A v B

Where parties agree to arbitration seated abroad and governed by foreign law, the English court should be slow to interfere with the arbitration or determine challenges to the tribunal’s jurisdiction. The agreed seat ordinarily confers supervisory jurisdiction on the courts of that seat. Intervention requires exceptionally strong grounds.

Claims challenging the validity or operation of the arbitration, including claims seeking to restrain the arbitrator, may be stayed under the court’s inherent jurisdiction. Personal claims closely connected with the arbitration may also be stayed temporarily to avoid inconsistent decisions. Related claims against non-parties should generally not proceed where they would duplicate issues falling within the arbitration.

The claimant alleged that an arbitration agreement appointing the first defendant as sole arbitrator had been procured by misrepresentation, fraud, duress and breaches of professional or fiduciary duty. The arbitration was seated in Geneva and governed by Swiss law.

The claimant brought proceedings in England seeking declarations, injunctions and damages against the arbitrator and related parties. The second, third and fourth defendants challenged service outside the jurisdiction, while the first defendant sought a stay. The central issues were whether the English proceedings should be stayed, whether service on the foreign defendants should be set aside, and whether the English court should permit parallel litigation concerning matters referred to the Geneva arbitration.

1. The claims against B. The claims seeking to invalidate the arbitration agreement, restrain the arbitration or set aside B’s orders had arbitration as their principal object. They therefore fell within the arbitration exclusion in Article 1(4) of the Lugano Convention and Judgments Regulation. The non-arbitration personal claims did not fall within that exclusion but were closely connected with the substantive disputes in the arbitration.
2. The court had an inherent jurisdiction to stay proceedings in favour of a foreign arbitration, including where the existence, scope or enforceability of the arbitration agreement was disputed. The relevant considerations included the Swiss seat, the Swiss governing law, the parties’ participation in the arbitration, the availability of review by the Swiss courts, and the risk that the English court would interfere with the supervisory jurisdiction of the courts at the seat.
3. Under Swiss law, B had Kompetenz-Kompetenz and was required initially to determine challenges to his jurisdiction. Any dissatisfied party could seek review in the Swiss Supreme Court. The English court should not displace that agreed regime. No sufficiently strong cause existed for an anti-arbitration injunction or trial in England of the issues concerning the enforceability of the arbitration agreement.
4. The arbitration claims against B were stayed. The personal claims against him were temporarily stayed, with liberty to apply after the final award or when he otherwise became functus officio.
5. The claims against C, D and Company E substantially overlapped with the arbitration and with proceedings in the Bahamas. Allowing them to continue in England would create a serious risk of procedural dislocation and conflicting decisions. Even assuming jurisdictional gateways, serious issues to be tried and full disclosure, the court should exercise its discretion against permitting service outside the jurisdiction. The orders permitting service on C, D and Company E were set aside, together with the related injunction.

The judgment records that David Steel J refused an interim injunction, and the Court of Appeal dismissed the appeal on 8 March 2006. The present judgment determined the substantive stay and jurisdiction applications.