Youell & Ors v La Reunion Aerienne & Ors

The arbitration exclusion in the Brussels I Regulation is determined by the substantive subject matter of the proceedings and the nature of the rights protected. A contract does not fall outside the Regulation merely because it contains an arbitration agreement. A preliminary issue concerning that agreement does not alter the position where the substantive claim falls within the Regulation. The appropriate remedy for an alleged breach of an arbitration agreement is ordinarily a stay under section 9 of the Arbitration Act 1996. A negative declaration may rely on the defendant’s asserted contractual claim for jurisdiction, but that does not make the declaration an arbitration claim. The appeal was dismissed.

London market insurers sought declarations that they were not liable to French market insurers for a settlement paid in connection with proceedings in the United States. The French market had commenced arbitration in Paris under an alleged arbitration clause and challenged the jurisdiction of the English court.

Tomlinson J rejected the challenge, holding that Article 5(1)(a) applied and that Article 1(2)(d) of the Brussels I Regulation did not exclude the claim merely because the alleged contract contained an arbitration clause: [2009] 1 All ER (Comm) 301. The appeal was limited to the arbitration-exclusion issue. The central question was whether the English negative-declaration proceedings were nevertheless outside the Regulation because the French market relied on a French arbitration clause.

Appeal dismissed. Lawrence Collins LJ gave the judgment, with Jacob and Rix LJJ agreeing.

1. Scope of the arbitration exclusion. The court applied the approach confirmed in Marc Rich and Co AG v Società Italiana Impianti PA Case C-190/89, Van Uden Maritime BV v Firma Deco-Line Case C-391/95 and Allianz SpA v West Tankers Inc Case C-185/07. Whether proceedings fall within the Brussels I Regulation depends on their substantive subject matter and, more particularly, the nature of the rights which they seek to protect. If the substantive claim falls within the Regulation, a preliminary issue concerning the existence or validity of an arbitration agreement does not remove it from the Regulation.
2. The mere existence of an arbitration agreement therefore does not deprive a court which could otherwise determine the substance of the claim of jurisdiction. The party alleging breach of the arbitration agreement should seek a stay under section 9 of the Arbitration Act 1996.
3. The claims were, in substance, a debt claim based on an alleged mandate and a subsidiary claim for damages under an alleged policy assignment. The London market sought declarations that it was not liable under those alleged obligations. Those claims were not arbitration claims. The fact that the French market pursued the mirror-image claims in Paris arbitration did not bring the English proceedings within Article 1(2)(d).
4. Negative declarations. Boss Group Ltd v Boss France SA [1997] 1 WLR 351 (CA) remained binding on the court. It established that a claimant seeking a negative declaration may rely on the defendant’s asserted contractual claim to establish a good arguable case under Article 5(1). That principle concerned jurisdiction under Article 5(1), not the separate question whether the substantive claim was excluded as arbitration.
5. The argument based on approbating and reprobating also failed. Even assuming that the principle applied in England through election or estoppel, there was no inconsistent position requiring its application. The original claims seeking declarations about the arbitration agreement had also been deleted. Section 72 of the Arbitration Act 1996 did not apply to an arbitration seated outside England and Wales or Northern Ireland under section 2(1), and the remaining proceedings were not thereby transformed into arbitration claims.

• Court of Appeal (Civil Division): The appeal was dismissed. The court upheld the rejection of the jurisdiction challenge on the arbitration-exclusion issue.
• High Court of Justice, Queen’s Bench Division, Commercial Court: Tomlinson J rejected the defendants’ jurisdictional challenge: [2009] 1 All ER (Comm) 301.