West Tankers: no escape? Damages for breach of arbitration clause permissible under EU law

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Addleshaw Goddard has previously reported on a number of the earlier decisions in the long-running saga of West Tankers Inc v Allianz SpA and another [2012] EWHC 854. In the latest decision, the Commercial Court has confirmed that there is no principle of EU law that requires an arbitral tribunal to decline to hear a claim for damages for breach of an arbitration agreement, even if the tribunal’s award is inconsistent with the decision of the court of an EU member state. The effect of this means that where a party commences proceedings in breach of an arbitration clause, although those proceedings cannot be the subject of an anti-suit injunction in the courts of another member state, a claim for damages or an indemnity may be brought before the arbitral tribunal against the party in breach.

To recap, arbitration proceedings were commenced in London arising out of a charter party and a collision with a pier in Italy. Court proceedings were subsequently commenced in Italy by the pier owner and its insurers in breach of an arbitration clause. Further proceedings were commenced by the ship owner (West Tankers) in the English Courts seeking an anti-suit injunction in respect of the Italian proceedings. The anti-suit injunction was granted at first instance but was subsequently referred to the European Court of Justice (ECJ). The ECJ held that it was for the Italian Courts as the Courts first seised (under the Brussels regulation) to rule on the issue without interference from the English Courts and that an anti-suit injunction in aid of the arbitration clause was non-compatible with the Brussels Regulation…

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