In National Navigation Co v Endesa Generacion SA [2009] EWCA Civ 1397, the Court of Appeal considered an appeal on the issue of whether a Spanish judgment (holding that an arbitration clause was not incorporated) was binding in proceedings before the Commercial Court in London. In the English proceedings, National Navigation Co (NNC) applied for an anti-suit injunction to prevent Endesa proceeding with its claims in court (rather than in arbitration), and a declaration that disputes between the parties were referable to London arbitration. Although the court at first instance dismissed the application for an anti-suit injunction (in light of the ruling of the European Court of Justice (ECJ) in West Tankers (C-185/07)), it granted the declaration. The court held that, although the Spanish judgment was covered by the Brussels Regulation (the Regulation), it was not binding in the Commercial Court proceedings as they fell outside the Regulation by virtue of the arbitration exclusion in Article 1(2)(d).

The Court of Appeal allowed the appeal. It held that the Spanish judgment was not, in fact caught by the arbitration exclusion and, as such, the English court had to recognise it as a Regulation judgment. Further, the Regulation judgment was binding on arbitration proceedings (themselves excluded from the Regulation) as much as on any other court proceedings. Therefore, the English court could not re-examine the issue of incorporation. For more detailed discussion of the factual background, see Legal update, National Navigation v Endesa: full report).

This decision is unlikely to be considered surprising as, to a greater degree than the decision at first instance, it is in keeping with the case law leading up to and including the ECJ decision in West Tankers. Moore-Bick LJ provided a detailed examination of that case law, which he said provided a consistent line of authority. The principle that emerged from his examination is that, for the purposes of determining the applicability of the Regulation, proceedings are to be characterised by reference to their subject matter, that is, the nature of the rights which the proceedings serve to protect. Where a dispute as to the existence of an arbitration agreement arises, that will fall outside or within the Regulation depending on whether it forms the main subject matter of the proceedings or is merely ancillary to a substantive dispute which itself falls within the Regulation.

The more unsatisfactory lack of reciprocity which may result from this line of authority was perhaps best expressed by Waller LJ in his portion of the judgment. Namely:

(because the latter would fall within the arbitration exception to the Regulation);

In 2009, the European Commission published a Green Paper proposing revision of the Brussels Regulation, including in respect of the scope of the arbitration exception. It remains to be seen whether the Green Paper will lead to amendments which may resolve difficulties such as that set out by Waller LJ (see Legal update, Green paper on the application of the Brussels Regulation).