It’s not every day of the week that I have the privilege of being in the same room as not one, but two former judges of our Supreme Court; but that’s just happened to me today to me at Leeds Civic Hall.
The bi-annual Mustill lecture was named in honour of the great Lord Mustill, a retired Supreme Court Judge whose brilliant judgements will long be remembered. Today’s talk was given by former Supreme Court judge Lord Dyson, who was later appointed Master of the Rolls.
I was the only family law arbitrator present but I am also interested in arbitration in its wider commercial context so this was a great opportunity to hear from the Master of the Rolls about the legal problems affecting arbitration which have arisen from of our membership of the EU. I am all too familiar with similar problems in family law. The lecture was entitled Arbitration and Brussels 1 and it was both coincidental and ironic that throughout the morning, I was receiving e mails on my iPad from a solicitor in our London office. These set out the current state of play in a case concerning the jurisdiction of the English courts in a matter where two member states had accepted jurisdiction and had made conflicting orders.
Commercial arbitration has been around for a long time, as Lord Dyson pointed out. A City of London Chamber of Arbitration was set up in 1892, “its aims being an expeditious, cheap, simple, peacemaker instead of starter up of strife” and it has certainly thrived since then, at home and abroad, in a commercial setting. London has gone on to become a capital of world arbitration, but there are now many other capitals, such as Kuala Lumpur, Hong Kong and Singapore where English arbitrators are sought after, making arbitration awards in global cases.
Problems arose when we joined the EU and I started to wryly smile as Lord Dyson touched upon problems we family lawyers know only too well. There is forum shopping, for example, where in a divorce case the first party out of the starting blocks can gain a substantial advantage by issuing a divorce petition in their country of choice, assuming the country of choice has a more favourable financial regime in place. The other half can then do nothing in their preferred country and must either submit to the jurisdiction of that court, or challenge it in that country. Either way, arguing their case can cost them a lot of money, especially if they are not living there.
In the commercial world of arbitration, the term is “torpedo actions”. These can occur where one party to a contract decides not to proceed to arbitration in the agreed “seat” – ie place and country as per the terms of the original contract – and instead issue court proceedings in their country of choice, thereby tying up the other side in additional, expensive and protracted litigation which was never agreed under the contract.
“Anti suit” injunctions are directed to the party concerned, to stop that litigation and enable the arbitration as originally agreed to go ahead. But these are held by the European Court of Justice to be incompatible with the European Convention, even where bad faith has been proven. An agreement to arbitrate in a given country, as intended under the contract, could turn out to be an expensive waste of time and there is nothing that can be done about it.
So, pondered Lord Dyson, should a short European legal instrument be introduced to protect arbitrational clauses?
Lord Mustill sitting intently at the front, was forthright with his response. Arbitration he said “is a creature of agreement”, whereas “law is the State that is speaking, and States consider matters differently from individuals. We shouldn’t be surprised that arbitration comes second to law, as what seems obvious to commercial lawyers is not obvious at all to a public lawyer, deciding how to fit arbitration into the imperative demands of the state.”
Put like that, the refusal of the European States to cede the jurisdiction of their courts to a dispute resolution process becomes understandable.
“Education” he believes is the answer. We, the audience today, were “believers” but “there are more important fish to fry ensuring that each European member state is psychologically integrated as well.”
I only had a small glimpse of what is going on at the highest levels of the judiciary to encourage dispute resolution out of court. The Master of the Rolls particularly praised the new Lord Chief Justice, Sir John Thomas, for his own work in Europe. European wheels turn slowly though, as I was once told when I visited Brussels once with the Law Society to discuss potential harmonisation of family law across the EU.
I must say my morning out of the office with a decent cup of coffee and a big croissant to boot was a great experience, given the company of two Yorkshire men with such formidable intellects.
Many thanks to the North East branch of CIArb for organising such a tremendous event and for inviting me to it. Special thanks too to CIArb’s Derek Masters!