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Summary Week 3 - Arbitration or Litigation (2)? Courts’ Jurisdiction
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CHAPTER 3 - Arbitration or Litigation (2)? Courts’ Jurisdiction3.1 Introductory remarks on litigation in court
What if, for whatever reason, no arbitration agreement was (or perhaps could) be reached – regardless
before or after the conflict arose - by the conflicting parties? In that case just one remedy remains for
the plaintiff: litigation in court. As however cross-border commerce transactions are eo ipso connected
with more than one legal order (for instance because parties are domiciled in different states in the EU
or anywhere else in the world), it is often not clear to which court the plaintiff must or, at his own
preference, may turn.
More or less paralleled to the legal context of arbitration, parties involved in commercial conflicts
enjoy considerable freedom (‘procedural party autonomy’) to agree – in advance, or perhaps even after
the dispute has arisen - on which court of which legal order shall be attributed the power to adjudicate
their dispute. We then speak of ‘choice of court’, or prorogation. This is not uncommon in cross-border
commercial relationships. Inevitably, however, one question imposes itself: what if they didn’t?
And this is not the only complication: a notorious case is that of parties having agreed on either
litigation in court or, as an alternative, arbitration, but one of them simply decides to frustrate this
agreement for whatever reason. For example: just think about the strategy of a ‘pre-emptive strike’: one
of the contract parties fearing action of its counterpart brings an action in another court than the court
chosen first! The defendant showing up may respond thereto by requesting an ‘anti-suit injunction’
from that court (cf. M. Moses: ‘An anti-suit injunction is an order by a court that has personal
jurisdiction over a party to require the party either not to file a claim in a foreign jurisdiction or not to
proceed with a claim that has already been filed’).
The core issue of this chapter is the ascertainment of jurisdiction of courts. Attention is devoted to the
‘European hemisphere’ (EU Regulation 1215/2012, a.k.a. ‘Brussels I bis’ or ‘Recast’) and the US legal
order. In addition, a 2005 Hague Convention on Choice of Court Agreements was elaborated in the
ambit of the ‘Hague Conference on Private International Law’. This Convention entered in force
October 2015. Inter alia Mexico, Singapore but also the European Union as a ‘REIO’ (Regional
International Organization’) already ratified this Convention, other legal orders contemplating
accession as well. Cf. the ‘Status Table’
https://www.hcch.net/en/instruments/conventions/status-table/?cid=98.
A glimpse of the future, an option that may become available to litigants: proceedings, not in the courts
of (sovereign) states but in a specialized European Commercial Court (ECC). This idea which was
launched in 2018 was discussed in academic writings. So far, however, there is no (draft) EU
Regulation yet.
3.2 Case study – Naber v. De Wit
In addition to conducting the discussions (in arbitration) with Toyota, Naber asks you to commence
proceedings against De Wit for misinformation by recommending the ‘expertise’ of Logico B.V.
Despite the settlement agreement between Sunshine and De Wit in private on the basis of which De
Wit 35000 USD agreed to compensate Naber De Wit so far did not pay this sum of money.
Against this background, you commence proceedings for your client Naber before the courts of
Amsterdam, the Netherlands. This is where Naber now lives. Furthermore, and of considerable
importance is that an order of the Amsterdam court will be enforceable ‘all over Europe’, ergo also in
Italy where De Wit possesses a luxury masseria (villa) and an extended vineyard at the
isle of Sardegna. De Wit, however, after the acquisition of VDLI by Toyota, no longer lives
,in the Netherlands. She moved to Florida, enjoying early retirement and a life of leisure.
Having noticed the commencement by Sunshine of proceedings before the courts of Amsterdam, De
Wit instantly commences proceedings in London fighting the validity of the settlement agreement. In
those (English) proceedings, De Wit argues that the English courts have jurisdiction and that Sunshine
should not be allowed to continue its action before the Amsterdam court.
Questions
1. Give your comment to the foregoing
(i) Naber's action-
(ii) De Wit's 'response'. Suggest there is no choice of court agreement whatsoever
(iii) de Wit's 'response', now claiming exclusive jurisdiction pursuant to a choice of court
agreement
2. Suppose that the parties involved agreed, not on choice of forum but on arbitration ad hoc in
London, UK? Would this influence the legal outcome?
3.3 Arbitration and litigation – Legal interrelationship
Everyday practice demonstrates that arbitration on one hand and litigation in court on the other are by
no means to be considered as ‘fully separate tracks’, as may be concluded already from, inter alia,
CJEU C-185/07 (West Tankers): how to deal with the procedural ‘clash’ between an arbitration
agreement reached by the conflicting parties, one of them yet ignoring such an agreement by
commencing litigation in court, challenging action (cf. the request for an anti-suit injunction) of the
other party?
As underscored already, it may not be overlooked that arbitration and litigation in court are often
intertwined:
- Cf., inter alia, CJEU 13 February 2014, C-555/13 Merck - Canada) demonstrating that on the
occasion arbitration tribunals even may appear to be acting as ‘courts’. Furthermore, parties
may contractually even ‘combine’ a choice of forum with an arbitration clause.
- Depending on national procedural laws special(ized) commercial courts may be endowed with the
power to adjudicate ‘commercial’ disputes of a cross-border nature, cf. the London Commercial
court, https://www.gov.uk/courts-tribunals/commercial-court. Cf. also, inter alia, the initiative for
an ‘NCC’ (Netherlands Commercial Court and Court of Appeal, Amsterdam). July 8, 2017, a draft
Bill was sent to the Dutch Parliament,
https://www.rechtspraak.nl/English/NCC/Paginas/default.aspx.
Regulatory instruments (International/EU law)
- EU Regulation 1215/2012 on Jurisdiction and the Recognition and Enforcement of Judgments in
Civil and Commercial Matters.
- Hague Convention of 30 June 2005 on Choice of Court Agreements, available at
http://www.HCCH.net.
Reading materials
- M. Bogdan/M. Pertegas Sender, Concise Introduction to EU Private International Law, 3d ed. 2019,
Ch 3.2-3.3.2;
, - T.C. Hartley, International Commercial Litigation, Cambridge 2015, p. 148-171, available via POD
(Printing on Demand).
Arbitration & litigation (interrelationship)
- A. Mourre, French courts firmly reject anti-arbitration injunctions, Kluwer Arbitration Blog
website 2010 (last visited august 2014), available at
http://kluwerarbitrationblog.com/blog/2010/05/06/french-courts-firmly-reject-anti-arbitration-
injunctions/.
- C. Kotuby, International Arbitration and the U.S. Federal Courts: The “Pro-Arbitration Campaign”
and the UNCITRAL Rules, comment to Oracle America, Inc. v. Myriad Group, A.G. (9th Circ.
Docket No. 11-17186, July 26, 2013), Conflictoflaws.net (posted July 29, 2013), available at:
http://conflictoflaws.net/2013/international-arbitration-and-the-u-s-federal-courts-the-pro-
arbitration-campaign-and-the-uncitral-rules/.
Case law (core elements of facts and dictum of judgments only!):
- CJEU C-185/07 (West Tankers) and ‘follow up’.
- England & Wales High (Commercial) Court Nori Holding v. Bank Otkritie (2018) EWHC1343
Com, http://www.bailii.org/ew/cases/EWHC/Comm/2018/1343.html. (summarized text version in
http://conflictoflaws.net/?s=Recast).
- CJEU C-555/13 (Merck Canada), notably Observ. 15-25 on arbitration. Text and useful comments
are downloadable from EU Curia website (CJEU), as well as from
http://arbitrationnewsaltana.wordpress.com/2014/03/31/an-arbitral-tribunal-may-refer-questions-
to-the-court-of-justice-of-the-european-union-for-a-preliminary-ruling/. :
http://conflictoflaws.net/2009/west-tankers-online-symposium/.
- CJEU Case C-536/13 (Gazprom).
- CJEU Case C-196/15 (Granarolo-Ambrosi).
- Madrid Court of Appeal (Spain), October 18, 2013, available:
http://hsfnotes.com/arbitration/2013/12/13/madrid-court-of-appeal-affirms-optional-dispute-
resolution-clause/.
- US SC Bristol-Myers Squibb v. SC of California, June 19, 2017, available
http://conflictoflaws.net/2017/the-u-s-supreme-court-further-narrows-specific-jurisdiction-over-
nonresident-defendants/.
Not mandatory (widening views; inspiration for thesis research, etc.):
- X. Kramer, International Business Courts, http://conflictoflaws.net/2019/international-business-
courts-open-access-book/. (Open access)
- M. Marta Requejo Isidoro, COVID-19 Response from the Hague Conference, EAPIL May 2020,
aivailable: https://eapil.org/2020/05/21/covid-19-response-from-the-hague-conference/.
- Pamela Bookman, The arbitration-litigation paradox, 72 Vanderbilt L. Rev., 1119 (2019), freely
available https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3253407 .
- ‘Legal instruments and practice of arbitration in the EU’ – Study for the Juri Committee 2014 (312
pages), http://www.europarl.europa.eu/studies.
- Building competence in commercial law in the Member States, Legal and Parliamentary Affairs
European Parliament (Study for the Juri Committee), September 2018 PE 604.980,
http://www.europarl.europa.eu/RegData/etudes/STUD/2018/604980/IPOL_STU(2018)604980_EN
.pdf.
- S.F.G. Rammeloo, New Cross-border Civil and Commercial Procedural Law on Prorogation: EU
Regulation 1215/2012 (the ‘Recast’) and the 2005 Hague Convention on Choice of
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