On 20 September 2023, the Supreme Court handed down judgment in Republic of Mozambique v Privinvest Shipbuilding SAL (Holding) & Ors [2023] UKSC 32.
The Supreme Court (Lords Hodge, Lloyd-Jones, Hamblen, Leggatt and Richards) unanimously allowed the Republic of Mozambique’s appeal, in long-running and complex litigation of an alleged c. US$2 billion fraud, which has become known as the “tuna bonds” or “hidden debts” scandal.
The appeal concerned a preliminary issue in jurisdiction applications brought by a group of defendants—the Privinvest Defendants—for a stay of the Republic’s claims against them under s.9 of the 1996 Act. S.9(4) mandates the Court (upon a duly made application) to stay proceedings brought by claim or counterclaim “in respect of a matter which…is to be referred to arbitration” under an arbitration agreement between the parties, unless it is null and void, inoperative or incapable of being performed. The Privinvest Defendants argued that the Court of Appeal had been correct to hold that all of the Republic’s claims were “matters” falling within the scope of various Swiss-law arbitration agreements allegedly binding on the Republic.
The Supreme Court disagreed. It accepted the Republic’s case that none of its claims in issue on appeal were “matters” in respect of which the proceedings were brought, which fell within the scope of the arbitration agreements.
The judgment makes for important reading for litigation and arbitration practitioners alike. Section 9 had formerly been the subject of conflicting (and unclear) decisions in the lower courts, with Popplewell J (as he then was) providing the most comprehensive English law analysis in Ruhan [2018] 2 Lloyd’s Rep 280. The Supreme Court gives much-needed clarity on the meaning of s.9, setting out its finding of a “general international consensus among the leading jurisdictions… on the determination of ‘matters’ which must be referred to arbitration” (§§71-80), and which can thus be stayed under the 1996 Act. This consensus included (§73) that “a ‘matter’ is a substantial issue that is legally relevant to a claim or a defence, or foreseeable defence, in the legal proceedings, and is susceptible to be determined by an arbitrator as a discrete dispute”.
The judgment, which also analyses the scope of the arbitration agreements in issue, is also a salutary and timely reminder that the ‘one-stop shop’ principle endorsed by the House of Lords in Fiona Trust (and its counterparts in other jurisdictions, such as the in favorem arbitri principle in Swiss law) does not negate a close and careful analysis of the meaning of an arbitration agreement in accordance with its applicable law.
Nathan Pillow KC appeared for the Republic of Mozambique, leading Richard Blakeley and Ryan Ferro, instructed by Sarah Gabriel, Philip Gardner and Stephanie Williams of Peters & Peters Solicitors LLP.
A copy of the judgment can be found here.
