Privy Council Dismisses Challenge To Mauritian Arbitral Award Based On Alleged Breaches Of Natural Justice And Public Policy

In the recent case of Peepul Capital Fund II LLC v VSoft Holdings LLC [2019] UKPC 47, handed down on 19 December 2019 and available here, the Privy Council (on appeal from Mauritius) upheld the decision of the Supreme Court of Mauritius which refused to set aside an arbitral award on the basis of alleged breaches of natural justice and public policy.

The essence of the appellant's case was that the sole arbitrator had improperly concluded, based on a submission by the appellant's counsel at the hearing, that the appellant had abandoned its defence to the claim. Alternatively, it was alleged that the relevant submission by counsel had been preceded by an inappropriate intervention by the sole arbitrator, and this had prevented the appellant from presenting its case. However, the Privy Council rejected these arguments and held that the appellant's counsel had indeed made such a concession, and that the sole arbitrator's intervention preceding the concession had been appropriate.

The decision serves as a useful remainder of the high hurdle that an applicant will generally face when attempting to challenge an award on the basis of natural justice or procedural irregularity. The case also highlights an unusual feature of Mauritian arbitration law: decisions of the Mauritius court in respect of challenges to an award may be appealed as of right to the Privy Council.

Background facts

The dispute arose from an equity investment by the respondents (“Investors“) into the appellant (“VSoft“), a company incorporated in Mauritius.

The relationship was governed by an investment agreement, which provided one of the Investors with an option to exit its shareholding in VSoft in exchange for a minimum return on its original purchase price (“Investment Agreement“).

The parties subsequently terminated the Investment Agreement and entered a new agreement under which the Investors agreed to surrender their shares in VSoft for an aggregate sum of US$17 million, which was payable in three tranches and with interest (“Shareholders Agreement“).

The Investors surrendered their shares in VSoft but VSoft failed to pay the tranches due under the Shareholders Agreement.

Arbitration and award

The parties referred their dispute, through an ad hoc agreement, to arbitration in Mauritius before a sole arbitrator.

The parties' positions were developed through two rounds of pleadings. By the time the arbitration came to hearing, the Investors were only pursuing a claim under...

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