Mauritius: Mauritius Adopts Legal Framework For International Arbitration

Mauritius has positioned itself as a jurisdiction for international arbitration. Recently passed by the Mauritius Legislature, the International Arbitration Act 2008 (the "Act") is based on the UNCITRAL Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law in 1985, and as amended by the UNCITRAL in 2006.

The Act adds another layer to the legal framework since Mauritius ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The new law therefore represents a major breakthrough and offers features, solutions, and a framework to global businesses, that is unique in the African region.

Global players will find comfort in two features of the Act. First, there is a right of appeal to the Judicial Committee of the Privy Council in England against any final decision of the Supreme Court – and, secondly, substantial appointing functions and administrative responsibilities are given to the Permanent Court of Arbitration (PCA) having its seat at the Hague.

The PCA is seen as neutral, international, and organised, and consequently is considered well placed to fulfil appointing and administrative functions. The Government of Mauritius has negotiated a host country agreement with the PCA that will see the PCA appoint a permanent representative in Mauritius funded by the Mauritius Government. The tasks of the permanent representative will be to assist the Secretary General of PCA and to promote Mauritius as a centre for international arbitration.

In case of failure under the Act to appoint an arbitral tribunal, any party may request the PCA to take the necessary measures and to give directions regarding the making of the necessary appointments. The PCA may also revoke appointments or designate any arbitrator as the presiding arbitrator. The PCA may also decide on matters such as challenge of arbitrator and extension of time limits.

The new legislation distinguishes between international arbitration and domestic arbitration. The Act focuses mainly on international commercial matters while domestic arbitration will continue under the aegis of the long-standing and French originated Code de Procédure Civile. The Act recognises that global players prefer to settle disputes without recourse to the courts, and may be more inclined to choose Mauritius as an arbitration centre if their disputes will not attract the intervention of the courts except in very limited circumstances.

The Supreme Court may set aside an arbitral award only where there is proof that:

The award may also be challenged on the basis that the subject matter of the dispute is not capable of settlement by arbitration under Mauritius law, the award conflicts with public policy, the making of the award was induced or affected by fraud or corruption, or there is a breach of the rules of natural justice. An application for setting aside must be made within three months from the date on which the party making the application has received notice of the award.

Parties to the arbitration may choose the seat of the arbitration. Under the Act, arbitration is considered an international arbitration where the juridical seat is in Mauritius and the parties to the agreement have their place of business in different states. The juridical seat may also be determined by agreement, and shareholders in a global business company may resolve that any dispute concerning the company may be referred to arbitration under the Act. Shareholders of a global business company may furthermore incorporate the provisions of an arbitration agreement in the company's constitution.

Any dispute whether an arbitration is an international arbitration, or whether the First Schedule (optional supplementary provisions, determination of preliminary point of law of Mauritius by court, appeals on questions of Mauritius law) of the Act applies to the arbitration, are to be determined by the arbitral tribunal.

Where an action is brought before any court and a party contends that the action is the subject of an arbitration agreement, that court shall automatically transfer the action to the Supreme Court, provided that the request is not later than when submitting the first statement on the substance of the dispute.

The Supreme Court shall on such a transfer refer the parties to arbitration unless a party shows, on a prima facie basis, that there is a very strong probability that the arbitration agreement may be null and void, inoperative or incapable of being performed. In these cases the Supreme Court shall itself determine whether the arbitration agreement is null and void, inoperative or incapable of being performed. Where the Supreme Court finds in favour of the latter it shall transfer the matter back to the court that made the transfer.

An interim measure may be granted by the arbitral tribunal at the request of a party and at any time before making the final award. The interim measures may refer to the status quo pending determination of the dispute, action that would prevent any current or imminent harm or prejudice to the arbitral process, preservation of assets and evidence, and provision of security for costs. An interim measure granted by the arbitral tribunal may be enforced on application to the Supreme Court irrespective of the country in which it was issued.

A party to an arbitration agreement may also request, before or during arbitral proceedings, that the Supreme Court or a court in a foreign state grant an interim measure of protection in support of arbitration.

The parties may determine the number of arbitrators. If the agreement is silent on the matter, the number of arbitrators shall be three. An agreement that indicates an even number of arbitrators shall be understood as requiring the appointment of an additional arbitrator as presiding arbitrator.

The parties are free to agree on a procedure for appointing the arbitral tribunal and may therefore set out contractual terms to that effect. The tribunal has duties to act fairly and impartially between all parties and to allow each party a reasonable opportunity to prepare and put their case, and to adopt suitable procedures so as to provide a fair means for the resolution of the dispute. Justifiable doubts about the independence and impartiality of an arbitrator or lack of qualifications as per the agreement are sufficient grounds to challenge an appointment.

The arbitrator enjoys immunity for anything done or omitted while acting as arbitrator unless the act or omission is shown to have been in bad faith.

An arbitral tribunal may rule on its own jurisdiction, including on any objection with respect to the existence or validity of the arbitration agreement. An arbitration clause that forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision of the arbitral tribunal that the contract is null and void shall not affect the validity of the arbitration clause.

The arbitral tribunal may, subject to the agreement of the parties, order the payment of a sum of money, and will have the same powers as a court in Mauritius to order a party to do or refrain from doing anything, order specific performance of a contract, or to order rectification, setting aside or cancellation of a deed or other document.

The successful party should recover a reasonable amount reflecting the actual costs of the arbitration and not only the nominal amount. However, in the absence of an award fixing and allocating the costs of the arbitration each party shall be responsible for its own costs, and shall bear in equal share the costs of the PCA, the fees and expenses of the arbitration tribunal, and any other expenses related to the arbitration.

The fees and costs will be driven by level of demand. Over and above the Act, the other characteristics that may support the first days of Mauritius as an international arbitration centre include availability of different languages, mainly English and French, geographical location, network of double taxation agreements, physical and telecommunications infrastructure, rule of law, and the perception of Mauritius as a neutral sovereign and politically stable state. Recourse to the Privy Council and functions of the PCA further strengthen the position of Mauritius as the centre for international arbitration for Africa and Asia.

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.