UK: Insurance And Reinsurance - 28 February 2013

Last Updated: 7 March 2013
Article by Nigel Brook

Welcome to the seventh edition of Clyde & Co's (Re)insurance and litigation caselaw weekly updates for 2013.

These updates are aimed at keeping you up to speed and informed of the latest developments in caselaw relevant to your practice.

This week's caselaw

U&M Mining Zambia v Konkola Copper Mines
A case about where the seat of an arbitration was and whether only the court of the seat has the power to grant interim relief.

Ases Havacilik v Delkor UK
Court decides whether the bringing of a counterclaim in an arbitration precludes a section 67 challenge.

U&M Mining Zambia v Konkola Copper Mines

Dispute about where the seat of an arbitration was and whether only the court of the seat has the power to grant interim relief

Clyde & Co for claimant

It is undisputed that the court of the seat of an arbitration has the power to grant interim measures to support the arbitration. However, there is no prior caselaw on whether any other court also has the power to grant such measures or whether an application to such other court would amount to a breach of the relevant arbitration clause. In this case, the claimant obtained an anti-suit injunction restraining the defendant from pursuing proceedings in Zambia in breach of various London arbitration clauses. The defendant had obtained interim relief from the Zambian courts prior to the anti-suit injunction. Blair J considered two issues:

  1. Where was the seat of the arbitration in this case? As was recognised in Shashoua v Sharma (see Weekly Update 17/09), the seat of the arbitration can be different from the physical place in which the arbitration hearings take place. The term "seat" was not used in the contract between the parties. However, the contract did provide for the referral of disputes to LCIA arbitration "in London" and stated that the place of the arbitration shall be England. The judge therefore held that it was plain that the parties had agreed that the seat of the arbitration should be in England. A reference to the exclusive jurisdiction of the Zambian court in another part of the contract did not affect that conclusion and the judge said he did not need to decide the reason for the inclusion of that clause given the other terms in the contract.
  2. Given that England was the seat of the arbitration, is it correct to say that only the English courts have power to grant interim relief in support of the arbitration? The judge considered the effect of Cooke J's judgment in Sulamerica Cia Nacional v Enesa Engenharia (see Weekly Update 03/12) and, in particular, the part of his judgment in which he considered what was left of an exclusive jurisdiction clause in favour of the courts of Brazil after it had been found that the parties were bound to refer to disputes to arbitration. Cooke J's list did not include the ability to grant interim measures. However, Blair J noted that Cooke J had not been specifically asked to decide this point.

He could find no express authority for the proposition that the English courts should have the sole jurisdiction to grant interim relief in this case.In any event, Blair J said he did not have to decide the point as a general matter of principle because he could instead refer to the LCIA Arbitration Rules (which the parties had agreed would govern the arbitration of their dispute). Rule 25.3 provides that the power of the tribunal to grant interim relief shall not prejudice any party's right to apply to "any state court... for interim or conservatory measures". The judge held that this rule implicitly recognises the party's right to do so. That was enough to decide the issue and nothing else in the arbitration agreement was inconsistent with this finding. Although there was a risk of inconsistent decisions (because the English court did also have the right to grant interim measures), Blair J held that in this case the Zambian court was best placed to decide on interim relief because the relevant assets were located in Zambia.

Accordingly, the anti-suit injunction was discharged.

Ases Havacilik v Delkor UK

Whether the bringing of a counterclaim in an arbitration precludes a section 67 challenge EWHC/Comm/2012/3518.html&query=title+(+ases+and+hava cilik+)&method=boolean

The claimant took no part in an arbitration up to the date of a partial final award because it was challenging the arbitrator's jurisdiction under section 72 of the Arbitration Act 1996 ("the Act"). However, when the claimant discovered that the section 72 application would not be heard until 18 October, although the final hearing of the arbitration was set for a month earlier, it decided that it had no choice but to start participating in the arbitration and to challenge the partial award under section 67. Various objections were raised by the defendant, including the argument that, as the claimant had brought a counterclaim in the arbitration it had thereby accepted the jurisdiction of the arbitrators. That argument was rejected by the judge.The counterclaim was only being relied on as a set-off and so did the claimant had not been invoking the arbitrator's jurisdiction, any more than any other defence. The claimant was not seeking to recover anything on the counterclaim - it was being relied on purely for defensive purposes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Nigel Brook
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