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A recent ruling of the European Court of Justice provides that the Brussels Convention precludes courts of contracting states from granting restraining orders preventing one of the parties from commencing or continuing legal proceedings in another contracting state.

It is very common for commercial contracts to contain an exclusive jurisdiction clause determining the forum in which disputes arising under the contract must be resolved. In cases involving contracts with exclusive jurisdiction clauses the English courts have (in appropriate circumstances) granted injunctions preventing proceedings from being commenced or continued in a different forum to that agreed by the parties.

However, two recent rulings of the European Court of Justice have struck a blow to the enforcement of exclusive jurisdiction clauses and anti-suit injunctions within the EU.

The European Court of Justice has recently held1 that in cases involving states party to the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968 (as amended by the Accession Conventions of 1978, 1982 and 1989), concerning the same facts and the same parties, the court second seized, even if it is the forum expressly chosen by the parties, must decline jurisdiction, even where the court first seized had taken an inordinate amount of time to rule on its jurisdiction.

Further, on a reference for a preliminary ruling by the House of Lords, in April 2004 the European Court of Justice held2 that a court of a state party to the Brussels Convention before which proceedings were in progress was not entitled to issue an injunction prohibiting one of the parties from beginning or continuing proceedings in another contracting state, even where those proceedings were brought in bad faith with a view to frustrating the existing proceedings.

In principle, the decisions are logical, as they are in line with the purpose of the Brussels Convention, which is to promote mutual trust between the courts of member states. However, the decisions will probably be unpopular from a commercial perspective, as they are likely to result in greater complexity, cost and uncertainty in the resolution of commercial disputes.

Nevertheless, this may not yet be the demise of the anti-suit injunction. The European Court’s decision on anti-suit injunctions is expressed in general terms and there may be room for exceptions. Also, the decision does not prevent a court from issuing an anti-suit injunction in respect of existing or contemplated proceedings in jurisdictions outside the EU and EFTA, like for instance the US.

Finally, it should also be remembered that the Brussels Convention does not apply to arbitrations. As a result, the decisions do not affect the ability of a court to grant an anti-suit injunction in respect of a contractual arbitration clause. Members and clients should bear this in mind when considering whether to include a jurisdiction or arbitration clause in contracts.

A more detailed article about these cases will be published in a future issue of Gard News.

1  Erich Gasser GmbH v. MISAT (Case C-116/02).
2  Turner v. Grovit and others (Case.C-159/02).

Any comments to this article can be e-mailed to the Gard News Editor.

Gard News is published quarterly by Gard AS, Arendal, Norway.