The Republic of Mozambique v Credit Suisse International & Ors

Factual and Procedural Background

This opinion concerns case management issues relating to applications made by certain defendants to stay proceedings against them pursuant to section 9 of the Arbitration Act 1996. There are two related sets of proceedings initiated by the Plaintiff, the Republic of Mozambique.

The first claim ("the Main Action"), issued in February 2019 and served in July 2019, is against multiple defendants including two banking entities (referred to as D1 and D2), several individuals formerly employed by one of these banks (D3 to D5), and a group of entities forming part of a large private shipping group (D6 to D10), with companies incorporated in Lebanon and the UAE. The second claim ("the Safa Action"), issued in July 2019, is against an individual alleged to be the ultimate beneficial owner and controlling mind of some of the shipping group entities (D6 to D10). The Plaintiff contends that service on this individual was valid under the Companies Act 2006, while the Defendant disputes this, raising what is termed "the Service Point". A Court of Appeal decision on this issue is awaited.

The claims relate to supply contracts entered into between the Plaintiff’s special purpose vehicles (SPVs) and some of the shipping group defendants for the supply of ships, aircraft, and related infrastructure to Mozambique. These contracts are governed by Swiss law and contain arbitration clauses providing for ICC arbitration in Geneva. Subcontracts governed by English law with exclusive jurisdiction clauses in England and Wales were also entered into between some of the shipping group entities.

Financing was provided by several banks, including the banking defendants, with the Plaintiff providing sovereign guarantees for the SPVs’ obligations. The Plaintiff alleges that bribes were paid to Mozambican officials and others, and that the supply contracts were "shams" or instruments of fraud, resulting in significant losses. The Plaintiff claims conspiracy to injure by unlawful means and seeks damages, restitution, and other remedies.

The defendants challenge jurisdiction and seek stays of proceedings under section 9 of the Arbitration Act 1996, arguing that the disputes fall within the scope of the arbitration agreements. The Plaintiff contests these points. The court is managing applications relating to these section 9 challenges and other procedural issues, including service and stay applications.

Legal Issues Presented

1. Whether the claims against defendants D6 to D10 should be stayed under section 9 of the Arbitration Act 1996 pending arbitration.
2. Whether the arbitration agreements cover the Plaintiff’s claims ("the Scope Point").
3. Whether the Plaintiff is a party or beneficiary entitled to enforce or be bound by the arbitration agreements ("the Beneficiary Point").
4. Whether non-signatory defendants D9 and D10 can invoke the arbitration agreements due to their involvement in contract performance ("the Interference Point").
5. Whether service on the individual defendant in the Safa Action was valid ("the Service Point").
6. Whether stays of proceedings should be granted for the individual defendant and certain defendants D9 and D10 pending resolution of section 9 issues.

Arguments of the Parties

Defendants' Arguments

• The claims against defendants D7 to D10 should be stayed pending arbitration decisions on jurisdiction.
• The arbitration clauses cover the Plaintiff’s claims broadly ("Scope Point").
• The Plaintiff is effectively a party to the arbitration agreements as a beneficiary ("Beneficiary Point").
• Non-signatory defendants D9 and D10 can rely on the arbitration agreements due to their interference with the contracts ("Interference Point").
• The court should defer consideration of these issues until arbitrators decide jurisdiction, to avoid duplicative litigation and respect arbitration expertise.
• Stays of proceedings should be granted pending resolution of these arbitration-related issues.

Plaintiff's Arguments

• There should be no deferral of the section 9 challenges; the court should hear preliminary issues promptly.
• The May hearing should address preliminary points including the Scope Point, Service Point, and stay applications.
• The arbitration agreements do not cover the Plaintiff’s claims as pleaded.
• The Plaintiff contests that it is bound by or benefits sufficiently from the arbitration agreements to be compelled to arbitrate.
• Service on the individual defendant was valid under existing case law.
• Split trials or deferral would cause significant delay and inefficiency, given the interconnectedness of the claims and parties.

Table of Precedents Cited

Court's Reasoning and Analysis

The court considered the applications to stay proceedings under section 9 of the Arbitration Act 1996, balancing the interests of efficient litigation management against respect for arbitration agreements and tribunals. It acknowledged the complexity of the claims and the interconnectedness of parties, particularly the "inextricably linked" nature of the claims against the bank defendants and the shipping group defendants.

Applying the principles from Ahmad Al-Naimi and The Barito, the court identified several factors relevant to whether to defer to arbitration or proceed with court determination of jurisdictional issues, including the length and cost of arbitration, potential prejudice, and the strength of parties' cases.

The court rejected the defendants' request to defer all claims against the shipping group defendants pending arbitration, citing the likely delay of two to three years and the linked nature of the claims, which would make partial trials impractical and unfair.

Instead, the court determined that some preliminary issues—most notably the Scope Point and the Service Point—could be usefully and fairly determined at an earlier hearing scheduled for May. These issues are relatively self-contained and capable of resolution on affidavit evidence and expert submissions, particularly given the detailed Swiss law evidence already presented.

Other issues, such as the Beneficiary Point and the Interference Point, were deemed better suited for trial given the need for fuller factual evidence and context. The court emphasized caution against shortcuts that might prejudice fair resolution.

The court also addressed the validity of service on the individual defendant in the Safa Action, deciding that this point should be resolved promptly, especially in light of the pending Court of Appeal decision.

Finally, the court set a timetable for the preparation and service of detailed statements of case and other procedural steps, including the handling of Part 20 claims and case management stays.

Holding and Implications

The court ORDERED that:

• The claims against defendants D6 to D10 shall not be deferred altogether pending arbitration; the application for a stay is rejected.
• The Scope Point and the Service Point, along with the case management stay applications related to the individual defendant and others, shall be determined at a preliminary hearing scheduled for 26 to 28 May.
• The Beneficiary Point and Interference Point shall be reserved for trial, provisionally scheduled for January 2021.
• The parties shall agree directions for service of evidence, expert reports, submissions, and the timetable for Part 20 claims and detailed statements of case.

The direct effect of this decision is to progress the litigation efficiently by resolving some jurisdictional issues early, avoiding protracted deferral that would cause significant delay. No new legal precedent was established; the court applied established principles in managing complex multi-party arbitration challenges under section 9 of the Arbitration Act 1996.