Luxembourg court confirms its competence to rule on investigative, provisional or conservatory measures under certain conditions
In a recent decision of the Luxembourg Court of Appeal, the Court considered it had jurisdiction to decide on a request for interim relief, regardless of the arbitration clause which confers (exclusive) jurisdiction on the arbitral tribunal.
In a shareholders dispute relating to a Luxembourg entity, minority shareholders requested an interim relief measure from the Luxembourg Court.
The shareholders agreement contained an arbitration clause, whereby parties agreed that all disputes arising from or in connection with the agreement would be settled in accordance with the Arbitration Rules of the German Institution of Arbitration (DIS) without recourse to the ordinary courts of law.
Prior to initiating an arbitral proceeding in Germany, several shareholders requested the Luxembourg Courts to appoint an accounting expert to establish evidence of the breach of the shareholders' agreement.
The Court of Appeal emphasised that the common intention of the parties in the arbitration clause must be respected and should not be interpreted restrictively. It concluded that the parties clearly intended to exclude the jurisdiction of the state courts to hear all type of disputes, including interim proceedings. The Court thereby confirmed that if parties wish to exclude the competence of the arbitral tribunal to rule on certain disputes, this must be explicitly provided for.
Indeed, the Court confirmed that an arbitration clause which excludes disputes between certain parties to be brought before the state jurisdiction may extend to interim proceedings, provided that the will of the parties, as reflected in the wording of the arbitration clause, makes it possible to characterise such exclusion.
However, the Court supplemented this principle with the principles governing the interaction between the state court and the arbitral tribunal with other clarifications.
According to the judgment, the State court nonetheless maintains its competence over interim relief if two conditions are both fulfilled. First, the arbitral tribunal must not yet be seized to hear the matter. Second, the measure requested is urgent or the measure is “in futurum”, i.e. to establish evidence of facts on which a subsequent action could be based.
In the present case, the Court of Appeal therefore declared itself competent on the basis that (i) the DIS tribunal had not yet been seized at the time of the request and (ii) the expertise was requested on two grounds, as a measure in futurum (article 350 of the New Code of Civil Procedure “NCPC”) and as an urgent measure (article 932, paragraph 1 of the NCPC).
In this decision, the Luxembourg Court of Appeal has confirmed its earlier position that parties can validly exclude the competence of the state jurisdictions, including with respect to interim measures. However, for as long as no arbitral tribunal has been seized and the requested measures is urgent or “in futurum”, the Luxembourg courts will nonetheless remain competent to hear requests for interim measures. A final observation is that, although the DIS Rules do contain provisions (e.g. Article 25.3 in 2018 version) which appear to permit recourse to courts in wider circumstances, the decision did not appear to review these. Ultimately this did not matter given the court found that interim relief was, in the circumstances, permissible anyway, but in a different case it would have been interesting to see how the court analysed them.