Republic of Mozambique (acting through its Attorney General) v Credit Suisse International and Others
| Jurisdiction | England & Wales |
| Judge | Henderson,Singh,Carr L JJ. |
| Judgment Date | 11 March 2021 |
| Neutral Citation | [2021] EWCA Civ 329 |
| Year | 2021 |
| Court | Court of Appeal (Civil Division) |
[2021] EWCA Civ 329
Henderson, Singh and Carr L JJ.
Court of Appeal (Civil Division).
Arbitration — Arbitration agreements — Stay of proceedings — Matters agreed to be referred to arbitration — Mozambique setting up companies to enter into supply contracts financed by loans backed by sovereign guarantees — Mozambique alleging transactions procured by bribery and supply contracts instruments of fraud and shams — Supply contracts providing for Swiss law and arbitration — Instrument of fraud allegation within scope of arbitration agreements — Defence of validity and genuineness of supply contracts arising in response to every cause of action pleaded — Arbitration Act 1996, s. 9.
This was an appeal against a decision refusing to stay the proceedings pursuant to the Arbitration Act 1996, s. 9.
The claimant Republic of Mozambique had set up three Mozambique companies as special purpose vehicles to enter into supply contracts with the sixth, seventh and eighth defendant companies which were part of a group of companies (Privinvest) ultimately owned and controlled by the 12th defendant. The supply contracts provided for the Privinvest companies to supply, respectively, a fishing fleet, a shipyard, and ships, aircraft and infrastructure to enable the Republic to protect to its coastline and territorial waters. The SPVs were financed by loans from the defendant banks and that was made possible by sovereign guarantees given by the Republic.
The loan agreements and guarantees provided for English law and exclusive jurisdiction. The supply contracts provided for Swiss law and arbitration.
The Republic alleged that it had been the victim of a conspiracy by the defendants which had left it owing about US$2.1 billion under the guarantees; the three transactions had involved the payment of large bribes to government officials and to bank employees; the guarantees were unconstitutional and illegal under Mozambican law; the transactions were part of a fraudulent scheme, since the value of the assets supplied or intended to be supplied under the supply contracts bore no relation to the price paid.
The Republic brought claims for deceit, bribery, conspiracy to injure by unlawful means, dishonest assistance, knowing receipt and also made proprietary claims.
The Privinvest companies contended that, although the Republic was not a signatory to the supply contracts, it was a party to them as a matter of Swiss law, and that the Republic's claims fell within the scope of the arbitration agreements. The judge rejected the latter contention, on the assumption that the Republic was a party to the arbitration agreements.
On appeal by the Privinvest companies, the Republic accepted that the allegations that (i) the supply contracts were instruments of fraud or shams (‘the IFA’) and (ii) the entry into the supply contracts was one of the unlawful means in the conspiracy (‘the UMIFA’) were within the scope of the arbitration agreements, but argued that a stay of the proceedings in respect of those allegations would not affect the remainder of its claims.
Held, allowing the appeal:
1. It was clear that the IFA was sufficiently connected to the supply contracts and so fell within the scope of the arbitration agreements. The IFA was an allegation that the supply contracts were ‘instruments of fraud’ or ‘shams’. It was hard to imagine a plea more directly related to a contract, apart from a direct claim for breach. It was an allegation going to the validity of the supply contracts, and as such fell within the scope of the respective arbitration agreements.
2. Even if the IFA was removed from the pleaded claim against the Privinvest companies, the validity and genuineness of the supply contracts, and the circumstances surrounding their entry and their performance, were matters bound to be relied on by the Privinvest companies as part of their defence. In considering the claim for the purposes of s. 9, the court looked at the nature and substance of the claim and the issues to which it gave rise, rather than simply to the form in which it was pleaded. If the proceedings would foreseeably involve resolution of any issue falling within the scope of the arbitration agreement, the court had to stay the proceedings to that extent, even if that led to fragmentation of proceedings. The matters in respect of which the proceedings were brought against the Privinvest companies included the question of whether the supply contracts were valid and genuine commercial contracts. That defence was sufficiently connected to the supply contracts and arose in response to every cause of action pleaded against the Privinvest companies: bribery, dishonest assistance, conspiracy and knowing receipt and the proprietary claims. The result was that all of the claims against the Privinvest companies were matters falling within the scope of the arbitration agreements.
The following cases were referred to in the judgment:
Aeroflot – Russian Airlines JSC v Berezovsky [2013] EWCA Civ 784; [2013] 2 CLC 206.
Autoridad del Canal de Panamá v Sacyr SA [2017] EWHC 2228 (Comm); [2017] 2 Ll Rep 351.
Bridgehouse (Bradford No. 2) Ltd v BAE Systems plc [2020] EWCA Civ 759; [2020] 2 CLC 69.
China Export and Credit Insurance Corp v Emerald Energy Resources Ltd [2018] EWHC 1503 (Comm).
Dallah Real Estate & Tourism Holding Co v Pakistan [2009] EWCA Civ 755; [2009] 2 CLC 84.
Enka Insaat ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38; [2020] 2 CLC 604; [2020] 1 WLR 4117.
Fiona Trust & Holding Corp v Privalov [2007] UKHL 40; [2007] 2 CLC 553; [2007] 4 All ER 951.
Premier Cruises Ltd v DLA Piper Rus Ltd [2021] EWHC 151 (Comm).
Sodzawiczny v Ruhan [2018] EWHC 1908 (Comm); [2018] 2 CLC 455.
Tomolugen Holdings Ltd v Silicia Investors Ltd [2015] SGCA 57.
Duncan Matthews QC, Ben Woolgar and Frederick Wilmot-Smith (instructed by Signature Litigation LLP) for the appellants.
Nathan Pillow QC, Richard Blakeley and Ryan Ferro (instructed by Peters & Peters Solicitors LLP) for the respondent.
Carr LJ: Introduction
1. This is an appeal against the judgment of Waksman J (‘the judge’) dated 30 July 2020[1] (‘the judgment’) whereby he dismissed the application of the appellants (together ‘the Privinvest companies’) for a stay pursuant to s. 9 of the Arbitration Act 1996 (‘s. 9’; ‘the 1996 Act’) of the proceedings brought against them by the respondent, the Republic of Mozambique (‘the Republic’). The judge did so on the basis that, on a proper construction and applying Swiss law, none of the Republic's pleaded claims against the Privinvest companies fell within the scope of three arbitration agreements (together ‘the arbitration agreements’).
2. Three corporate vehicles wholly owned by the Republic (‘the SPVs’) entered into three supply contracts with three of the Privinvest companies (‘the supply contracts’) by which the SPVs acquired valuable goods and services in connection with the Republic's development of its Exclusive Economic Zone (‘EEZ’). The SPVs borrowed the purchase funds from the first and second defendants, Credit Suisse International and Credit Suisse AG (together ‘Credit Suisse’), and a third bank, VTB Capital plc (‘VTB’). In turn, the Republic gave sovereign guarantees over that borrowing (‘the guarantees’).
3. The Republic claims that it has been the victim of a conspiracy involving the various named defendants. It brings claims for deceit, bribery, conspiracy to injure by unlawful means, dishonest assistance, knowing receipt and also makes proprietary claims. The Republic accuses the Privinvest companies (and their ultimate owner and controller, now the 12th defendant, Mr Iskandar Safa (‘Mr Safa’)) of paying very significant bribes to its corrupt officials, exposing the Republic to a potential liability of some US$2 billion under the guarantees.
4. The supply contracts are governed by Swiss law and contain the arbitration agreements which are in favour of arbitration under the rules of the International Chamber of Commerce (‘the ICC’) or the rules of the Swiss Chambers' Arbitration Institution (‘the SCAI’). Although the Republic is not a signatory to the supply contracts, the Privinvest companies contend that, as a matter of Swiss law, it was a party to them, and that the Republic's claims in these proceedings fall within the scope of the arbitration agreements. The judge rejected that latter contention, resolving it as a preliminary issue in favour of the Republic (on the assumption that the Republic was a party to the arbitration agreements).
5. Further to a review by the Republic in accordance with CPR PD52C para. 27.10, the contested issues on appeal have narrowed to the following:
(i) Whether the judge erred in his construction of the arbitration agreements, specifically whether he was wrong to conclude that they should be construed narrowly (ground 1);
(ii) Whether the judge erred in failing to find that the Republic's allegations of bribery, dishonest assistance, unlawful means conspiracy, knowing receipt and claims for proprietary relief fell within the scope of the arbitration agreements (ground 2).
6. The Republic resists the appeal, save in two discrete respects relating to the judge's findings on scope in relation to allegations that (i) the supply contracts were instruments of fraud, alternatively a sham and (ii) the entry into the supply contracts was one of the (six) unlawful means in the conspiracy to which the Privinvest companies are alleged to have been party (referred to respectively as the ‘IFA’ (the instrument of fraud allegation) and the ‘UMIFA’ (the unlawful means instrument of fraud allegation)). The Republic no longer seeks positively to uphold the judge's findings that the IFA and the UMIFA were matters falling outside the arbitration agreements. Its position is that whether or not those matters are stayed does not materially affect the substantive or...
To continue reading
Request your trial
-
Republic of Mozambique (acting through its Attorney General) v Privinvest Shipbuilding SAL (Holding) and Others
...UKSC 32 before Lord Hodge, Deputy President Lord Lloyd-Jones Lord Hamblen Lord Leggatt Lord Richards Supreme Court On appeal from: [2021] EWCA Civ 329 Appellant Nathan Pillow KC Richard Blakeley Ryan Ferro (Instructed by Peters & Peters Solicitors LLP) Respondents Duncan Matthews KC Ben Woo......
-
Ms R Moon v Lancashire and South Cumbria NHS Foundation Trust: 2414248/2021
...case law authorities: Alemi v Mitchell and Anor [2021] IRLR 262; Day v Health Education England [2017] 8 of 31 Case Number: 2414248/2021 EWCA Civ 329; Ghaidon v Mendoza [2004] UKHL 30; Gilham v Ministry of Justice [2019] UKSC 44; Hashwani v Jivraj [2011] UKSC 40; National Union of Professio......
-
FamilyMart China Holding Company Ltd v Ting Chuan (Cayman Islands) Holding Corporation
...to stay proceedings in so far as they fall outside the scope of the arbitration agreement. 54 In Republic of Mozambique (acting through its Attorney General) v Credit Suisse International [2021] EWCA Civ 329; [2022] 1 All ER Comm 235 (“ Mozambique”) the Court of Appeal of England and Wale......
-
Loudmila Bourlakova v Oleg Bourlakov
...are brought in respect of a matter that must be referred to arbitration ( Republic of Mozambique v Credit Suisse International [2021] EWCA Civ 329 at [62]). The arbitration clauses on which Mr Anufriev relies are contained in clause 19 of the Foundation Charters of each of the Foundations ......