Arbitration seated in England – do proceedings brought in courts outside the English seat of the arbitration amount to a breach of the arbitration clause and do the English courts have exclusive jurisdiction to grant interim measures?

In the recent case of U&M Mining Zambia Ltd v Konkola Copper Mines plc [2013] EWHC 260 (Comm), the English Commercial Court considered whether proceedings brought in courts outside the English seat of the arbitration can amount to a breach of the arbitration clause on the basis that the court of the seat has exclusive jurisdiction and whether English courts have exclusive jurisdiction to grant interim measures in support of an arbitration seated in England pending the appointment of the tribunal. The court decided that proceedings in another national court were not in breach of the arbitration clause on the basis that the English courts, as the court of the seat of arbitration, did not have exclusive jurisdiction to grant injunctions in support of arbitration proceedings.

Background

Konkola Copper Mines (“KCM”) owned a copper mine in Zambia and appointed U&M Mining Zambia Ltd (“U&M”) to operate the mine. The contract between the parties was governed by Zambian law and provided for arbitration in the London Court of International Arbitration (“LCIA”) in the event of a dispute. A dispute arose between the parties and KCM applied to the Zambian court for an interim injunction compelling U&M to vacate the mine immediately and hand over certain equipment that U&M had pledged as security for advance payments from KCM. The Zambian court granted the interim injunction. U&M immediately commenced LCIA arbitration proceedings against KCM and applied to the English court for an interim anti-suit injunction to restrain KCM from taking steps in the Zambian court proceedings on the ground that those proceedings were in breach of the arbitration provisions in the contract.

The main issues to be decided by the English court were:

  •  what is the seat of the arbitration?
  •   If the seat of arbitration is in London, was KCM nevertheless entitled to use the Zambian court to obtain interim remedies?

Decision

What is the seat of the arbitration?  The court found that reference to the ‘place’ of arbitration being in England made it plainly evident that the parties had agreed to the seat of arbitration being England. Reference to the Zambian courts having exclusive jurisdiction in a separate governing law clause in the contract was not sufficient to displace this presumption.

If the seat of arbitration is in London, was KCM nevertheless entitled to use the Zambian court to obtain interim remedies? On the basis that the LCIA rules expressly recognise a party’s right to apply to a state court before the formation of the tribunal, and in the light of the subject matter of the dispute being of national and international importance, the court decided that the natural forum for such proceedings was indeed Zambia. Further, KCM was entitled to apply to the Zambian courts for interim or conservatory measures pending the appointment of the tribunal. The court rejected the argument that the English courts, as the court of the seat of arbitration, have exclusive jurisdiction to grant injunctions in support of arbitration proceedings although they did have “primary” jurisdiction to intervene in the arbitration proceedings. The English court concluded that the Zambian proceedings were not in breach of the arbitration clause and, finding in favour of KCM, discharged the anti-suit injunction which had earlier been granted on an ex parte basis.

Comment

This case provides useful guidance as to whether, when an arbitration is seated in England, interim relief can be sought from courts other than English courts pending the formation of the tribunal. It appears from this decision that, whilst English courts retain primary jurisdiction to grant such interim relief, parties may nevertheless seek interim relief elsewhere where for practical reasons it is sensible to do so. This case also shows that the arbitral rules selected by the parties will have a bearing on whether interim measures may be sought from courts other than those of the seat of arbitration.

Thus, pending the formation of the arbitral tribunal, parties to an English-seated arbitration may wish to consider whether they may be able to get more effective interim relief in courts other than those of the seat.

The material contained in this article is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances and before action is taken.

© , June 2013

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Moray Hughes - Consultant Solicitor

DD +44 (0)20 7553 6000

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