Jurisdiction to grant injunctions in respect of arbitrations is generally seen as part of the general supervisory function exercised by the courts of the seat of the arbitration. Accordingly, where England is the seat of the arbitration, the court has jurisdiction to grant an interim injunction in support of arbitration proceedings.

However, the English courts have indicated that it is only in the most exceptional cases that an injunction restraining the conduct of an arbitration with a foreign seat will be granted. The power to grant such injunctions usually rests with the courts of the seat of the arbitration, not the English court (see Weissfisch v Julius [2006] EWCA Civ 218, discussed in Article, Weissfisch v Julius; A v B [2007] 1 LLR 237; A v B (No 2) [2007] 1 LLR 358; and C v D [2007] EWHC 1541 (Comm)).

As illustrated in Ahmad Al Naimi v Islamic Press Agency [2000] EWCA Civ 17, where the issue in a case is whether the underlying dispute is subject to an arbitration agreement at all, the court has a choice whether to decide the issue itself, or stay the proceedings while the issue is referred to arbitration. A number of factors may influence the court, such as:

There were two issues to decide:

Gloster J concluded that the proper approach was as set out in the Court of Appeal's judgment in the Ahmad Al Naimi case. Here, where both parties had agreed that the matter was capable of being resolved before Gloster J without further evidence, it was appropriate that the court should decide the jurisdictional issue. Gloster J then considered the terms of the contract and found that, save in respect of one disputed invoice, the parties had agreed an exclusive English jurisdiction clause. Alternatively, even if no consensus had been reached on the clause, the English court had jurisdiction under Article 5(1)(b) of the Brussels Regulation because delivery under the contract was at the claimant's UK works.

Permission to appeal Gloster J's decision was refused on paper.

Following Gloster J's judgment, the defendant submitted a request for arbitration to the HCCI court seeking, among other things, an urgent interim award declaring the parties to be bound by the arbitration agreement and restraining the claimant from pursuing the action in the English court. The HCCI Rules provide that the arbitration court considers "the existence of its jurisdiction of its own motion" and the arbitration court indicated that it would do so.

In response to this, the claimant applied for an injunction restraining the defendant from continuing the Hungarian arbitration. The defendant opposed the application on the basis that the English court had no jurisdiction to injunct arbitral proceedings in a member state following the ECJ'S decision in West Tankers. It submitted that the ECJ's decision extended to prevent an anti- arbitration injunction in respect of arbitration proceedings conducted under the supervisory jurisdiction of another EU member state.

The ECJ's decision in West Tankers applies to court proceedings not arbitration proceedings because arbitration does not fall within the scope of the Brussels Regulation (Article 1(2)(d)).

Under the Brussels Regulation, the national courts of the EU states have exclusive right to determine their own jurisdiction. This might involve a national court seised of a court action falling within the scope of the Regulation deciding on the existence of an arbitration agreement even if that arbitration agreement is governed by the law of some other EU state, or where the courts of another EU state have supervisory powers over the arbitration.

In West Tankers, the ECJ had held that the Italian court, which was the court normally having jurisdiction over the claim, must be left to decide the question of its own jurisdiction, including the incidental question of whether its jurisdiction was ousted by a binding arbitration agreement. However, there is no objection to an order restraining proceedings falling outside the scope of the Regulation such as arbitration. While an anti-suit injunction would be objectionable if it interferes with an EU court deciding its own jurisdiction under the Regulation, an anti-suit injunction should not be seen as objectionable if it does not interfere with such jurisdiction. Where the injunction is not directed towards court action (such as in this case where it is directed towards arbitration) then the Brussels Regulation is not impaired.

Hamblen J noted that while the English court did have jurisdiction to grant an anti-arbitration injunction, such injunctions will generally only be granted in exceptional circumstances (see, for example,Weissfisch above and Republic of Kazakhstan v Istil Group Inc (No 2) [2007] EWCA Civ 471, referred to in Legal update, Anti-arbitration injunction granted). In particular, caution is needed in relation to arbitrations outside the jurisdiction because such matters are generally best left to the supervisory courts in the place of the seat of the arbitration.

In order to establish exceptional circumstances, as a minimum, it is usually necessary to establish that the applicant's legal or equitable rights have been infringed or threatened by a continuation of the arbitration, or that its continuation will be vexatious, oppressive or unconscionable (see Elektrim SA v Vivendi Universal SA (No 2) [2007] EWHC 571 (Comm)).

Here the claimant could establish that a continuation of the arbitration would breach its legal rights, given that the court had already held that the contract was subject to an English exclusive jurisdiction clause and therefore, the arbitration proceedings were in breach of that contractual agreement. The English courts have generally recognised that such a right could be enforced by way of injunction relief unless there are "strong reasons for not giving effect to the exclusive jurisdiction clause" (Donohue v Armco Inc and others [2001] 1 UKHL 64).

Hamblen J held that it would be vexatious and oppressive to allow the arbitration to continue in this case, given that the court had already held that there was no arbitration agreement. Any continuation would involve a duplication in work and expense and also it would do so on a jurisdictional basis that the court had already held did not exist. Any reliance on the New York Convention was misplaced because there was no question of there being a prima facie or arguable case that there was an agreement to arbitrate. Gloster J had already decided that point.

Accordingly, the fact that the court had already decided there was no arbitration clause and held that there was a governing English exclusive jurisdiction clause was sufficient to establish exceptional circumstances to grant an anti-arbitration injunction. Alternatively, if these were not exceptional circumstances, a broader approach was justified where the court has held that the claim is subject to an English exclusive jurisdiction clause and/or that there is no arbitration agreement.

Further, the English court's decision that there was no binding arbitration agreement should be recognised by the Hungarian court as binding upon it.