West Tankers Inc v Ras Riunione Adriatica Di Sicurta Spa & Anor

Where an insurer becomes subrogated to a claim which is subject to a binding arbitration agreement, the duty to arbitrate may form an inseparable part of the transferred right. The question is determined by the law governing the arbitration agreement when the issue concerns the method of enforcing the transferred claim.

An anti-suit injunction may protect the equitable rights arising from an arbitration agreement even where the subrogated insurer has no actionable contractual liability for breach. Article II.3 of the New York Convention does not give the court first seised exclusive jurisdiction to enforce the arbitration agreement. Strong cause is ordinarily required before the injunction is withheld.

West Tankers owned the vessel Front Comor, which collided with an oil jetty owned by Erg Petroli. Erg commenced London arbitration for uninsured losses under a charterparty containing an English-law arbitration agreement. Erg’s insurers pursued their subrogated claim for insured losses before the Tribunale di Syracuse.

Gross J had granted an interim anti-suit injunction restraining the Italian proceedings. The insurers applied to discharge it, arguing that the proceedings fell within Regulation 44/2001, that Italian law governed whether they were bound by the arbitration agreement, and that no actionable breach or sufficient basis for injunctive relief existed.

1. The application was dismissed. The temporary anti-suit injunction was replaced by a permanent injunction restraining the insurers from continuing the Syracuse proceedings.
2. The issue whether the insurers were bound by the arbitration agreement was governed by English conflicts rules. Italian law governed the underlying delictual claim and the entitlement to subrogation, but English law governed the scope and enforcement of the arbitration agreement.
3. On that basis, the insurers had acquired the assured’s delictual claim subject to the arbitration agreement. The duty to arbitrate was an inseparable component of the transferred subject matter. The insurers were therefore required to pursue the claim by London arbitration.
4. The court also found that the more recent Italian Court of Cassation authorities supported the conclusion that, under Italian law, subrogation transferred the right of action subject to a binding arbitration agreement. The insurer could not commence arbitration without consent, but the debtor could insist on arbitration.
5. Turner v Grovit did not prevent an anti-suit injunction supporting an arbitration agreement, because the arbitration exception applied and the Court of Appeal’s decision in Through Transport Mutual Insurance Association (Eurasia) Ltd v New India Assurance Association Co Ltd remained binding.
6. The principles in The Angelic Grace applied. An injunction protected the owners’ contractual and equitable rights and did not depend on proof of an actionable claim for damages. Evidence that the Italian courts would ignore the injunction, or might regard it as an interference with their jurisdiction, was irrelevant.
7. Article II.3 of the New York Convention imposed a duty on the court seised of the foreign proceedings to refer the parties to arbitration, but did not confer exclusive jurisdiction to enforce the arbitration agreement. Italian law, the location of evidence, comity and the possibility of a foreign-court stay did not amount to strong cause against relief.