Case law Developments in PIL Views and comments

London Steam-Ship Owners: Looking Beyond the Case through the Lens of Res Judicata

This is the third contribution to an online symposium on the ruling of the European Court of Justice, of 20 June 2022, in London Steam-Ship Owners’ Mutual Assistance Association Ltd v Spain. The first post was contributed by Adrian Briggs, the second one by Gilles Cuniberti. The post below was written by Antonio Leandro, who is Professor of Private International Law at the University of Bari. Update: another contribution to the symposium has been published in the meanwhile, authored byFrançois Mailhé.

In London Steam-Ship Owners’ Mutual Assistance Association Ltd v Spain the Court attempted to strike a balance between the ‘integrity of a Member State’s internal legal order’ and the ‘provisions and fundamental objectives’ of the Brussels I Regulation. This is as much apparent as the fact that the Court ruled closely on the circumstances of the case.

‘Internal integrity’ means that the recognition cannot trigger irreconcilability between judgments in the requested State, even when it comes to ‘judgment entered in terms of an award’. The relevant ‘provisions and fundamental objectives’ of the Brussels I Regulation prevent the same judgment from being recognized where: (a) jurisdiction (arbitration) clauses in insurance contracts have worked against (third) injured parties in such a way as to restrict their right to bring direct actions against the insurer, and (b) lis pendens rules have been breached.

What about ‘judgments entered in terms of an award’ that instead comply with ‘provisions and fundamental objectives’ of the Regulation? The expression may refer to ‘judgments entered in terms of an award’ not breaching the relative effect of jurisdiction (arbitration) clauses or the lis pendens rules, or, more generally, not encroaching on the provisions of the Regulation that protect weak parties.

Nothing seems to prevent such judgments from falling under Article 34(3) of the Brussels I Regulation and, even more, under Article 45(3) of the Brussels I Regulation (Recast), because the definition of ‘judgment’ in Article 2(a) does not appear to be limited to the material scope of the Regulation.

Res Judicata in the Interplay between Brussels I and Arbitration

The Court put res judicata outside the realm of public policy. In this respect, the Court went beyond the circumstances of the case, as it reiterated that ‘the use of the “public-policy” concept is precluded when the issue is whether a foreign judgment is compatible with a national judgment’ (para 78, which refers to Hoffmann).

The message is clear: the ‘issue of the force of res judicata’ has been regulated exhaustively in Article 34(3) and (4) of the Brussels I Regulation (Article 45 (1) (c) and (d) of the Brussels I Regulation (Recast)). The issue has been regulated exhaustively when it comes to ‘judgments’, even those ‘entered in terms of an award’.

Instead, the ‘issue’ — i.e., the use of the public policy exception under the Brussels I Regulation (Recast) to protect the force of res judicata against the recognition of irreconcilable foreign judgments – remains open when it comes to arbitral awards.

Assuming that the protection of res judicata of arbitral awards amounts to a public policy concern in the requested State, Article 45(1)(a) may be relied upon as a ground for refusing the recognition of an irreconcilable foreign ‘judgment’. This conclusion does not find obstacles in the Court’s reasoning.

As I argued elsewhere, the public policy defence neither overlaps nor expands in such cases the grounds for refusing the recognition related to the ‘irreconcilability’ that the Brussels I Regulation (Recast) confines to ‘judgments’. Put it differently, protecting res judicata of arbitral awards through the public policy exception would not entail an issue of ‘irreconcilability’ in terms of Article 45(1)(c) and (d), and would be consistent with the arbitration exclusion.

From a wider perspective, the binomial ‘res judicata – public policy’ helps the Brussels I Regulation (Recast) and arbitration coexist, including by securing the right interplay between the Regulation and the 1958 New York Convention.

Just as it may work under the Brussels I Regulation (Recast) to protect res judicata of arbitral awards, the binomial ‘res judicata – public policy’ may work, in fact, under Article V(2)(b) of the 1958 New York Convention in the reverse direction of protecting res judicata of judgments. Article V(2)(b) allows the competent authority in the requested State to refuse recognition or enforcement of an award found to be contrary to the public policy of that State. This may occur where the award is ‘irreconcilable’ with judgments having res judicata in the requested Member State, including foreign judgments that have been recognized therein under the Brussels I Regulation (Recast).

2 comments on “London Steam-Ship Owners: Looking Beyond the Case through the Lens of Res Judicata

  1. Adrian Briggs

    If I read this correctly, registration of the Spanish judgment may not be opposed in England by pointing to the English judgment, but may be opposed by pointing to the London award. That must be correct. Whether it is the New York Convention or ‘public policy’ which produces this does not matter except, as here, where the NYC does not claim to apply to a local award (presumably because no-one in 1958 thought that the Convention needed to provide for the recognition and enforcement of local awards). Either way round, the Spanish judgment remains dead in the water, and the European Court has just made everything worse than it was.

  2. Antonio Leandro

    Thanks for the comment, Adrian (if I may). I see your point clearly.

    I wrote “looking beyond the case”, especially when addressing the NY Convention. Therefore, the ‘speculations’ as to the interplay between Brussels I (recast)/NY Convention through the binomial ‘res judicata-public policy’ assumed that all the concerned instruments apply; which means that I referred to foreign arbitral awards in the few lines dedicated to the NY Convention.

    Instead, the idea of defending res judicata of arbitral awards against foreign irreconcilable judgments via ‘public policy’ rests on Brussels I, and may include local awards.

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