Anti-suit injunctions in international arbitration: the Swiss approach (Part 2/2)

/

After focusing on the conditions for obtaining an anti-suit injunction from an arbitral tribunal under Swiss law in Part 1, this second blog will discuss how Swiss courts deal (or should deal) with anti-suit injunctions in support of arbitration.

Anti-suit injunctions in support of arbitration are intended to prevent or restrain court proceedings commenced in breach of an arbitration agreement. They have been used with a view to preventing forum shopping and have long been a distinct feature of English law. Under common law rules, such injunctions are typical where there are concurrent proceedings in another jurisdiction, and they are meant to prevent the pursuit of foreign proceedings that are being characterised as vexatious or oppressive.

The predominant view in Switzerland: no anti-suit injunctions in support of arbitration

The predominant view in Switzerland is that Swiss courts cannot grant anti-suit injunctions in support of arbitration, either in national or international cases. Chapter 12 of the Swiss Private International Law Act (PILA) sets out rules on arbitration proceedings, but does not set out any rule allowing a state court to restrain foreign proceedings or to compel a party to arbitrate. Similarly, the Lugano Convention, a parallel convention to the Brussels Convention, is interpreted by the majority of scholars as not providing sufficient ground for anti-suit injunctions in support of arbitration.

Arguments in favour of anti-suit injunctions in support of arbitration under Swiss law

There may be good arguments to support the view that anti-suit injunctions in support of arbitration should be considered as a tool available to Swiss courts.

First, one could argue that Article 10 of PILA/Article 31 of the Lugano Convention do provide a statutory basis for the jurisdiction of a Swiss court to order an anti-suit injunction in support of arbitration, as the parties to an arbitration agreement are subject to the contractual obligation not to bring their dispute to a foreign court in violation of the arbitration agreement. Under both Articles 10 of PILA and 31 of the Lugano Convention, Swiss courts can order interim measures, regardless of their jurisdiction to hear the merits of the dispute. The right to arbitration of each party to an arbitration agreement is a two-sided coin: on the one hand, it is an affirmative right to have a dispute referred to, and resolved, by arbitration; on the other hand, it is a right not to have the dispute adjudicated upon in court proceedings. One could also seek to find support in Article 185 of PILA (according to which a Swiss court at the place of the arbitration must provide “any further judicial assistance” as may be required by the arbitral tribunal) to order an anti-suit injunction.

Second, one could also argue that anti-suit injunctions in support of arbitration are not at odds with the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), insofar as Article II(3) does not confer exclusive jurisdiction to consider the validity of an arbitration agreement on the court before which court proceedings have been brought in alleged breach of the agreement.

Third, anti-suit injunctions in aid of arbitration are in personam injunctions and are not directed at a foreign court. As such, one could argue that they do not affect the foreign court’s jurisdiction and are not intended to decide on the jurisdiction of such foreign court. The decision which a Swiss court may make as to its own jurisdiction should therefore be distinguished from a decision on the jurisdiction of another court which a Swiss court, in principle, has no power and no jurisdiction to make. When it orders an anti-suit injunction in aid of arbitration, the court does not review the jurisdiction of the other court; it reviews whether claims falling within the ambit of a valid arbitration clause are threatened or have already been brought to any court in breach of the arbitration agreement.

Fourth, it could be reasonably argued that anti-suit injunctions in support of arbitration do not violate the principle of kompetenz-kompetenz. Anti-suit injunctions not only leave the decision on jurisdiction to the arbitral tribunal, they also make sure that no foreign state court will interfere with the positive and negative effect of the principle of kompetenz-kompetenz. When ordering an anti-suit injunction in support of an arbitration, a court merely seeks to protect the arbitral bargain, at least until the arbitral tribunal has decided on its jurisdiction.

Fifth, anti-suit injunctions in support of arbitration are likely to abate the risk of parallel court and arbitration proceedings. Having parallel proceedings seriously undermines the purposes of arbitration in terms of confidentiality, efficiency and costs.

Finally, the grant of an anti-suit injunction in support of arbitration could be viewed as warranted in light of the uncertainty surrounding the recognition and enforcement of a foreign court decision made in disregard of an arbitration agreement. Indeed, an unwilling party may be incentivised to commence parallel proceedings in a foreign court (inclined to decide against an arbitration agreement). The unwilling party may then hope to obtain a decision on the merits from that foreign court before seeking the recognition and the enforcement of that decision at the seat of the arbitration, to sabotage the arbitration. For instance, in Switzerland, the Swiss Supreme Court held on 9 February 2001 that a decision by a court deciding on the merits, notwithstanding a jurisdictional defence based on an arbitration agreement, would fall within the scope of the Lugano Convention. The question of whether public policy may constitute a ground for non-recognition and non-enforcement of a court decision made in disregard of a valid arbitration agreement is controversial, even in Switzerland.

Conclusion

In conclusion, the view has sometimes been expressed that anti-suit and anti-arbitration injunctions ordered by state courts are, in all situations, at variance with a number of the key principles of international arbitration (such as the principle of kompetenz-kompetenz) or even contrary to the mutual trust which Contracting States of Regulation (EC) 44/2001 (Brussels Regulation) should accord to one another’s legal systems and judicial institutions.

While anti-suit injunctions ordered by state courts to enjoin parties from commencing or pursuing arbitral proceedings have rightly been held by Swiss courts to be at variance with the principle of kompetenz-kompetenz, one could argue that anti-suit injunctions ordered in support of arbitration are a completely different matter. Their focus is arbitration, and such injunctions are only intended to protect the contractual right of a party to have a dispute determined by arbitration.

Leave a Comment