English Commercial Court Orders Stay Of Lebanon-Seated Arbitration In ‘Exceptional' Case

In the most recent decision in the Sabbagh family feud, Sabbagh v Khoury & Ors [2018] EWHC 1330 (Comm), the English Commercial Court ordered the stay of parallel Lebanon-seated arbitration proceedings. This was despite the tribunal in that case having found that it had jurisdiction to hear it. In granting the interim injunction to restrain the pursuit of the arbitration proceedings, Mr Justice Knowles was quick to acknowledge the significance of a court that is not the supervisory court granting an injunction to prevent parties prosecuting a foreign arbitration.

Background and procedural history

Ms Sana Sabbagh and her two brothers, Samir and Suheil, are the children and heirs to the late Mr Hassib Sabbagh who, together with his cousin Said Toufic Khoury, founded the largest group of engineering and construction companies in the Middle East, the Consolidated Contractors Company group (the "CCC group").

Sana commenced litigation proceedings in the English Commercial Court in July 2013 against various defendants, including her brothers, three of her Khoury cousins, and various CCC group companies. The proceedings were started in the English courts, as the first defendant, Mr Wael Said Khoury, was domiciled in England and Wales, thereby bringing the other defendants within the jurisdiction of the courts as "necessary and proper parties" to the litigation against Wael (under Article 6(1) of the Brussels Regulation).

Sana alleged that the Defendants had conspired to misappropriate assets belonging to her father (referred to as the 'asset misappropriation claim') and, since her father's death in 2010, to deprive her of her entitlement to shares in the Consolidated Contractors Group (CCG), the ultimate parent company of the CCC group (referred to as the 'share deprivation claim').

After Sana had commenced the English litigation, her brothers Samir and Suheil, together with CCG and Hassib Holding SAL, the Lebanese company owned and controlled by Samir and Suheil (the "Arbitration Claimants"), commenced arbitration proceedings seated in Lebanon under the dispute resolution clause in the Articles of Association of CCG (the "Lebanese Arbitration"). The Arbitration Claimants were seeking, amongst other things, a determination as to the ownership of the shares in CCG and sums owed from Hassib's shareholder account. These are issues which the Arbitration Claimants themselves acknowledged in their Memorial on Jurisdiction "correspond[ed] in substance" to...