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This note is based on an article written by Guy Pendell and David Bridge of the law firm CMS Cameron McKenna LLP, which first appeared in the firm’s ‘Law-Now’ service on 11 April 2011.
'''Note'''
This decision has now been upheld by the Court of Appeal in a judgment reported at [2012] EWCA Civ 27. The Court of Appeal has confirmed the discretionary jurisdiction of the English courts under section 66 of the Arbitration Act 1996 to make a (negative) declaratory judgment on the terms of a (negative) declaratory award made in arbitration. The Court of Appeal's decision was bsed on essentially the same grounds as that of the court of first instance.
The Court of Appeal further referred to and approved the judgment of the Commercial Court in the case of African Fertilizers and Chemicals NIG Ltd (Nigeria) v BD Shipsnavo GmbH & Co Reederei KG (The “Christian D”)[[http://www.onlinedmc.co.uk/index.php/African_Fertilisers_v_BD_Shipsnavo,_the_Christian_D]]:
However, the Court of Appeal did not deal with the further question of whether or not a s.66 declaratory judgment fell within the meaning of a judgment for the purpose of article 36 of the Brussels Regulation (EC Regulation 44/2001). This was because the appellant insurers did not seek to advance that argument at the present stage of the proceedings.
'''Background'''
Having obtained, in November 2008, an arbitration award in its favour, West Tankers was concerned that the insurers might in future obtain an Italian judgment which was inconsistent with that award. The insurers could then seek to have that judgment recognised and enforced in England, pursuant to Chapter III of EC Regulation 44/2001 (relating to the jurisdiction and recognition and enforcement of judgments in civil and commercial matters between EU member states) (the “Regulation”). Those concerns prompted West Tanker’s application to have the award enforced as a judgment, the thinking being that once the award had been converted into a judgment, any subsequent Italian judgment in favour of the insurers would not be recognised in England pursuant to Article 34(3) of the Regulation. Article 34(3) of the Regulation provides that:
West Tanker’s application was successful and, by an order dated 15 November 2010 (the “Order”), it was given leave to enforce the arbitration award pursuant to section 66(1) of the Act and judgment was entered against the insurers pursuant to section 66(2) of the Act in the terms of the award.
