Nomihold Securities Inc v Mobile Telesystems Finance SA

The High Court has jurisdiction under section 37 of the Senior Courts Act 1981 to grant an anti-arbitration injunction in appropriate cases. This includes proceedings which infringe contractual or equitable rights, or which are vexatious, oppressive or unconscionable. The court’s supervisory jurisdiction over an English-seated arbitration may protect an award from an unlawful attempt at invalidation or collateral attack.

However, intervention is exceptional. A party should ordinarily raise res judicata, issue estoppel and abuse-of-process objections before the arbitral tribunal, particularly where the later arbitration raises a genuinely new issue within the parties’ arbitration agreement. Such supervisory proceedings are not matters “to be referred” for the purposes of section 9 of the Arbitration Act 1996. The injunction was refused on the facts.

Nomihold obtained an LCIA award requiring Mobile Telesystems Finance SA to pay US$170 million and damages in return for shares. The award determined issues concerning the validity and performance of a sale and purchase agreement and an option agreement. The High Court later enforced the award as a judgment.

MTSF subsequently commenced or sought to revive two LCIA arbitrations, advancing money-laundering allegations and seeking relief which included declarations undermining the award and an order releasing it from payment obligations. MTSF undertook not to pursue those declarations or the release order.

Nomihold sought an anti-arbitration injunction under section 37 of the Senior Courts Act 1981. MTSF sought a stay under section 9 of the Arbitration Act 1996. The issues were whether the court had jurisdiction, whether a stay was mandatory, and whether intervention was just and convenient.

1. The court had jurisdiction under section 37 of the Senior Courts Act 1981 to restrain arbitral proceedings. An anti-arbitration injunction may protect a legal or equitable right, or restrain proceedings which are vexatious, oppressive or unconscionable. The jurisdiction survives the Arbitration Act 1996, but must be exercised sparingly.

2. The arbitration agreements incorporated LCIA rules under which awards were final and binding and the parties agreed to the supervisory jurisdiction of the English courts. That jurisdiction extends beyond correcting arbitral error. It includes supporting the arbitration, enforcing awards and protecting the integrity of the arbitral process. An attempt to invalidate an award or mount a collateral attack may therefore constitute breach of the arbitration agreement.

3. MTSF was not entitled to a stay under section 9 of the Arbitration Act 1996. Nomihold’s application concerned the court’s supervisory jurisdiction in relation to an allegedly unlawful attack on an existing award. Although the arbitral tribunals could determine res judicata, issue estoppel and abuse-of-process objections if the new arbitrations proceeded, that did not make Nomihold’s supervisory application a matter which the parties had agreed must be referred to arbitration.

4. The principle associated with Henderson v Henderson has a narrower application following an arbitration because arbitration is consensual. A subsequent tribunal may nevertheless reject a complaint which could and should have been raised in an earlier reference. That principle was more precisely characterised as the doctrine recognised in Smith v Johnson, reflecting abandonment.

5. The money-laundering complaint had not been determined by the earlier award. It was on its face a matter within the arbitration agreements, and the new tribunals had adequate powers to determine the re-arbitration complaints, potentially as a preliminary issue. MTSF’s undertaking substantially reduced the risk that the new arbitrations would obstruct enforcement.

6. The applications were dismissed. The court accepted the undertaking, subject to any observations on its precise terms. The exceptional injunction sought was not just or convenient on the facts.

Not stated in the judgment.