By an application notice dated 1 June 2015 AmTrust Europe Limited (“ATEL”) applies for a so-called “anti-arbitration” injunction, an order to restrain Trust Risk Group SpA (“TRG”) from pursuing arbitration proceedings in Italy. It is made on the grounds that, as has already been determined on 10 December 2014 by Blair J (in [2014] EWHC 4169), whose judgment was upheld by the Court of Appeal on 30 April 2015 ([2015] EWCA Civ 437), the parties have agreed upon the exclusive jurisdiction of the English courts, and TRG’s refusal to undertake to stay or discontinue Italian arbitration proceedings is vexatious, oppressive and unconscionable.

ATEL, an English insurance company, conducted business with TRG, an insurance broker incorporated in Italy, whereby TRG placed ATEL policies, mostly with Italian hospitals, in the Italian market. The parties entered into a contractual document entitled “Terms of Business Agreement” (the “ToBA”) with an effective date of 20 July 2010 (and later agreed two endorsements to the ToBA). TRG was entitled to deduct commission from premiums, but ATEL says that otherwise it was required to pay them into a bank account (the “designated account”) and to hold them on trust for ATEL pending monthly accounting. The ToBA included at clause 21 a provision headed “Jurisdiction and Choice of Law” which provided that, “This agreement shall be construed according to English law and any disputes arising under it shall ... be determined in the English Courts”. It is not in dispute that the jurisdiction provision, being in mandatory terms, means that disputes covered by it are to be resolved exclusively by the English courts (rather than through arbitration). Nor was it in dispute before me that, although the parties chose expressly only a law whereby it is to be construed, the ToBA was governed by English law (and Beatson LJ so assumed at [2015] EWCA Civ 437 para 65(3), where he referred to the “applicable law”), but no specific or formal concession was made about this.

On 27 January 2011 TRG, ATEL and also AmTrust Financial Services, Inc (“AFS”), a Delaware company, entered into a so-called “framework agreement”, in which they agreed that their relationship would be exclusive “with reference to MedMal [medical malpractice] insurance risks in Italy”. TRG agreed to pay ATEL 6% of the gross premium before insurance premium tax for its exclusive rights. It was also agreed that ATEL had a call option for the shares in an Italian claims management company called Medical Claims Management Srl. By article 2.2(c)(i) (which treated ATEL and AFS as a single party) it was agreed that, in the event that a material breach by one party of an obligation under the framework agreement or any other agreement between the parties was “not remedied within the following 20 days”, the framework agreement should be automatically terminated pursuant to article 1456 of the Italian Civil Code as soon as a termination notice was served by the other party. The framework agreement included at clause 6 a provision headed “Applicable Law and Arbitration”, which provided that:

By October 2014 the relationship between ATEL and TRG had broken down. On 10 October 2014 TRG wrote that it was entitled to “advance commission” of some €97 million, and purported to withhold premium payments to set-off against its entitlement. ATEL denied that TRG was so entitled, and by a letter dated 20 October 2014 it sent TRG a notice of termination of the ToBA if TRG did not remedy its breach within 20 days. On 23 October 2014 TRG sent ATEL notice that it had brought arbitration proceedings in Italy. According to ATEL, an audit conducted on 26 and 27 October 2014 showed that the designated account held some €32 million less than it should have done. By letter dated 11 November 2014 headed “Re: Termination of the Terms of Business Agreement dated July 20, 2010 and the Framework Agreement dated January 27, 2011”, ATEL purported to terminate both agreements, writing, “… we inform you that both the Framework Agremeent and the [TOBA] … shall be deemed terminated in all respects, pursuant to Article 2.2(c)(i) of the Framework Agreement and (to the extent necessary) Article 1454 of the Italian Civil Code”. On 12 November 2014 ATEL and AFS appointed an arbitrator in the Italian reference, while disputing the tribunal’s jurisdiction. (ATEL also says that the audit found a shortfall of some €21 million in an account for premiums received by TRG’s subsidiary, Trust Risk Italia Srl (“TRI”), who had been appointed as an insurance agent of ATEL’s Italian branch (“ATEL Italy”) under an agreement of 10 May 2013 (the “Agency Agreement”). Apparently the letter of 20 October 2014 also gave notice terminating, or purporting to terminate, the Agency Agreement. I was told that there is a separate arbitral reference about disputes concerning this, but I know nothing more of this and the Agency Agreement is not relevant for present purposes.

On 31 October 2014 ATEL issued these proceedings, and on 4 November 2014 it applied for an order requiring TRG to pay into the designated account the alleged shortfall of some €32 million, and also for an anti-arbitration injunction. The applications came before Eder J on 7 November 2014, who adjourned them, and they were relisted before Blair J on 25 November 2014. The application for an anti-arbitration injunction was not pursued by ATEL, but Blair J ordered the payment into the designated account, concluding that ATEL had shown a good arguable case that its claim was governed by the jurisdiction clause in the ToBA and was not covered by the arbitration agreement in the framework agreement,and rejecting TRG’s contrary argument. As I have said, the Court of Appeal dismissed an appeal against Blair J’s judgment, and, by order dated 8 May 2015, ordered that TRG pay ATEL’s costs, ordered a payment on account of £80,000, and directed that TRG file a defence by 5 June 2015.

ATEL submits:

That, in circumstances such as these, the court should provide relief to enforce the parties’ agreement in the absence of strong reason to do otherwise, and not require an applicant to show exceptional circumstances to justify an anti-arbitration injunction.

That, even if the court requires an applicant to show exceptional circumstances, there are such circumstances in this case in that:

There is no dispute in this case that the parties agreed in the ToBA that English courts should have exclusive jurisdiction.

TRG is seeking to advance in the arbitration arguments that have been rejected in these proceedings.

TRG’s conduct is vexatious in that it has not paid the £80,000 ordered by the Court of Appeal.

In response to these submissions Mr Charles Samek QC, who represented TRG, contended that no injunction should be made for three main reasons:

Because ATEL delayed in seeking relief.

Because the circumstances do not justify relief, but on the contrary they provide good reasons not to grant it.

Because ATEL has made a counterclaim in the reference.

Before considering these arguments directly, it is convenient first to say something more about what was decided by Blair J and the Court of Appeal, and what disputes are raised in the arbitral proceedings.

ATEL applied to Blair J for an order that TRG pay into the designated account some €32 million on the basis that it was required to do so under the ToBA, and, the designated account being a trust account, funds had been misappropriated from it in breach of trust. It relied on the jurisdiction clause in the ToBA. In response TRG challenged the court’s jurisdiction, contending that the parties had agreed that disputes between them would be arbitrated in Milan and that arbitration was already underway. It was common ground before Blair J (see para 31 of his judgment) that this challenge turned on whether ATEL had a “good arguable case” that the court had jurisdiction: this depended on the relationship between the ToBA and the framework agreement, and so in turn, in Blair J’s view, on their proper construction (see para 32). TRG contended that the framework agreement modified the ToBA and in particular displaced its jurisdiction provision. Blair J decided that ATEL had shown a good arguable case that “the TOBA continued as an agreement after the Framework Agreement”.

In the Court of Appeal the leading judgment was given by Beatson LJ. Christopher Clarke LJ gave a short concurring judgment, and Elias LJ agreed with both. Beatson LJ characterised the dispute as one of jurisdiction (at para 1); and he recorded TRG’s argument that jurisdiction was determined by the proper construction of the framework agreement (at para 4), the choice of law and jurisdiction clauses (sic) which displaced those of the TOBA (at para 5), and ATEL’s case that the ToBA and the framework agreement deal with “different aspects of the relationship between the parties” (para 6). He explained (at para 7) the structure of his judgment, and that the last section, section V, “contains my reasons for concluding that ATEL has satisfied the ‘good arguable case’ requirement, which, in this context, includes what has been described as the ‘Canada Trust gloss’ of ‘a much better argument on the material available’” (the expression “Canada Trust gloss” referring to the judgment of Waller LJ in Canada Trust Co v Stolzbenburg (No 2), [1998] 1 WLR 547, 555). In section V Beatson LJ expressed his conclusion in these terms (at para 71):

There was never any dispute between the parties that the framework agreement was a valid contract between them and that it included a valid arbitration agreement. The decision of Blair J and the Court of Appeal determined only that ATEL had made out a sufficient case for the purposes of establishing jurisdiction that the dispute about the monies in the designated account was not covered by the framework agreement and its arbitration provision and was covered by the jurisdiction provision in the ToBA: if there is any doubt about that, Christopher Clarke LJ recognised (at para 74) in terms that the issue remained for consideration at trial:

Accordingly, the English courts have not decided that TRG is pursuing arbitral proceedings when there is no relevant arbitration agreement, nor have they examined whether the arbitration provision in the framework agreement covers the disputes that have been referred to the Italian tribunal. Indeed, it is striking that in his judgment Blair J did not mention the precise words of the arbitration provision. I recognise that Beatson LJ stated in para 70 of his judgment that, “Issues relating to exclusivity are issues governed by the Framework Agreement and thus covered by the choice of Italian law and Italian arbitration in clause 6 of the Framework Agreement but issues concerning commission remain governed by clause 21 of ToBA”. But I do not understand that he intended this broad statement to define a precise line of demarcation between clause 6 and clause 21: that was not necessary for the decision.

When TRG resisted ATEL’s application before Blair J and on appeal, it contended that the dispute that ATEL sought to litigate covered the same ground as the Italian arbitration. Thus it said in its skeleton argument for the appeal that, “There is presently an ongoing Arbitration in Italy (in respect of which the Respondent dropped its anti-arbitration injunction). The Milan Courts could impose an injunction in support of the arbitration if required. As a result of the Judge’s decision there are, at the same time and in parallel, Commercial Court proceedings continuing in this jurisdiction in respect of the same matters. The situation is inherently undesirable”. However, in resisting this application TRG maintains that the claims that it pursues in the arbitration raise different issues from this litigation, and that it makes no claim in the arbitration under the ToBA and does not rely on it, adding that the only claims under the ToBA that are brought in the reference are by way of counterclaim by ATEL and AFS.

ATEL submits that TRG has therefore changed its position, but I am not impressed by that argument. The history is readily understandable: TRG’s former submissions were based on its own case as to the interplay between the ToBA and the framework agreement, but that case was rejected by the Court of Appeal. It now submits that, given the ruling of the Court of Appeal, it is apparent that the issues raised in the arbitration are distinct from those in this litigation. In any case, ATEL’s attempt to exploit TRG’s so-called change of position is no more than a forensic game: it was not, and could not be, suggested that TRG is estopped or otherwise prevented from presenting its present submissions about what disputes arise in the arbitration, nor that TRG’s previous arguments inform an assessment of them.

ATEL does not contend that TRG should be restrained from pursuing the arbitral proceedings at all: its application (as it is formulated in its draft order) refers to “TRG’s Written Statement to Formulate Queries” dated 30^th March 2015” (“TRG’s Statement”), which is by way of a pleading in the arbitration and which Mr Samek describes as “essentially its particulars of claim”. ATEL seeks an order that TRG shall not “take any further steps in the arbitration proceedings in Italy to pursue any substantive claims arising under the [ToBA], including” certain claims identified by reference to “Queries” pleaded in the TRG’s Statement.

The translation of TRG’s Statement that is in evidence is not entirely easy to follow, but is in these terms:

Mr Paul Downes QC, who represents ATEL, criticised TRG’s Statement for “recycling” arguments that have been rejected in these proceedings, in “belligerent disregard” of the judgments of Blair J and the Court of Appeal. Thus, he referred, for example, to the pleading that the framework agreement was signed “in replacement and novation of the previous ToBA” and was “to govern, first and foremost, all relationships between the TRG Group and the ATEL Group”. It is fair to observe that TRGs Statement was filed before the Court of Appeal delivered its judgment. However, what is more important is to examine what disputes TRG seeks to have decided in the reference.

ATEL’s contention in relation to “queries” 1 and 4 is that they advance claims that “clearly fall within the scope of the ToBA [because] clause 5 of the ToBA, headed ‘Remuneration’, governed the commission payable to TRG by ATEL”, whereas the framework agreement did not govern commission payments by ATEL to TRG but only payments to ATEL by TRG for its rights of exclusivity. It is submitted that “The Court of Appeal has unequivocally found that the question of commission payable by ATEL to TRG is governed by the ToBA and not by the Framework Agreement”.

There are two answers to this. First, the Court of Appeal did not make such a finding: as I have explained, it was concerned with whether ATEL had made out a sufficient case for interlocutory purposes, and that did not involve it in making findings on the balance of probabilities or otherwise. If it be suggested (although Mr Downes couched his submission in terms of what the Court of Appeal “found” and although it involves the interpretation of a contract governed by Italian law) that the issue is one of contractual interpretation and so of law and not fact, Beatson LJ said (at para 35) that here too the court was concerned with who had “much the better of the argument”, notwithstanding (i) “it has been recognised that where the question for decision is a question of law that would go to the existence of the jurisdictional gateway, the court will normally decide the issue rather than merely decide whether it is arguable …” (at para 35), and (ii) “ … the nature of the issue here, the construction of the overall agreement package, a question to which, there is, in law, only one correct answer, means that it is appropriate [for the Court of Appeal] to take a less restrained approach [to differing from the first-instance judge] than in, for example, an appeal against a first instance judge’s assessment of whether the English court is the appropriate forum” (at para 61). Similarly, the passage of Christopher Clarke LJ’s judgment that I have already cited reflects that the court was concerned with the assessment of Blair J as to whether ATEL has shown a sufficient case to establish jurisdiction and with the principles governing appeals against such assessments.

Secondly, as Mr Samek pointed out, TRG does not advance in its pleading in the arbitration a claim under the ToBA for commission: it claims under the framework agreement and on the basis that the framework agreement justifies its claims. Of course, if the Tribunal’s analysis of the contractual position accords with the views expressed by Beatson LJ, some of the claims would (at the least) face difficulties, but that is not a sufficient basis to restrain TRG. It does not follow that the claim is vexatious, oppressive or unconscionable. Even if I considered the claims to be unarguable, the court has no supervisory jurisdiction to dismiss unarguable claims brought in an English arbitration (Nomihold v Mobile Telesystems Finance SA, [2012] EWHC 130 at para 49), and there is no proper basis for assuming it in respect of a foreign arbitration. It was not said that TRG is estopped per rem judicatam from bringing its claims, and in any event it would be for the Tribunal to determine whether ATEL has (or ATEL and AFS have) such a defence.

Similarly, the claims in queries 2, 3 and 5 concern the purported termination of the ToBA, and TRG’s pleading makes clear that its contentions about this are based on the framework agreement. They are directed to whether the letter of 11 November 2014 validly terminated the ToBA as well as the framework agreement, as it purported to do, but in the letter ATEL asserted both contracts were deemed terminated on the basis of the provisions of the framework agreement and the Italian Civil Code. It did not rely on the terms of the ToBA. Again, I am not concerned with whether the claims are properly arguable: if a dispute arises “out of or in connection with” the framework agreement within the meaning of the arbitration agreement (interpreted, of course, not in isolation but in the overall scheme of the contractual relationships), it is for the Tribunal to determine it.

I need not deal separately with queries 6, 7 and 8: as I understand it, they are for consequential relief.

There is no dispute that the English court has personal jurisdiction over TRG and that therefore it has jurisdiction under the Senior Courts Act, 1981 s. 37 to make an injunction restraining the pursuit of arbitration proceedings, notwithstanding their seat is in another jurisdiction: see the decisions of the Court of Appeal in Weissfisch v Julius, [2006] EWCA Civ 218, and Albon v Naza Motor Trading Sdn Bhd, [2007] EWCA Civ 1124. Dicey, Morris & Collins, The Conflict of Laws (2012, 15^th Ed) states at para 16-89, “The court … has power to grant an injunction restraining foreign arbitral proceedings, although it is a power that is only exercised in exceptional circumstances and with caution”. The editors cite cases where injunctions were made, and observe (loc cit at fn 246) that in them “the essential claim was that there was no arbitration agreement at all, and the English court either had determined or was entitled to determine that point. Such cases are likely to be very rare”. Similarly Hamblen J decided that Claxton Engineering Services Ltd v TXM Olaj-és Gazkutato Kft, [2011] EWHC 345 (Comm) was “one of those rare and exceptional cases in which it is appropriate to grant an anti-arbitration injunction” (at para 48), in that the defendant had deliberately taken steps to bring a reference knowing that this breached a contractual agreement that the English court had found to exist, notwithstanding it was seeking to appeal that finding (at para 49), and that thus the claimant could invoke binding decision both “that there is the exclusive jurisdiction clause and that there is no arbitration agreement” (at para 50).

However, Mr Downes disputed that in the circumstances of this case, ATEL need to show exceptional circumstances to justify an injunction. He relied on the speech of Lord Bingham in Donohue v Armco Inc, [2001] UKHL 64, which Hamblen J cited in the Claxton Engineering case (loc cit at para 35):

I am prepared to accept that Lord Bingham’s observation applies when an anti-arbitration order is sought and there is no room for argument that a jurisdiction clause covers the relevant claims (or here, in the language of the ToBA, the relevant disputes) either because it is common ground between the parties or because of a previous determination. Whether those circumstances are “exceptional” or whether these cases are an exception to the general position stated by Dicey, Morris & Collins is an arid debate: after all, the ultimate question is always whether it would be “just and convenient” to make an injunction under section 37 of the 1981 Act. In this case, there is no dispute that the parties agreed to the jurisdiction provision in the ToBA, but that does not mean that it applies to the disputes that ATEL has (or ATEL and AFS have) put before the Tribunal.

The courts have recognised that in circumstances such as these it is not usually just and convenient to restrain a person from bringing or pursuing arbitral proceedings. The reason (or an important reason) for this is clear from the judgment in Weissfisch v Julius, [2006] EWCA Civ 218. At para 25 of the judgment of the Court of Appeal, Lord Phillips CJ set out, with apparent approval, the observation of David Steel J at first instance that “it was a well established principle of English law that the courts of the seat of the arbitration should have supervisory jurisdiction. … In these circumstances, if … section 37 of the Supreme Court Act gave him jurisdiction to grant the injunction sought, it was a jurisdiction that should be exercised with great caution”. This reasoning applies with particular force where, as here, there is no dispute, or cannot properly be any dispute, that the parties made an agreement for arbitration with the foreign seat, and so accepted that (i) in accordance with the principle of Kompetenz-Kompetenz a tribunal appointed under the agreement should determine whether the agreement covered disputes before it, and (ii) that the supervisory jurisdiction over such decisions of a tribunal should be that of the courts of the seat of the arbitration. In the Albon case Longmore LJ acknowledged these considerations, but there they were displaced because the parties had themselves agreed that the English court should determine whether the arbitration agreement (in the so-called JVA) was genuine or was a forgery, made, it was alleged, in order to derail English litigation. Hence Longmore LJ said this (loc cit at paras 16 and 17):

The position is quite different here. ATEL and AFS have always objected to the Tribunal’s jurisdiction in the reference. This is, according to the unquestioned evidence of TRG’s Italian lawyer, Mr Gialuigi Malandrino, in accordance with article 817 of the Italian Code of Civil Procedure, which imposes an obligation on the parties to arbitrations to raise issues of competence before tribunals, and on tribunals to determine them: “If the validity, content and scope of the arbitration agreement … are disputed during the arbitration, the arbitrators shall decide on their own jurisdiction”. If ATEL (or, presumably, ATEL) is dissatisfied with the Tribunal’s decision, it should, Mr Maladrino explained, apply to the Milan Court of Appeal under article 830 of the Code and, if it considered that an award goes beyond the limits of the arbitration agreement, it can challenge it under article 829.

I therefore reject Mr Downes’ arguments that an injunction is justified in this case because:

There is no dispute that the parties agreed in the ToBA the exclusive jurisdiction provision, there being a dispute about whether it applies to the claims in the arbitration; and

TRG seeks to advance arguments in the reference that have already been rejected in these proceedings, because I do not accept that they have been rejected in any relevant way.

There remains the argument that an injunction should be granted because TRG has not paid the costs ordered by the Court of Appeal. Mr Downes submitted that this is not because it cannot make the payment but because it refuses to do so. There is not material before me that enables me to determine whether this is so, but in any case it does not mean that the pursuit of the arbitration proceedings is vexatious and does not justify an injunction.

For these reasons I conclude there is no proper reason to make an anti-arbitration injunction.

TRG therefore does not need to rely on arguments about delay or about the counterclaims in the arbitral proceedings. I was less impressed by them, but in the circumstances I deal with them briefly.

As I have said, when it issued these proceedings on 31 October 2014 ATEL sought an anti-arbitration injunction, and in a witness statement of 7 November 2014 Mr Jeremy Cadle, its European General Counsel, said that relief was sought “In order to protect ATEL from this vexatious conduct, and to prevent it being forced to incur costs in defending such part of those proceedings covered by the English exclusive jurisdiction clause”. It was not pursued before Blair J, and during the hearing Mr Downes explained that decision: he described the reference to arbitration as a “vague and rambling document”, and said that it was unclear how far it would “impinge upon ToBA”. I have heard no argument that persuades me that this was anything other than a sensible decision: certainly, TRG did not say anything at the time to suggest otherwise, or that if the application was not pursued before the claims in the reference were clarified, it would rely on the delay.

As I have said, TRG filed its “Written Statement to Formulate Queries” on 30 March 2015, and it was provided to ATEL’s (and AFS’s) lawyers at the same time. TRG submits that ATEL would have seen from it that TRG was asking the Tribunal to determine disputes that ATEL maintains are within the ToBA jurisdiction clause and not within the arbitration provision in the framework agreement. However, the Court of Appeal handed down its judgment only on 30 April 2015, and it made a final order, after resolving some ancillary issues, only on 8 May 2015. ATEL’s arguments in support of the anti-arbitration injunction relied heavily on the judgments in the Court of Appeal. Had I acceded to them, I would not have considered that ATEL has delayed in any material way in waiting for the judgments before making the application.

On 14 May 2015 ATEL sought undertakings from TRG, but this request was refused on 22 May 2015. On 26 May 2015, ATEL was served with a notice that TRG had ceased to instruct its solicitors, Lewis Silkin. According to ATEL it expected TRG to appoint new solicitors in time to serve its defence by 5 June 2015, as ordered by the Court of Appeal: this would mean that service could be effected on the new solicitors and the expense and delay of serving the application in Italy avoided. But on 8 June 2015, when no new solicitors had been appointed and no defence served, ATEL sent notice of this application, with the evidence in support, to TRG and went about having it served. In the event, on 11 June 2015 Lewis Silkin advised that TRG had restored its instructions.

There was no relevant delay, certainly none that would warrant refusing an injunction that it would otherwise be just and convenient to make.

As I have said, on 29 May 2015 ATEL and AFS filed their defence in the arbitration. Section III of the pleading is headed, “On the merits: the groundlessness of TRG’s claims and ATEL and AFS’ counterclaims”, and the sub-heading to section III.6 is “The counterclaims of ATEL and AFS”: claims are made for liquidated sums, damages and interest. More specifically the relief claims declaratory relief by way of a finding “that [TRG] breached its contractual obligations towards [ATEL] and [AFS], including [specified articles of the ToBA, the Italian Civil Code and Private Insurance Code and an Italian Insurance Supervisory Authority Regulation referred to as “IVASS”]”; a declaration that the framework agreement and the ToBA were “validly terminated for all statutory purposes”; and a declaration of TRG’s liability to make payments of sums due under the framework agreement and ToBA, including premiums from 1 September 2014 in the sum of €32,454,777.76.

In these circumstances Mr Samek argued that ATEL is behaving inconsistently in seeking an anti-arbitration injunction on the grounds that the disputes before the Tribunal are not covered by the arbitration agreement but by the jurisdiction agreement in the ToBA: that it approbates and reprobates. However, ATEL always made clear that it objects to the reference on jurisdictional grounds, and specifically that it objects to including in the reference claims relating to the payment of the commission. The relief that ATEL and AFS seek includes a declaration by the tribunal that “it lacks jurisdiction in relation to any claim, defense or objection raised by [TRG] on the basis of the [ToBA] … by virtue of the relevant article 21 …, including any claim for the payment of commission and/or damages”. It is, to my mind, clear that this is ATEL’s primary contention, and the counterclaims are brought lest it fails. Had I otherwise been willing to grant the application, I would have required ATEL to clarify its position in that regard and possibly required undertakings about the counterclaims in the reference. But I would not have refused the application on this basis.

I therefore reject TRG’s arguments about delay and the counterclaims in the arbitration, but I refuse ATEL’s application.