Betamax V STC ' When May An Arbitral Award Be Set Aside Or Enforcement Refused?

• Published date: 25 June 2021
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution, Trials & Appeals & Compensation
• Law Firm: Wilberforce Chambers
• Author: Stuart Isaacs QC

The important and much anticipated judgment of the Privy Council in Betamax Ltd v State Trading Corporation [2021] UKPC 14, on an appeal from the Supreme Court of Mauritius, puts right several errors into which the Supreme Court fell in terms of both the circumstances generally in which a court may set aside or refuse enforcement of an arbitral award and the issue whether the award in the particular case was in fact illegal and hence contrary to the public policy of Mauritius. The decision has been welcomed by the international community at large. The reaction to it in Mauritius has been more mixed.

The facts of the case are straightforward. Betamax is part of a substantial group of Mauritius companies. STC is a trading arm of the Government of Mauritius set up by statute and entrusted with the responsibility for importing essential commodities such as petroleum products and LPG for use and trade in Mauritius. In November 2009, the parties entered into a 15 year contract of affreightment ("COA") under which Betamax agreed to transport Mauritius' entire petroleum product requirements from a refinery in India on a vessel specially designed for that purpose. At the time the COA was concluded, the then coalition government of Mauritius at all times maintained the legality and promoted the economic benefits of the COA. However, following a general election in 2014, there was a change of government. The new government included a party which, during the election campaign, for the first time claimed that the COA had been entered into in breach of the Public Procurement Act 2008 ("PPA") and undertook, if elected, to terminate the COA. Soon after the election of the new government, STC made it clear that it did not intend to continue to perform the COA and failed and refused to perform it further. Betamax accordingly gave notice of termination whereby it accepted STC's repudiation and failure and refusal to perform as bringing the COA to an end.

Betamax initiated arbitration proceedings in the Singapore International Arbitration Centre claiming damages and interest of over $150 million - a sum representing about 1.5% of Mauritius' GDP. Importantly, although the SIAC Rules applied, the governing law of the COA was Mauritius law and the seat of the arbitration was Port Louis, Mauritius. Mauritius' International Arbitration Act (the "IAA") was applicable because the ship management obligations under the COA were to be performed in Singapore and India.

Before the sole...