Disputes: parties may desert London for US or Switzerland




The City could soon cease to be a top player in the international arbitration market, lawyers warned this week.



The Square Mile's pre-eminence has been threatened by a House of Lords' decision to refer to the European Court of Justice (ECJ) a question that could persuade parties in an arbitration to move proceedings to non-EU venues.



Peter Rees, a partner in the London office of US firm Debevoise & Plimpton and chairman of the Chartered Institute of Arbitrators' practice and standards committee, said: 'The effect on arbitration in England and the rest of the EU could be far-reaching.'



Until now, the EU member state where arbitration is scheduled to take place has been allowed to issue an anti-suit injunction to restrain court proceedings in any other EU state that might interfere with the arbitration process. Arbitration is uniquely excluded from an EU-wide regulation that otherwise bars such injunctions. The question to the ECJ asks whether this exception should continue.



Mr Rees said that allowing anti-suit injunctions has streamlined the arbitration process and made EU centres, and in particular London, attractive to parties seeking commercial dispute resolution. The ECJ had a 'general distrust of anti-suit injunctions', however, and might decide to bring arbitration into line with other proceedings, he said.



Mr Rees added: 'If the ECJ changes the rules, the likely losers in an arbitration could in effect torpedo the whole process by playing the litigation game and simply starting proceedings in another member state court where things happen more slowly. There would also be the extra expense of two sets of proceedings in two separate places.'



He said parties would be likely to desert London for a non-EU venue, such as the US or Switzerland.



Jonathan Rayner