Republic of Mozambique (acting through its Attorney General) v Privinvest Shipbuilding SAL (Holding) and others

The Supreme Court considered the meaning and application of section 9 of the Arbitration Act 1996 in multi‑party, multi‑contract litigation. The court restated the two‑stage approach: (1) identify the "matter" or matters in respect of which the court proceedings have been brought by reference to the substance of the dispute and reasonably foreseeable defences, and (2) decide whether each such matter falls within the scope of the relevant arbitration agreement on its true construction (governed here by Swiss law).

The court held that a "matter" must be a substantial issue that is legally relevant to a claim or to a relevant defence and that is capable of being determined as a discrete controversy by an arbitral tribunal; issues that are merely peripheral, factual or not essential to liability do not qualify. Applying those principles, the court concluded that (i) the Republic's pleaded claims in bribery, unlawful means conspiracy and dishonest assistance (other than the previously conceded allegations that the supply contracts were instruments of fraud or shams) were not matters which the parties had agreed to refer to arbitration, and (ii) a defendant's partial defence on quantification (that the supply contracts gave value for money) was not a referable "matter" for arbitration in the context of these proceedings. The appeal was allowed for those reasons.

Background and parties: The Republic of Mozambique sued multiple defendants including Privinvest entities and Credit Suisse entities in relation to three composite transactions (supply contracts, financing facilities and purported sovereign guarantees) undertaken in 2013–2014. The Republic alleged bribery, conspiracy to injure by unlawful means, dishonest assistance, knowing receipt and proprietary claims, and sought declarations, damages and proprietary relief. Privinvest applied under section 9 of the Arbitration Act 1996 for a stay of the English proceedings on the ground that the supply contracts contained arbitration agreements governed by Swiss law.

Procedural history: Waksman J decided a preliminary issue in [2020] EWHC 2012 (Comm) that most of the Republic’s claims did not fall within the arbitration clauses and dismissed the section 9 applications. The Court of Appeal ([2021] EWCA Civ 329) allowed Privinvest’s appeal and held that the supply‑contract arbitration clauses covered the Republic’s claims. The Republic obtained permission to appeal to the Supreme Court.

Nature of the application: The appeal concerned whether the English court must grant a mandatory stay under section 9 of the Arbitration Act 1996 for matters said to fall within the arbitration clauses in the supply contracts, and in particular how to identify a "matter" and whether a defendant’s partial defence on quantification (that the contracts conferred value) is a referable matter.

Issues framed:

• How should a court identify the "matter" for the purposes of section 9?
• Does a defence that the supply contracts were valid or conferred value render the claimant’s claims matters for arbitration?
• Is a dispute limited to quantification of loss (value received under the supply contracts) a matter that must be stayed for arbitration?

Reasoning: The court adopted a two‑stage approach consistent with international jurisprudence (including Tomolugen and other authorities): first identify substantial matters in dispute by reference to the substance of the claim and reasonably foreseeable defences; second, construe the arbitration agreement in context to decide whether each such matter falls within its scope. The court emphasised a pro‑arbitration interpretative background but explained that not every conceivable issue that could be determined by an arbitral tribunal qualifies as a "matter" for the purposes of section 9. A "matter" must be legally relevant and substantial to the claim or to a relevant defence and not merely peripheral or factual. Applying Swiss law principles of interpretation, the court found that, except for the supply‑contract fraud/sham allegations (conceded by the Republic and no longer pursued), the Republic’s substantive claims were not matters for arbitration. Nor was the quantification/valuation defence a referable matter in the context of these proceedings, given the limited practical purpose of a stay (and because the issues will in any event be addressed at trial given Credit Suisse’s Part 20 proceedings).

Relief sought and disposition: Privinvest sought a mandatory stay under section 9. The Supreme Court allowed the Republic’s appeal and refused the stay in respect of the matters in issue (other than the conceded fraud/sham matters), so the English proceedings were to continue.

Appeal allowed. The court held that section 9 must be applied by a two‑stage enquiry: identify the substantial "matter(s)" in dispute by reference to the substance of the claim and reasonably foreseeable defences, and then determine whether each such matter falls within the arbitration agreement on its proper construction. A "matter" must be legally substantial and relevant to liability or a relevant defence; peripheral factual issues or a partial defence about quantification/value for money are not matters that mandate a stay in the context of these proceedings. Applying those principles, except for the supply‑contract fraud/sham allegations (conceded by the Republic), the Republic’s claims and Privinvest’s quantification defence were not matters to be referred to arbitration.

First instance: Waksman J, Commercial Court, [2020] EWHC 2012 (Comm) dismissing Privinvest's s.9 applications. Court of Appeal: [2021] EWCA Civ 329 (Henderson, Singh and Carr LJJ) allowing Privinvest's appeal. Supreme Court: [2023] UKSC 32 (this judgment) allowing the Republic's appeal.