On 20 June 2022, the CJEU rendered its judgment in London Steam-Ship Owners’ Mutual Assistance Association Ltd v Spain. The judgment, which dramatically altered the understanding of the arbitration exception under the Brussels instruments, gave rise to heated comments and debates, including an on-line symposium on this blog.
On 6 October 2023, the English High Court rendered a new judgment in the case where Justice Butcher discussed, inter alia, the meaning of the CJEU jugdment and the extent to which he was bound by it.
Interestingly, the insurers had initiated a second arbitration in 2019 which was still in progress when the CJEU delivered its judgment. As a result, the arbitrator, Sir Peter Gross, also had to express views on the meaning of the CJEU judgment in the two partial awards he made on 6 January 2023 and 27 March 2023.
The English proceedings are highly complex, with a number of challenges initiated by each of the parties against the various arbitral awards and application to enforce the Spanish judgment. Without getting into all these details, I focus below on the issues addressed by the CJEU and how they were perceived and addressed by the English court.
Concept of Judgment in Article 34(3) Brussels I
A first argument made by Spain before the English court was that the English judgments on the arbitral awards were no relevant ‘local’ judgments for the purposes of Article 34(3), as they were not judgments of ‘a judicial body of a Contracting State deciding on its own authority on the issues between the parties’. (Solo Kleinmotoren GmbH v Emilio Boch  ECR I-2237).
Justice Butcher ruled that the CJEU confirmed that the argument based on Solo Kleinmotoren was incorrect.
123. In the judgment of the CJEU, at paras. [48-50], the CJEU said that a judgment entered in terms of an arbitral award was capable of being regarded as a ‘judgment’ within the meaning of Article 34(3). In that regard, the CJEU pointed out at para.  that the concept of a ‘judgment’ set out in Article 32 was a broad one and ‘covers any judgment given by a court of a Member State, without its being necessary to draw a distinction according to the content of the judgment in question, provided that it has been, or has been capable of being, the subject, in the Member State of origin and under various procedures, of an inquiry in adversarial proceedings’. At para.  the CJEU said that this interpretation of the concept of ‘judgment’ in Article 34(3) was supported by the purpose of the provision, which was to protect the integrity of a Member State’s internal legal order. At para.  the CJEU said that, ‘a judgment entered into in the terms of an arbitral award is capable of constituting a ‘judgment’ within the meaning of Article 34(3) …’.
A second argument made by Spain before the English Court was that the whole of the English proceedings, and the resulting English s. 66 Judgments (declaring the first arbitral awards enforceable in England), fell within the arbitration exception to the applicability of the Brussels Regulation enshrined in Article 1(2)(d). Spain’s contention was that a non-Regulation judgment, or at least a judgment which is a non-Regulation judgment because it falls within the arbitration exception, did not count as a relevant ‘home’ judgment for the purposes of Article 34(3).
Again, Justice Butcher ruled that the CJEU confirmed that the argument, that he labelled ‘the material scope point’, was incorrect.
142. (…) the Court’s reference, at para. , to the purpose of Article 34(3) as being the protection of the integrity of a Member State’s legal order is relevant to this point as it is to the ‘Solo’ point. Further at paras [51-52], the CJEU said that it was ‘apparent from the Court’s case-law that the exclusion of a matter from the scope of Regulation No.44/2001 does not preclude a judgment relating to that matter from coming within the scope of Article 34(3) of that regulation and, accordingly, preventing the recognition of a judgment given in another Member State with which it is irreconcilable’, and made reference to Hoffmann v Krieg.
Jurisdictional Qualifications of the CJEU
The most novel, far reaching and debatable aspects of the ruling of the CJEU were, however, the introduction of new requirements relating to lis pendens and the privity of jurisdiction clauses.
Readers will recall that the CJEU ruled that where a judicial decision resulting in an outcome equivalent to the outcome of an arbitral award could not have been adopted by a court of the Member State of enforcement without infringing the provisions and the fundamental objectives of the Brussels I regulation, in particular as regards the relative effect of an arbitration clause included in the insurance contract in question and the rules on lis pendens contained in Article 27 of that regulation, the judgment on the arbitral award cannot prevent the recognition of a judgment given by a court in another Member State.
The issue before both the arbitrator and the English court was whether this part of ruling had deprived the arbitrator from its jurisdiction and thus prevented the operation of Art. 34(3), as the relevant arbitral awards should be set aside for lack of jurisdiction.
Both of them rejected the argument on the ground that they were not bound by answers to questions not referred to the CJEU.
209. I have also reached the conclusion (as did Sir Peter Gross at paragraph [122(3)] of the Gross First Award) that, if the CJEU purported to answer a question not or falling outside those referred to it, the national court would not be bound to follow any such purported answer, though it would not lightly so hold. This appears to me to be the corollary of the limited jurisdiction established by Article 267 of the TFEU. (Reference to precedents omitted)
Justice Butcher then concluded:
214. Applying the principles set out above, in my judgment the CJEU, in paragraphs  to  of its Judgment, gave answers to questions which had not been referred to it, and which this Court had refused to refer. In doing so, it trespassed on the facts of the case.
215. Thus, the first two questions referred to the CJEU in relation to Article 34(3) raised clearly defined issues of EU law. They asked whether a s. 66 judgment was capable of falling within Article 34(3) in light of two specific points, the ‘Solo point’, and the material scope point. The nature of the questions and the reasons why they were asked were set out both in the Reference Judgment, and very clearly in the Reasons for the Reference section of the Order for Reference.
216. There was no question aimed at whether there were other reasons why Article 34(3) might be inapplicable, and specifically no question directed at whether Article 34(3) might be inapplicable because the English s. 66 Judgments had been entered in circumstances where the English Court could not have entertained the claim which was the subject of the Spanish proceedings. That, in my view, raised different questions (including but certainly not limited to different questions of EU law).
Justice Butcher then wondered whether, although he was not bound, he would still want to follow the CJEU. He ruled he would not.
236. Further, while I am clearly entitled to have regard to the reasoning of the CJEU in those paragraphs, if I am not bound by them I would not follow them. In my judgment they fail to give effect to the exclusion of arbitration from the Regulation, and they fail to have regard to the jurisprudence of the ECJ/CJEU which has recognised that the arbitration exception is effective to exclude arbitration in its entirety, including proceedings in national courts the subject matter of which is arbitration, in particular the decisions in Marc Rich & Co AG v Società Italiana Impianti PA (The ‘Atlantic Emperor’) (Case C-190/89), and Proceedings Concerning Gazprom OAO (Case C-536/13).
237. Instead I would follow, and may be bound by, the reasoning of the Court of Appeal in The Prestige (Nos. 3 and 4), in relation to an argument which was raised there with reference to Assens Havn, to the effect that an analogy with that case indicated that the Award Claims there under consideration did not fall within the ‘arbitration exception’ to the Regulation. The argument of the States was that the reasoning in Assens Havn, which was to do with an exclusive jurisdiction clause in a liability insurance policy, was ‘equally applicable to an arbitration clause’. At - the Court of Appeal said this:
 For these reasons we hold that the reasoning in Assens Havn cannot apply to an arbitration clause. We note that this is also the view of Professor Briggs (Civil Jurisdiction and Judgments, 7th ed (2021), para. 9.05). Accordingly the “arbitration” exception applies to the Award Claims and jurisdiction must be determined in accordance with domestic law principles.’
Res Judicata as English Public Policy
The English judgment also addressed the argument of whether res judicata was a principle of English public policy, and whether the Spanish judgment could be denied recognition under the public policy exception in Article 34(1), on the ground that the English judgments declaring enforceable the first arbitral awards were res judicata.
Justice Butcher found that the Spanish judgments would also be contrary to public policy on that ground, but the argument was subsidiary, given that he had already found that the Spanish judgments should be denied recognition on the ground of Article 34(3).
The most interesting part of the English judgment is its interpretation and treatment of the most controversial aspects of the CJEU judgment, namely the jurisdictional qualifications.
The debates before the English court show how far reaching the CJEU judgment might be and raise the issue of whether the CJEU has indeed laid down jurisdictional requirements for arbitrators.
On the one hand, a narrow reading of the CJEU judgment could be that nowhere does it expressly say that it has a bearing on the jurisdiction of arbitrators. And that, in the case at hand, it had not ruled on the issue of whether Spain was bound to arbitrate. This, I understand, was the position of the arbitrator. Justice Butcher reported:
77. At  Sir Peter Gross considered whether the CJEU Judgment had any bearing on his jurisdiction as an arbitrator. He concluded that, whatever its ambit in other respects, the CJEU Judgment said nothing at all about his jurisdiction; and that he entertained no doubt at all about his having jurisdiction.
78. At - Sir Peter Gross considered whether the CJEU Judgment had decided that Spain had not been obliged to arbitrate its dispute with the Club and hence was not in breach of any equitable obligation by pursuing its Article 117 claims and seeking to enforce the Spanish Judgment. The Arbitrator found that the CJEU Judgment did not contain any such decision. He said (at ) that ‘Part 2’ of the CJEU Judgment went to the status of English court judgments, not whether Spain was in breach of its obligation to arbitrate. He said (at ) that the CJEU Judgment had said nothing about whether Spain had been obliged to pursue its dispute in arbitration, and that he could see no proper basis for reading in any such decision.
On the other hand, a less cautious reading of the CJEU judgment is that it has indeed laid down jurisdictional requirements for arbitrators. Spain made the argument repeatedly (which is fair enough).
Justice Butcher avoided addressing the issue by ruling that he was not bound by that part of the CJEU judgment. But the views he expressed when he declined to consider the CJEU judgment persuasive enough to follow it may well reveal that he did think that the CJEU has indeed laid down jurisdictional requirements.
Debate to be continued, on the Continent.