Sheltam Rail Company (Proprietary) Ltd v Mirambo Holdings Ltd & Anor

CPR Part 38 applies to arbitration claims. A claimant may discontinue without leave, but a defendant may apply to set the notice aside. The court has a broad discretion under CPR 38.4. Abuse of process is one possible basis, but it is not the only relevant circumstance. The court may consider why the notice was issued and what the claimant seeks to achieve. A useful question is whether permission to discontinue would have been granted unconditionally. In an arbitration challenge, the court may require an undertaking preventing the claimant from using the discontinuance to preserve objections to enforcement of the award elsewhere. Once an appropriate undertaking is given, the notice may be allowed to stand.

The claimant challenged an arbitral award under sections 67 and 68 of the Arbitration Act 1996. The arbitration was seated in London and concerned disputes under a consortium agreement. Shortly before the challenge was due to be heard, the claimant served a Notice of Discontinuance.

The defendants applied to set the notice aside and sought orders confirming the award. They argued that discontinuance could undermine the English court’s supervisory jurisdiction and leave enforcement objections available in other New York Convention states. The claimant said that it lacked funds to continue, but undertook not to resist enforcement on the jurisdictional grounds advanced under section 67.

The central issue was whether the notice should be set aside under CPR 38.4.

1. Application of CPR Part 38. CPR Part 38 applies to arbitration claims. A claimant may discontinue without leave unless CPR 38.2 prevents it. A defendant may apply to set aside the notice under CPR 38.4. Applications will generally require notice and evidence, although the court may dispense with those requirements where the parties already understand the application and its basis.
2. Discretion under CPR 38.4. CPR 38.4 gives no exhaustive test. The court may set aside a notice where its issue is an abuse of process, but abuse is not the only circumstance relevant to the discretion. The court should consider the circumstances in which the notice was issued and what the claimant is attempting to achieve. A useful question, derived from the former RSC procedure and the approach in Castanho Brown & Root (UK) Ltd and Fakih Bros. v AP Moller (Copenhagen) Ltd, is whether permission to discontinue would have been granted unconditionally. The approach may not answer every case, as recognised in Ernst & Young v Butte Mining Plc.
3. Arbitration challenges. Where a claimant has invoked the English court’s supervisory jurisdiction to challenge an award, the court may ensure that discontinuance does not allow the award’s validity to be impugned indirectly in later enforcement proceedings. In this case, unconditional permission would not have been granted because the claimant continued to regard its challenges as arguable and had not agreed to relinquish jurisdictional objections.
4. The claimant’s undertaking not to resist recognition or enforcement of the award in a New York Convention state using the grounds advanced under section 67 removed that concern. The Notice of Discontinuance was therefore allowed to stand. The defendants’ costs up to and including service of the notice, including the hearing costs, were payable by the claimant and were summarily assessed.

Not stated in the judgment.