Court of Appeal rules Mozambique bribery claims must proceed by way of arbitration

11/03/21

Republic of Mozambique v Credit Suisse and ors

The Court of Appeal has today handed down a significant judgment on the approach to section 9 of the Arbitration Act. The case concerns the Republic of Mozambique’s claims in bribery, unlawful means conspiracy and dishonest assistance against Credit Suisse, former Credit Suisse employees and, most relevant for present purposes, five UAE and Lebanese companies (the “Privinvest Companies”) and others.  

The Republic alleges that the bribes were paid in connection with the Republic’s entry into certain sovereign guarantees which were given over the funding of certain Supply Contracts entered into by three of the Privinvest Companies and SPVs owned by the Republic.  The Republic alleges a conspiratorial scheme against it and a central allegation is that those companies paid bribes to various individuals in Mozambique, including to former Finance Minister Manual Chang.

The Privinvest Companies sought a stay of all of the Republic’s claims against them pursuant to s.9 Arbitration Act 1996 on the basis that the Supply Contracts contain arbitration clauses.

To succeed in their application, the Privinvest Defendants have to show that (1) both the Republic and all the Privinvest Defendants are all parties to the arbitration agreements in question; and (2) the matters alleged in the Particulars of Claim fell within the scope of the arbitration agreements. In a directions application in April 2020, Waksman J decided to hear the second question (the “Scope Issue”) first, assuming (for the purposes of argument) that all the parties were bound by the arbitration agreements.

At first instance Waksman J accepted the Republic’s argument that its claims concern the guarantees, not the Supply Contracts, and that there was no ‘matter’ within the meaning of s.9 that was required to be determined with arbitration. such that none of the pleas fall within scope.

The Privinvest Companies argue that the claims are inextricably linked with the Supply Contracts, such that the claims constitute matters that fall within scope.

In the first English appellate authority on what constitutes a ‘matter’ for the purposes of the application of section 9 of the Arbitration Act, the Court of Appeal overturned Waksman J’s decision. Having set out the approach to determining what a ‘matter’ is for the purposes of s.9, the Court considered the Republic’s claims and the realistically foreseeable defences to those claims, which it held included the validity and genuineness of the Supply Contracts. The Court of Appeal concluded that, as a matter of Swiss law (which was the relevant governing law), the claims constituted matters that were ‘sufficiently connected’ to the Supply Contracts to fall within scope.

The Court of Appeal’s decision is now the leading authority on the nature of a ‘matter’ for the purposes of a section 9 application, as well as proper approach to any such application.

The judgment is here.