Does Your Arbitration Agreement 'Matter?': Recent Guidance From The English Supreme Court

• Jurisdiction: United States,Federal
• Law Firm: Bracewell
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Contracts and Commercial Law, Arbitration & Dispute Resolution
• Author: Mr Robert Meade and Jameela Bond
• Published date: 03 October 2023

It is often assumed that arbitration agreements will catch all possible disputes arising from a given relationship, with the result that those disputes will have to be resolved confidentially. A recent decision of the English Supreme Court highlights that this may not always be the case.

What was the dispute about?

The dispute concerned a series of commercial contracts entered into by (among others) the Republic of Mozambique (ROM), three special purpose vehicles created by ROM (the SPVs) and several shipping companies (referred to collectively in the judgment as Privinvest).

Privinvest entered into three supply contracts with the SPVs in connection with certain development projects in Mozambique. Those contracts were governed by Swiss law and included arbitration clauses providing disputes were to be resolved by arbitration seated in Switzerland.

The SPVs procured financing from several well-known banks in order to fund the sums owed under the supply contracts, with ROM guaranteeing performance of their obligations. The loan agreements were governed by English law and contained an exclusive jurisdiction clause in favour of the English Court.

In 2019, ROM commenced litigation in the English High Court against Privinvest alleging a $2 billion fraud involving claims of bribery, conspiracy and dishonest assistance in relation to the procurement of the guarantees provided (the ROM Litigation). Privinvest (and others) in turn commenced arbitrations against ROM and the SPVs pursuant to the arbitration agreements contained in the supply contracts.

What were the key issues for the Court to decide?

Privinvest applied to the English Court for a stay of ROM's claims in the ROM Litigation in favour of arbitration pursuant to section 9 of the Act which provides:

"A party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may... apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter."¹

In its first decision on the application of section 9 of the Act, the Supreme Court had to determine whether the "matters" with which the ROM Litigation was concerned were indeed matters that the parties had agreed to resolve by arbitration and whether to stay the ROM Litigation accordingly.

What was the result?

The Supreme Court...