Wadi Sudr Notes

Wadi Sudr

Facts

Whether a judgment of a fellow member state of the European Union ruling against a stay of proceedings on the basis that an arbitration clause was not incorporated in the contract can be relied on as creating an issue estoppel so as to prevent the English court deciding the point differently.

The broad picture is as follows. The appellant, Endesa, commenced proceedings in the Mercantile Court of Almería in Spain in order to arrest a vessel and claim damages for late delivery under a bill of lading for discharging a cargo of coal at a port some way short of the contractual point of discharge. The respondents, NNC, commenced proceedings in the Commercial Court in London without reference to any arbitration clause claiming a declaration of non-liability. NNC however sought a stay from the Almería court on the grounds that there was an arbitration clause incorporated by reference to a charterparty in the bill of lading, alternatively on the grounds that the Commercial Court in London was first seised. The Almería court ruled (so Endesa alleges) that no arbitration clause was incorporated into the contract, refused to decline jurisdiction on that basis, but stayed proceedings pending the Commercial Court in London establishing its position as the court first seised.

NNC commenced an arbitration and also arbitration proceedings in London (the arbitration proceedings). Endesa's response was to assert that the judgment of the Almería court was binding on the English court under article 33 of Council Regulation (EC) No 44/2001 (the Regulation) so as to preclude the English court from deciding that question a different way.

Question

Whether the judgment of the Almería court is a judgment to which the Regulation applies and whether it gives rise to an issue estoppel in the Commercial Court in London in the arbitration proceedings.

Holding

Do the Spanish Proceedings fall within the Regulation?

NNC accept that the proceedings brought in the Almería court claiming damages for breach of the bill of lading would come within the Regulation. The question is whether a judgment which is not on the merits but which is ruling that an arbitration clause has not been incorporated and that proceedings should not be declined for that reason is a judgment which must be recognised and enforced under Chapter III of the Regulation.

It seems to me that the Advocate General in that paragraph is advising that a judgment on a preliminary issue in proceedings within the Regulation will be a judgment within the Regulation, even if, when looked at in isolation, the subject of the preliminary issue fell within the ambit of arbitration.

That is consistent with the decision in Marc Rich on which the Advocate General was relying. In Marc Rich the argument was that a preliminary issue as to the existence of an arbitration clause came within the Regulation, although the subject matter of the proceedings was arbitration.

If, because of the subject matter of the dispute, that is, the nature of the rights to be protected in proceedings, such as a claim for damages, those proceedings come within the scope of Regulation (EC) No 44/2001, a preliminary issue concerning the applicability of an arbitration agreement, including in particular its validity, also comes within its scope of application.

I have no doubt that the court was agreeing with the Advocate General in saying that a preliminary ruling as to the...

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