foregone conclusion right from the beginning of the arbitration. There is obviously the possibility that the award will be recognized in other member States despite its vacatur at the
seat, but this is a controversial issue.86
A similar problem may arise when it comes to the recognition and enforcement in a
member State under the New York Convention or the domestic rules of the enforcing
84

So also Benedettelli (supra n 3), Section 6.2. The fact that recognition of judgments on the validity of
an arbitration agreement is not governed by the Regulation obviously does not prevent a court from
relying on its own general rules on the recognition of foreign judgments (or on notions such as issue
estoppel: see DSV Silo- und Verwaltungsges. m.b.H. v Owners of the Sennar, [1985] 1 Lloyds Rep. 521 (HL))
to give effect to such a rule. Contrary to the position defended here, Illmer (supra n 3, 664) and Magnus, Mankowski (supra n 1, 25) consider that the court first seized would be bound under the Regulation to recognize by the decision of the seat court.

85

A conceivable alternative is to bring proceedings before another court having jurisdiction under the
Regulation.

86

Infra subsection F.2(b).

29

State of an award made pursuant to an arbitration agreement declared invalid or inapplicable by the courts of the seat in the context of Article 29(4) mechanism.87 The fact that the
judgment of the seat court is not covered by the Regulations rules on the circulation of
judgments means that, in assessing the award, in particular under Article V(1)(a) of the Convention, the courts of the enforcing member State will not be bound by the positive or negative findings of the court of the seat as to the validity or invalidity of the agreement. Accordingly, they may hold the award unenforceable for invalidity of the arbitral agreement, even if
the agreement was upheld by the seat court; conversely, they may enforce it holding it to
have been made under a valid arbitration agreement despite the seat courts contrary finding.
The pragmatic solution to these problems which, incidentally, already exist today
is once again for the parties to choose a seat sufficiently well disposed towards arbitration, or
at least more so than the foreseeable fora where actions in potential violation of the arbitration agreement could be brought. Obviously this does not eliminate the risk of problems
arising in practice.

F.2(b) Judgments on the validity and effects of arbitral awards


The inapplicability to arbitration of the Regulations rules on the circulation of judgments also entails the non-entitlement to recognition and enforcement under the Regulation
of judgments of the seat State on the annulment or validity of awards.
As a practical matter, this might not raise serious concerns when the courts requested
of enforcement adhere to the more traditional view on the fate of annulled awards. Under
that view an award annulled at the seat simply ceases to exist, more or less like a court judgment quashed by a higher court, and therefore almost by definition cannot be recognized or
enforced in other States. This view has little regard to the setting aside judgment and therefore to the possibility of its recognition by other States, but only relies on the hypothetical
factual consequence of the judgment, i.e. the annulment. The view seems consistent with
Article V(1)(e) of the New York Convention, which allows contracting States not to enforce
awards annulled in the State of origin with no regard to the possibility of recognition of the
underlying judgment. In most legal systems, including those of most member States, this
solution is not questioned and is applied systematically.88 Where that is the case, the Regulations inapplicability to annulment judgments is irrelevant for the purposes of the consistency
87

The problem arises regardless of whether the courts of the seat have decided on the annulment of the
award.

88

See Poudret, Besson, supra n 5, para []; Born, supra n 5, [].

30

of solutions within the EU. The fact that the annulled award is considered per se unenforceable eliminates at the root the risk of divergent outcomes.
However, as is equally well known, that is not the only solution to this problem, nor is
it even necessarily the preferable one. Some States admit, either as a rule or at least in certain
circumstances, the enforceability in their territory of foreign awards annulled at the seat.89
This solution has solid legal and policy underpinnings.90 Without going into a discussion of
its merits, it is unquestionably legitimate today even within the EU,91 and it would continue
to be so under the Proposal. As a consequence, an award set aside at the seat would remain
enforceable in the member States that subscribe to the more permissive theory.
In other words, the Putrabali92 situation would remain possible also under the Proposal,
thus creating a potential for conflicting situations, since the award would be enforceable in
some member States and not in others, including obviously the one of the seat. This would
have a further effect, since the recognition or enforcement of an award in a given member
State, regardless of whether it has or has not been set aside at the seat, prevents the recognition in that member State of a judgment in conflict with the award.93 This being the case, if
the annulled award is enforced in some member States and not in others, a hypothetical
member State judgment conflicting with the award could be enforced in some States under
the Regulation but not in others.
F.2(c) Judgments on the enforcement of arbitral awards
No significant debate should arise at least with regard to judgments granting recognition and enforcement to an arbitral award in a member State, be it under the New York
Convention or under the domestic rules of the recognizing forum. It is generally acknowledged that these types of judgment are not intended to circulate and to have effects other
than in the State where enforcement is requested, since their function is simply to determine
whether the award can have effects in that State94. This is all the more so, given that certain
grounds for refusal of enforcement are peculiar to the law of the forum, such as arbitrability

89

See Poudret, Besson, supra n 5, para 879; Born, supra n 5, [].

90

See Radicati di Brozolo, The control system of arbitral awards, supra n 5, with citations.

91

Supra, n 84 and corresponding text.

92

Supra n 11. A similar situation obtained in the SNF case (supra n 12), with the difference that in that
case enforcement was granted in France before the annulment decision in of the Belgian court of first
instance (which was subsequently reversed by the Brussels Court of Appeal).

93

Infra, Section F.2(d).

94

See Poudret, Besson, supra n 5, para. 849.

31

and public policy.95 The fact that the Regulation does not apply to arbitration-related judgments is thus not a problem with regard to this type of judgments.96
F.2(d) Judgments on the merits
The last category of judgments is that of judgments on the merits rendered by member
State courts notwithstanding the existence of an arbitration agreement allegedly applicable to
the dispute at hand.97 The point has given rise to debate in the past and there have been decisions holding such judgments not to be entitled to recognition under the Regulation by virtue of the arbitration exception of Article 1(2)(d).98
Under the current regime that solution is impossible to reconcile with the European
Courts position that the verification as an incidental question of the validity of an arbitra-

tion agreement invoked to contest the jurisdiction of a member State court falls within
the scope of the Regulation.99 Based on this principle the English Court of Appeal in National Navigation100 convincingly held that a preliminary decision on the validity and effects
of an arbitration agreement rendered in the context of proceedings falling under the
Regulation was covered by the Regulation, adding that such a decision cannot be denied
recognition on grounds of public policy even if it fails to uphold the arbitration agreement. A fortiori the same holds true for a final judgment on the merits, even if the subject
matter of the dispute was covered by an arbitration agreement.

95

See Article V(2)(i) and (ii) of the New York Convention.

96

The situation is incidentally the same for decisions of member State courts on the enforcement of a
court judgment under the Regulation which have no impact on the enforceability of the judgment in
other member States. The principle is summarized in the French expression exequatur sur exequatur ne
vaut.

97

A category of judgments which is intermediate between the ones considered here and those on the
validity of awards discussed above is that of judgments on damages for breach of an arbitration
agreement. There are good reasons to hold that where the alleged breach consisted in an action before
a member State court which resulted in a judgment denying the validity or effects of the arbitration
agreement, an action for damages would be incompatible with the Regulation, and specifically with the
principle of mutual trust, essentially for the same reasons that prohibit anti-suit injunctions (Illmer, supra n. 3, 654; [], Damages as a remedy for a breach of an arbitration agreement: A European Dimension (2011) J. of Private Intl L.). If such a judgment were nonetheless entered by a member State
courts, it would probably have to be recognized under the Regulation largely for the same reasons that
compel the recognition of judgments rendered notwithstanding the existence of an arbitration agreement.

98

See for instance Legal Department du Ministre de la Justice de la Rpublique dIrak v Fincantieri Cantieri Navali
Italiani et alii, supra n 14; ABCI c. Banque Franco-Tunisienne, supra n 15; National Navigation v. Endesa Generacion SA, [2009] EWHC 196 (Comm), supra n 15.

99

Supra, nn 47 and 48 and corresponding text.

100

Supra, n 16.

32

This solution should continue to apply also if the Proposal is adopted in its current
form, irrespective of whether the Article 29(4) mechanism has been engaged in a given case.
A judgment having rejected the arbitration objection and decided on the merits must irrefutably be recognized if the condition for lis pendens did not materialize due to the failure of the
party invoking the agreement to bring timely arbitral proceedings or court proceedings at the
seat, thus relieving the court seized from its obligation to grant a stay and eventually to decline jurisdiction. In this case there is no change with respect to the situation prevailing today. The same applies, however, also if the court failed to respect the obligation to stay proceedings or to decline jurisdiction notwithstanding a decision of the court of the seat or of
the arbitrators upholding the arbitration agreement. This is consistent with the basic principle
of the Regulation that prohibits the review of jurisdiction at the recognition and enforcement
stage and which has been reinforced in the draft revised Regulation with the abolition of the
exequatur.101
That said, the violation of the obligation to stay laid down by the new Article 29(4) is
likely to be an exceptional occurrence. Under the new system there is consequently little danger that the persistence of the obligation to recognize judgments rendered on the merits despite the existence of a valid and applicable arbitration agreement will seriously interfere with
agreements to arbitrate.
There is also an important caveat, which may contribute to reinforce the effects of arbitration agreements from a practical standpoint even if the Article 29(4) rule is exceptionally
not respected. If the judgment on the merits is handed down subsequently to an award rendered in concurrent proceedings and conflicts with the award, that judgment cannot be recognized in a given member State regardless of the Regulation if, in that member State, the
award has been granted recognition or enforcement under the New York Convention or under the local law. This is not spelled out in Article 34 of the Regulation (Article 48 of the revised version), which lists as grounds for non-recognition (n. 3 and 4) only the irreconcilability of the foreign judgment with judgments of the forum and with judgments of other States
that fulfill the conditions for recognition in the forum. However, the requirement of respect
of res judicata, which manifestly underlies these grounds, cannot but apply also to arbitral
awards. Awards benefit from the same res judicata effect as court decisions, which is implied
also in the obligation to recognize arbitral awards and to enforce them laid down in Article

101

According to Illmer, supra n. 3, 665 the seat courts decision on the validity of an arbitration agreement
would be binding also in a subsequent enforcement action in another member State. This conflicts
with the principle that the Regulation does not apply to the existence, validity and effects of arbitration
agreements.

33

III of the New York Convention.102 The conclusion that an enforced arbitral award trumps a
subsequent court judgment is reinforced by the consideration that the recognition in a given
State of an award under the Convention cannot be prevented by the fact that proceedings are
pending before a court in the State requested of enforcement and IS likely to preclude the
continuation of such proceedings.103

G.

An assessment

G.1

Success in avoiding parallel actions and conflicts


As regards arbitration, the Proposal raises several practical and theoretical issues. Reac-

tions will doubtless be conflicting.


All but the most prejudiced opponents of the Commissions efforts will probably have
to concur that the Proposal goes a long way towards achieving a workable mechanism to defuse torpedo actions and to prevent parallel court and arbitration proceedings and conflicts
between awards and judgments. This was the main goal pursued by the Commission once it
abandoned its more far-reaching and dogmatic plans to deal with all possible problems and
interactions between arbitration and member State jurisdictions.104 The new mechanism has
the capability of avoiding such problems, at least if the parties exercise sufficient care in
choosing the seat of the arbitration and have the leeway to do so in the specific factual circumstances of their dealings. In this respect the system is irrefutably more effective in ensuring its stated goal than the one prevailing today. It is unlikely to be any less effective than
resort to anti-suit injunctions, without of course suffering from the grave defects of that instrument in the context of a system of mutual respect as is the EU.
Beyond this success, there is room for conflicting assessments. One way to articulate
the pros and cons of the Proposal is to consider the matter from two opposite perspectives.
The first one, which can simplistically be dubbed a pro-arbitration perspective, is the one
102

See Born, supra n 5, 2879; LG Radicati di Brozolo, Res judicata, P Tercier (ed) Post Award Issues (2011)
ASA Special Series No. 38, 2011, 127.

103

This line of reasoning underlies West Tankers v. Allianz s.p.a. and Generali Assicurazioni S.p.a., [2011]
EWHC 829 (Comm) which allowed the enforcement of an award as a judgment with a view to establishing its primacy over a future possibly inconsistent judgment of a foreign court. See also A Briggs,
Civil Jurisdiction and Judgments, Oxford, 2009, 5th ed 700.

104

See Recital 20 of the draft revised Regulation and 2.4.1.3 of the Commissions Impact Assessment
(supra, n 26) which identifies as the specific objective of the exercise to ensure a transparent and
predictable coordination of court and arbitral proceedings which preserves and improves the attractiveness of European Union as a place for arbitration and as the operational objective to avoid
parallel court and arbitration proceedings and reduce the possibilities of undermining arbitration proceedings through abusive litigation tactics.

34

of the more fervent detractors of any involvement in arbitration of member State courts (especially those of member States other than their own) and more generally of those who fear
the EU casting a shadow on arbitration. The other is that of the conflicts purists who advocate an all-embracing regulation of every possible interface between arbitration and court
proceedings with a view to avoiding all conceivable conflicts within the common jurisdictional space of the European Union.
G.2

The view from a pro-arbitration perspective


One set of criticisms from the pro-arbitration faction of the debate could focus on

the remaining failings of the proposed solution in terms of protecting arbitration. As shown
above, there still remains a danger that a given arbitration agreement will not be upheld even
where it arguably should, at least according to generally accepted principles.105 This may occur where the seat of the arbitration is in a State with restrictive views on the subject. This,
however, is the inescapable price of the failure to harmonize the requirements of arbitration
agreements. While this avoids the likely prospect of a watering down of the more significant
progress in the field of arbitration achieved by some legal systems, it conversely does not do
away with the more restrictive approaches of other systems. As recalled, the resulting risk for
the enforcement of arbitration agreements can nevertheless be minimized by a wise choice of
the seat of the arbitration and by starting arbitration proceedings if a suit is brought in a
member State court. Admittedly, the law of the seat might require that the arbitration be discontinued if the validity of the agreement is not upheld by the local courts or is contested
before them. The supporters of arbitration will in any case have to concede that the fact that
the arbitrators decisions on the validity and effects of the arbitration agreement are put almost at the same level as that of the court is a significant breakthrough for arbitral KompetenzKompetenz beyond its present role in many member States.
In the same vein it could be lamented that the proposed system does not eliminate the
obligation to recognize judgments on the merits which have flouted an arbitration agreement.106 If it is true that this can lead to inconsistencies between judgments and awards, under the new system such an occurrence should be exceptional, and certainly even less likely
than today, especially if the parties have made diligent use of the tools made available to
them. In any event, the system seems to strike a fair balance between the need to protect arbitration agreements and the equally fundamental principle of mutual trust that imposes the
recognition of judgments on the merits dealing with arbitration as an incidental question and
105

Supra Section E.3.

106

Supra Section F.2(d).

35

precludes the control of the jurisdiction of the court of origin of the judgment submitted for
enforcement. In pragmatic terms the chances of prevalence of the award may be further increased by the fact that the courts most likely to take a negative view of arbitration agreements may often also be fairly inefficient and unable to come to a decision on the merits before the award is rendered.
A second set of criticisms from the same side of the divide might relate to the fact that
the new solution allows the EU and the European Court, so to speak, to put a foot in the
door to the world of arbitration. As shown above, once references to arbitration are introduced into the Regulation, it may prove difficult to prevent the Court from taking a stance
on some arbitration-related issues that could be submitted to it, starting from the definition
of arbitration agreement which triggers the new lis pendens rule.107 There are other issues liable
to attract the Courts attention, in particular the effects of judgments on the validity of arbitration agreements rendered under the new mechanism.108 It is far from sure that the Court
will be deterred from intervening in these matters by the restated inapplicability of the Regulation to arbitration. In the past Article 1(2)(d) of the Regulation has not sufficed to make it
shy away from dealing with arbitration when the interface between the latter and matters
over which it has competence has come to the fore.109 As indicated, it cannot be taken for
granted that the Courts attitude will be as favorable to arbitration as that of many arbitration
specialists and of certain member State laws.
The inclusion of these, albeit limited, rules on arbitration in the Regulation could also
be criticized by some for providing the Commission and the Court with a springboard for
moving toward the inclusion of arbitration within the external and internal competences of
the Union.110
It is true that, for the reasons mentioned above, skepticism is justified as to whether an
exercise of these competences by the Union today would be good for arbitration or for that
matter would be useful and justified on a broader level. However, whatever the merits of this
consideration, it is nave to assume that, the debate having come this far as a result also of
West Tankers, of the Commissions interest in the subject matter and of the increasing popu107

Supra Section D.3(b).

108

Supra Section F.2(b). In particular, the Court might view the solution put forward in this paper as too
artificial and not entirely consistent with the new mechanism of Article 29(4) and with the aim of
avoiding conflicting solutions.

109

Supra n 10 and corresponding text. There are of course other situations in which the Court could have
been called upon to give a preliminary ruling. A typical one is the one decided in National Navigation
(supra n 16) which raised a matter already touched upon obiter in West Tankers.

110

See the Courts Opinion 1/03 on the Communitys competence to conclude the new Lugano Convention (7 February 2006), [2006] ECR I-[].

36

larity of arbitration in the last decade, the spirit could be put back in the bottle simply be
avoiding dealing with arbitration in the Regulation or even by expanding the arbitration exception.111 Since the view sometimes held that arbitration falls outside the scope of the Unions competence is scarcely tenable, refraining from inserting any reference to arbitration in
the Regulation would not of itself suffice to forestall the possibility of some form of intervention by the Union on the matter.
An objective assessment cannot overlook that the Proposal is far removed from the
initial dogmatic position and the aim to regulate all possible conflicts between courts and
arbitration that inspired the Heidelberg Report and the Green Paper. The Proposal is moderate and avoids any type of harmonization of the law of arbitration, which was rightly opposed because of its potential for jeopardizing progress and the high quality acquis of certain
systems. Barring interventions of the Court of Justice, it leaves intact national arbitration laws
and the autonomy of member States to govern arbitration as they wish. Competition between legal systems will continue and might actually be further fostered as a result of the increased role of the law and courts of the seat.
The Proposal should also lay to rest concerns that changes in the Regulation would
harm the European arbitration market to the benefit of outside arbitration venues. By better
shielding arbitrations seated in the EU from competing court proceedings, at least within the
EU, the Proposal should actually strengthen the local arbitration market making it more attractive to seat arbitrations within the EU. The more arbitration-friendly seats within the EU
would clearly stand to reap the greatest benefits.
The Proposal is a therefore a reasonable compromise that achieves much of what was
sought without unacceptable concessions. From the point of view of the promotion of arbitration it seems more important to work in the direction of trying to inoculate into the European Union a greater understanding of arbitration and of its positive potential, which might
have a useful impact on any future position that the Court or even the legislator may be
called upon to take. That course seems preferable to continuing to fight a rearguard battle,
which can only feed an unjustified suspicion that arbitration has something to hide from
European Union law.112

111

See Benedettelli (supra n 3), para 4, who, however, also seems to advocate further harmonization of
EU law on the subject (para 7) in contrast to the view maintained here.

112

See L G Radicati di Brozolo, Arbitration and Competition Law: The Position of the Courts and of
the Arbitrators, (2011) Arbitration International 1, 23-25.

37

G.3

The view from a conflicts purism perspective


From their side, the partisans of a full-fledged inclusion of arbitration under the Regu-

lation will be disappointed and will point to the possible conflicts stemming in particular
from the inapplicability to arbitration-related judgments of the rules on the recognition of
judgments113 and to a clash with the elegance of the Regulation system.
To this one may retort, for a start, that the elimination of parallel proceedings on the
merits before courts and arbitral tribunals is just as important a success for an orderly European judicial system as it is for the protection of arbitration.114 As to the other dysfunctions
that may be criticized in the envisaged reform, they are there already today. Thus while the
continued inapplicability of the Regulation to arbitration-related judgments might not permit
a step forward on the other fronts, it is not a step back either. Furthermore, experience so far
shows that the potential problems arise very seldom in practice and can probably be resolved
by the courts on a case by case basis until greater consensus has been achieved. In any event,
those problems raise complex issues that go to the root of the law of arbitration and cannot
be adequately resolved by the hasty and surreptitious introduction of a few rules into an instrument such as the Regulation, which is not intended to provide the framework for arbitration.115
In any event, conflicts purists still have the opportunity of a second shot at dealing
with arbitration in a different and more appropriate context by means of a harmonization of
arbitration law,116 although, as mentioned above, this course is unadvisable at the present
juncture because times are not ripe.
Scholars of European orthodoxy may also take comfort in the fact that the new system
would extend to arbitration a form of home country control that enhances the role of the
court of the seat, albeit in parallel with the arbitral tribunal. This transplant of a basic tenet of
European Union law into the law of arbitration is interesting from the point of view of legal
technique, and unquestionably reduces in a pro-integration and pro-arbitration perspective
the member States current freedom to deal with arbitration agreements and determine their
own jurisdiction in the presence of arbitration agreements. The fact that it is not accompanied by minimum harmonization is in part offset by the applicability in all member States of
113

Supra Section F.2.

114

One problem from this perspective is that the new rule introduces a potential for disruption of court
proceedings by means of abusive arbitration objections (supra Section D.3(b)), which is the reverse of
the abusive recourse to arbitration complained of today. As discussed, it is likely that the Court of Justice may be called upon to resolve this issue.

115

Supra Section C.3.

116

For a discussion of the scope of possible harmonization see Benedettelli (supra n 3), para 7 f.

38

the New York Convention. Albeit not as directly as European harmonization, that makes for
a basic common ground rule capable of ensuring a minimum level of respect of arbitration
agreements to justify deferring decisions on the validity of arbitration agreements to the
courts of the seat.
G.4

Conclusion
The Proposal is overall a satisfactory compromise to the quandary of the interface be-

tween arbitration and the European jurisdictional space.117 On a realistic assessment of the
options on the table and of their broad implications, it deals more than adequately, and certainly more satisfactorily than anti-suit injunctions, with the most serious issue on the table,
that of parallel arbitration and court proceedings, with no significant drawbacks or steps
back. For all the criticisms that will certainly be leveled against it from different quarters, it is
difficult to imagine a solution capable of addressing that problem and the remaining unsolved ones in a way that, at the present stage of the debate, would not create even greater
problems and dissatisfaction at least in one or the other of the camps that have aggressively
battled over the issue in the last decade.
If adopted, the solution currently on the table should defuse the principal sources of
tension. While it will not lay to rest the debate on the interface between arbitration and the
European space of justice, it may contribute to take some of the steam out of the conflicts
purists quest for greater intervention of the European Union in the field of arbitration.

117

The constructive and at the same time moderate approach of the Commissions solution has led this
author to overcome the initial scepticism against any amendment to the Regulation to deal with arbitration (see LG Radicati di Brozolo, supra, n. 1).

39