Friedhelm Eronat v CPNC International (Chad) Ltd & Anor
[2024] EWHC 2880 (Comm)
Republic of Mozambique (acting through its Attorney General) v Privinvest Shipbuilding SAL (Holding) and others
20 September 2023
[2023] UKSC 32
Supreme Court
Mozambique sued a shipbuilding company for bribery and conspiracy. The company wanted the case sent to arbitration based on contracts' clauses. The Supreme Court said no, because the main issues (bribery and conspiracy) weren't about the contracts themselves, only about the money made from them. The argument about how much money was lost was important but not enough to force arbitration.
Key Facts
- •Dispute between Republic of Mozambique and Privinvest over three 2013-2014 transactions involving loans, supply contracts, and sovereign guarantees.
- •Republic alleges bribery, conspiracy, dishonest assistance, and knowing receipt against Privinvest and others.
- •Supply contracts contained arbitration agreements governed by Swiss law.
- •Privinvest sought a stay of English court proceedings under section 9 of the Arbitration Act 1996.
- •Waksman J dismissed Privinvest's application, while the Court of Appeal reversed the decision.
- •The appeal to the Supreme Court concerns the interpretation of "matter" in section 9 of the Arbitration Act 1996 and the scope of the arbitration agreements.
Legal Principles
Section 9 of the Arbitration Act 1996 provides for a mandatory stay of court proceedings concerning matters agreed to be referred to arbitration, unless the agreement is null, void, inoperative, or incapable of performance.
Arbitration Act 1996, section 9
A pro-arbitration approach involves a liberal interpretation of arbitration agreements to respect party autonomy.
Enka Insaat ve Sanayi AS v OOO “Insurance Co Chubb” [2020] UKSC 38
In determining whether court proceedings concern a "matter" subject to arbitration, a two-stage process is used: (1) identify the matters in the proceedings, (2) assess whether those matters fall within the scope of the arbitration agreement.
Various cases, including Sodzawiczny and Tomolugen
A "matter" is a substantial, legally relevant issue, susceptible to arbitral determination as a discrete dispute, and not merely peripheral or tangential.
Tomolugen, WDR Delaware, Ting Chuan
The court considers the substance of the dispute, including reasonably foreseeable defences, not just the claimant's pleadings.
Lombard North Central, Autoridad del Canal de Panamá
Swiss law principles for interpreting arbitration clauses include an objective approach, consideration of context, and the principle in favorem arbitri, but the latter cannot override the language and context of the clause.
Waksman J's judgment
Outcomes
The Supreme Court allowed the Republic's appeal.
The Court of Appeal erred in concluding that a defence, if arbitrable, automatically renders the claimant's claim arbitrable. The Court also failed to sufficiently analyze the connection between the Republic's remaining claims (excluding the conceded IFA and UMIFA) and the specific supply contracts. The quantification of damages, while a substantial issue, was not a "matter" in respect of which the proceedings were brought in the context of the Republic's core claims, which fell outside the scope of the arbitration agreements.