U&M Mining Zambia Ltd v Konkola Copper Mines Plc [2013] EWHC 260 (Comm) (15 February 2013)

Neutral Citation Number: [2013] EWHC 260 (Comm) Case No: 2013 Folio 161 IN THE HIGH COURT OF JUSTICE QUEEN'S BENCH DIVISION COMMERCIAL COURT Royal Courts of Justice The Rolls Building 7 Fetter Lane London, EC4A 1NL 15/02/2013 B e f o r e : MR JUSTICE BLAIR ____________________ Between: U&M Mining Zambia Ltd Claimant - and - Konkola Copper Mines Plc Defendant ____________________ Andrew Mitchell QC & Marianne Butler (instructed by Clyde & Co) for the Claimant Justin Mort (instructed by Latham & Watkins) for the Defendant Hearing dates: 11 & 12 February 2013 ____________________ HTML VERSION OF JUDGMENT ____________________ Crown Copyright © Mr Justice Blair: This case concerns an anti-suit injunction obtained by the claimant, U&M Mining Zambia Ltd ("U&M"), against the defendant, Konkola Copper Mines Plc ("KCM"). The injunction obtained by U&M restrains KCM from pursuing proceedings in Zambia contrary (U&M submits) to various London arbitration clauses. Though the general principles applicable in such a situation are well settled, counsel agree that there is no direct authority on the particular issue that is raised in this case. That is because the suit in Zambia which U&M seeks to restrain is, or is in the form of, an application made for interim measures in support of, rather than in opposition to, the arbitration. The issue is essentially whether these proceedings amount to a breach of the arbitration clauses in question so as to justify the grant of an injunction by this court. The facts U&M is a Zambian company which is a subsidiary of a major Brazilian mining and construction contractor. KCM is also a Zambian company (according to U&M it is a subsidiary of Vedanta Resources Plc, a company headquartered in London, England, but KCM did not confirm this at the hearing). KCM owns copper mines in Zambia. This case concerns an open pit copper mine called COP F&D which is in the Nchanga area of Zambia's copperbelt. Some idea of the scale of the operation comes from the fact that the mine is at least 4km long by about 3km wide. Many people (local and expatriate) work there, and I was told that it accounts for a substantial percentage of the entire country's GDP. U&M has operated the COP F&D mine for KCM since 2007. KCM says that U&M was incorporated for this purpose, and no contrary suggestion has been made. In simple terms, the evidence is that mining takes place as follows. Rock is blasted with explosives, excavated by hydraulic shovels and loaded into very large trucks. Waste is deposited in nearby dumps, while the ore is hauled to KCM's plant for extraction of the copper. All this requires heavy duty machinery of various kinds which is provided by U&M. I am told by U&M that, leaving aside certain equipment that has been treated as security for advances made by KCM to U&M, the value of U&M's equipment on site is around US$95m. Since the first Mining Contract between the parties dated 25 April 2007, there have been numerous further contracts by way of amendment, or self-standing agreements of various kinds. For present purposes, this application is primarily concerned (it is stated in U&M's evidence) with a contract entered into by the parties on 15 December 2011 for mining waste from what is called the Footwall and Hanging Wall ("the FW/HW Contract"). However various other contracts feature in the evidence, including a Settlement Agreement dated 26 October 2012 (one of two settlement agreements entered into in 2012). A common feature of the parties' various contracts is that they are governed by Zambian law, and provide for LCIA arbitration in London. The fact that there were two settlement agreements between the parties in 2012 indicates, as is the case, that relations between them have not been good in recent times. Among other things, disputes have arisen as to what sums are due to be paid to U&M. Matters came to a head at the beginning of 2013. On 28 January 2013, KCM terminated (or purported to terminate) the FW/HW Contract on the grounds that U&M had failed to meet production targets over five consecutive months from August 2012 to December 2012. U&M denies any such breach, and says that (even if established) it was subsumed in the Settlement Agreement of 26 October 2012. Clause 35.1.8 of the FW/HW Contract provides that upon termination, the contractor (that is U&M) shall leave the site. It does not state (U&M contends) that it should do so "immediately", and it contends that given the size of operations, and the nature of its mining equipment (much of which would need to be dismantled before it could be moved and shipped elsewhere), that would be quite impossible. U&M says that by implication it must be entitled to a reasonable time to vacate and de-mobilise the operations. It believes that KCM is intent on seizing the equipment without paying for it. This is denied by KCM, which says that it is acting in accordance with the contractual provisions, and for good reason, since operations need to restart as soon as possible. The obtaining of the order in Zambia The parties appear to have been in negotiations as regards demobilisation, but there then followed the step that has lead directly to these proceedings in England. On 31 January 2013, KCM applied to the District Registry of the High Court of Zambia sitting at Kitwe (a major city in the copperbelt) under s.11 of Zambia's Arbitration Act 2000. It sought, and obtained, an ex parte interim mandatory injunction compelling U&M to vacate the mine immediately, and hand over certain identified equipment that had (in effect) been pledged by U&M to KCM as security for an advance payment guarantee and performance guarantee given by U&M in KCM's favour in 2012. I am told that the value of this equipment is US$12m. KCM emphasises the form in which these proceedings were brought. The Originating Summons refers to s.11 Arbitration Act 2000, and a statutory instrument of 2001, the Arbitration (Court Proceedings) Rules. The affidavit in support of the summons states as follows:- "25. That all the contracts and amendments including the guarantees dictate resolution of the matter by arbitration. 26. That the arbitration proceedings are yet to be commenced and preliminaries are being undertaken to appoint the Arbitral Tribunal." The ex parte summons similarly refers to s.11 Arbitration Act 2000. The Order made by the court on 31 January 2013 is stated to be made "until further order of this honourable Court or an Arbitral Tribunal as the case may be". The order relating to the two guarantees is stated to be made "pending the conclusion of the arbitration proceedings". KCM's evidence asserts that its intention in bringing the proceedings was to protect its contractual rights and interests pending LCIA Arbitration in London. It was made by way of provisions in the Arbitration Act 2000 equivalent to those in the UK Arbitration Act 1996, and these steps were taken "to support the arbitration process rather than to contradict or hinder it". For completeness, I should add that U&M contends that KCM failed to put the matter properly before the court, given that it was an ex parte application. It says that the court was not told, for example, about the 26 October 2012 Settlement Agreement. These points may have substance, but as U&M accepts, they are matters for the Zambian court, not this court. The order was served at U&M's site office at about 4pm on Thursday, 31 January 2013. U&M points to the fact that armed police officers attended along with officials from KCM itself. On its part, KCM asserts that this was not unusual, and in any event the police officers attended without any request on its part. U&M is seeking to comply with the order. Most if not all of the equipment identified in the order (as varied) has been handed over. The evidence is that conditions at the mine are tense. All work at the mine has stopped. U&M has begun to lay off workers. KCM says that losses are accruing at the rate of US$1.5m per day so long as U&M remains in possession of the site in breach of contract. U&M asserts that it is no longer in possession, its presence now being limited to the company compound outside the precincts of the mine. It says that KCM operates another mine, and could readily operate this one if it chose to. Alternatively, U&M could itself operate the mine, but for the fact that KCM is preventing it from doing so. The obtaining of the order in England There followed proceedings in England, first by way of arbitration, then in court. On 31 January 2013, that is, the same day as the Zambian proceedings, U&M commenced an LCIA arbitration in London by way of a formal Request for Arbitration under the Settlement Agreement of 26 October 2012. (Other Requests for Arbitration under other agreements have since followed.) At about 8:45pm on Friday, 1 February 2013, U&M applied on the phone to the Queens Bench Division out of hours judge, who was Hickinbottom J that evening, for an anti-suit injunction restraining KCM from taking steps in the proceedings commenced in Zambia in breach, it was submitted, of the arbitration provisions in the contracts which require LCIA arbitration. The judge granted the order, with a return date of 11 February 2013, recognising that only exceptional urgency could justify an application in a commercial matter made in this way. At some point over the next few days, the court in Zambia fixed a return date of 12 February 2013 in respect of the order which it had granted. On 11 February 2013, I extended Hickinbottom J's order to permit argument to take place as to whether, as U&M submitted, the order should be made final requiring KCM to discontinue the Zambian proceedings, or, as KCM submitted, the order should be discharged. I heard argument on 12 February 2013. On that day, I am told that, having been informed of these developments in the English court, the High Court in Zambia adjourned the return date of the order made on 31 January 2013 to 5 March 2013, thereby avoiding a potential clash between the two sets of proceedings. Finally in the factual narrative, I should say something about the anticipated arbitrations. U&M says that KCM has been obstructive in getting the process moving, in particular objecting to expedition in respect of the arbitration under the FW/HW Contract. This was in the event ordered by the LCIA Court on 8 February 2013. KCM denies that it is being obstructive. I was not taken to the evidence on this point, but clearly, KCM's submissions to both the courts in Zambia and in England have been to the effect that the legal action which it has taken is in support of the arbitration, and obstructive behaviour would fly in the face of that. Further, from the evidence that I have seen, whatever happens by way of legal proceedings, it seems clear that the parties need to agree a procedure for the orderly severing of their relations. I should note in this regard that KCM's counsel told me in the course of the hearing that KCM would accept any preliminary direction by the arbitrators that it should enable U&M to get its machinery off site in an orderly way rather than, as the order of 31 January 2013 presently provides, immediately. The jurisdiction to grant an injunction It is not in contention that this court can, and indeed regularly does, restrain a party by injunction from bringing or pursuing proceedings in a foreign court in breach of an agreement to refer the dispute in question to arbitration. Damages in such a situation are not considered to be an adequate remedy. The injunction is granted in personam against the party bringing the proceedings on the basis that without it the claimant will be deprived of its contractual right to have disputes settled by arbitration (see e.g. Dicey, Morris & Collins, The Conflict of Laws , 15 th edn, at para 16-088). A clear statement of recent practice is contained in the judgment of Cooke J in Starlight Shipping Co v. Tai Ping Insurance Co Ltd [2008] All ER (Comm) 593 at [12]: "In accordance with principles laid down in a number of authorities, including The Angelic Grace [1995] 1 LLR 87, where contracting parties agree to refer disputes to arbitration and a claim falling within the scope of the arbitration agreement is made in proceedings elsewhere, the English court will ordinarily exercise its discretion to restrain the prosecution of those proceedings in the non-contractual forum, unless the party suing in that forum (the burden being on him) can show strong reasons for proceeding there. … Damages would for all the reasons given in the authorities, be an inadequate remedy for breach of such a clause since its very nature requires the parties to have their disputes determined in arbitration. A party to such an agreement should not be put to the trouble of having disputes determined elsewhere in a manner contrary to the express contract between the parties." Anti-suit injunctions in the case of arbitrations are, therefore, made to uphold the parties' bargain, and protect the integrity of the arbitral process. The jurisdiction is based on s. 44 Arbitration Act 1996, which is stated in limited terms, and/or s. 37 Senior Courts Act 1981, which is stated in general terms. (No issue arises in the present case as to the interrelationship between these provisions.) Aside from the discretionary considerations that arise in all cases where the court is asked to grant an injunction, the jurisdiction depends on the claimant showing that the foreign proceedings amount to a breach of contract, namely the arbitration agreement that the parties entered into. The contractual provisions As I have indicated, the primary focus of U&M's application is the FW/HW Contract of 15 December 2011. The contractual provisions relevant to the arbitration are as follows: 9 Dispute Resolution/Arbitration 9.1 The parties hereto shall endeavour to settle all disputes and differences relating to and/or arising out of the Contract amicably. 9.2 If the parties are unable to agree: that an unknown Geological Condition exists, on Dewatering issues, scope of work, on the construction of the Hardship/Force Majeure Clauses, or upon the terms of any Variation, the Parties will submit such dispute to an independent mining engineer, to be jointly appointed by the Parties, who will be asked to adjudicate the dispute within 30 days from submission. 9.3 The Institute of Civil Engineering in London will appoint the adjudicator in case Parties disagree. 9.4 The adjudicator's decision will be binding on the Parties, until the dispute is decided by an Arbitral Tribunal or by agreement. 9.5 In the event of the Parties failing to resolve any dispute amicably, and subject to Clause 9.2 above, the same shall be referred to Institutional Arbitration in the London Court of International Arbitration (LCIA), in London. The number of arbitrators shall be three. Each party shall be entitled to nominate an Arbitrator and the third will be nominated by the Arbitrators jointly. 9.6 The Arbitrators shall give a reasoned award. 9.7 The place of arbitration shall be England and the language shall be English. 9.8. The parties further agree that any arbitration award shall be final and binding upon the Parties. 9.9 The Parties hereto agree that they shall be obliged to carry out their obligations under the Contract even if a dispute is referred to Arbitration. It is further clarified that the Owner shall be entitled to retain any sum or portion of the Contract price for any unfinished works or any subject matter under arbitration. 9.10 The High Court of Zambia shall have exclusive jurisdiction to execute the Arbitration award. GOVERNING LAW AND JURISDICTION 9.11 This Contract shall be construed in accordance with and governed by the laws of Zambia. 9.12 The High Court of Zambia shall have exclusive jurisdiction. It is common ground that the two guarantees I have mentioned which were given by U&M in 2011 effectively incorporate the arbitration provision in the FW/HW Contract. The Settlement Agreement of 26 October 2012 has a different provision as follows: 4.11 This Agreement and any non-contractual rights or obligations arising out of or in connection with it shall be governed by and construed in accordance with the laws of the Republic of Zambia. 4.12 Any dispute, controversy or claim arising out of or in connection with this Agreement, including any question regarding its existence, validity, performance, breach of termination, shall be referred to and finally resolved by arbitration, by a sole arbitrator, under the Arbitration Rules of the LCIA (the "Rules"), which are incorporated by reference into this clause. The seat, or legal place, of arbitration shall be London, England. The language to be used in the arbitral proceedings shall be English. Judgment on any award may be entered in any court having jurisdiction thereover. The issues for decision It is convenient at this point to set out the provisions of s.11 of the Zambian Arbitration Act 2000, which were the provisions under which the High Court of Zambia made the order of 31 January 2013, and under which the proceedings in respect of which U&M seeks the injunction are brought. As is clear from preamble and the First Schedule, the 2000 Act adopts with modifications the 1985 UNCITRAL Model Law on International Commercial Arbitration. Entitled "Arbitration agreement and interim measures by court", s. 11 covers similar matters to those covered by s. 44 of the English Arbitration Act 1996. It is however in wider terms, since among the orders the court may grant is an order securing the amount in dispute. The terms of section 11 are as follows: 11. Arbitration agreement and interim measures by court (1) A party may, before or during arbitral proceedings, request from a court an interim measure of protection and, subject to subsections (2), (3) and (4), the court may grant such measure. (2) Upon a request in terms of subsection (1), the court may grant – (a) an order for the preservation, interim custody, sale or inspection of any goods which are the subject matter of the dispute; (b) an order securing the amount in dispute or the costs and expenses of the arbitral proceedings; (c) an interim injunction or other interim order; or (d) any other order to ensure that an award which may be made in the arbitral proceedings is not rendered ineffectual. (3) Where the court intends to grant an order or an injunction requested under subsection (2), and an arbitral tribunal has already ruled or made a finding of fact on a matter relevant to the request, the court shall treat the ruling or finding made in the course of the arbitral proceedings as conclusive for the purpose of the request. (4) The court shall not grant an order or injunction under this section unless – (a) the arbitral tribunal has not yet been appointed and the matter is urgent; (b) the arbitral tribunal is not competent to grant the order or injunction; or (c) the urgency of the matter makes it impracticable to seek such order or injunction from the arbitral tribunal; and the court shall not grant any order or injunction where the arbitral tribunal, being competent to grant the order or injunction, has already determined an application therefor. In this regard, there is a significant difference in the way the claimant's case was put to Hickinbottom J, and the way it has been put at the inter partes hearing. In its application to the judge, the suggestion was made by U&M that the order made in Zambia went beyond merely preserving assets. KCM submits that it is for the High Court in Zambia to decide whether the relief sought falls within or outside the boundary of the Zambian Arbitration Act. The English court cannot decide whether a court of equal stature has correctly applied the law and procedure of that court's jurisdiction. At the inter partes hearing, there was no dispute in this respect. U&M accepts that it is not for the English court to say that the Zambian court has exceeded its powers. KCM suggested that the arbiter of whether the remedies it sought go beyond what is permitted by the parties' arbitration agreement is necessarily the court in which the proceedings are brought, not the court where the seat of the arbitration is. On the particular facts of this case, I think that this was also accepted by U&M. U&M's concession is rightly made in my view. I should make it clear that it only applies to the position as it obtains in the English court. I was told that U&M's Zambian lawyers strongly believe that KCM's proceedings are inappropriate and improperly brought, and it reserves the right to argue this in the Zambian courts. Clearly, that is the correct forum for such an argument. I should also add that it reflects the particular facts of the case. The court will be astute to detect abuse where the substance as opposed to the form of the court proceedings amounts to an attack on the arbitration (see e.g. Joint Stock Asset Management Co Ingosstrakh-Investments v BNP Paribas SA [2012] 1 Lloyd's Rep 649 ), but that issue does not arise here. The consequence is that the issue at the inter partes hearing has been whether U&M is correct in saying that if KCM genuinely required interim relief from a court for reasons of urgency, it was obliged to seek it from the English court, not the Zambian court. It is common ground that this depends on the terms of the arbitration agreement between the parties. That in turn has raised two issues for decision. The first is whether KCM is correct to submit that as regards the FW/HW Contract and the guarantees (the relevant provisions being set out above), the seat of the arbitration for the purposes of s. 3 Arbitration Act 1996 is in Zambia. The second is whether KCM is correct to submit that whether or not the seat of the arbitration is in Zambia, KCM was still entitled to use the Zambian court to obtain interim remedies. The first issue: what is the seat of the arbitration? As regards the FW/HW Contract, KCM's case is that the seat of the arbitration is in Zambia. It says that the parties have agreed to the exclusive jurisdiction of the Zambian courts (clause 9.12 set out above). It is agreed by both parties that that statement must be read subject to the arbitration agreement (clause 9.5). In other words the parties' disputes are to be decided in arbitration but insofar as the arbitration agreement makes reference to or envisages some court activity, that court will be the High Court of Zambia and it will be no other court. Secondly, KCM relies on the fact that the parties have agreed to Zambian law governing their relationship. Thirdly, both parties are Zambian entities, their assets are in Zambia as is the place of performance of the contract and the subject matter of any possible dispute. Fourthly, the parties have agreed that the arbitration award will be enforced in the Zambian courts (clause 9.10). That tends to indicate that the parties have no particular objection to the involvement of those courts and indeed they have gone to the trouble of excluding all other jurisdictions for that purpose. Fifthly, the involvement of the English courts as a supervisory court is likely to be of limited assistance to parties based in Zambia in circumstances where there appears to be no arrangements for reciprocity of enforcement of judgments (Zambian case law is cited in this regard). Indeed, KCM submits, the evidence appears to suggest that were England the supervising jurisdiction the arbitration would be essentially without the support or supervision of any court in any practical sense. It is unlikely that the parties would have sought that outcome. As regards the reference to the "place" of the arbitration as being England in clause 9.7, whilst "place" in isolation could mean "seat", it is nonetheless, KCM submits, capable of meaning either the legal place (seat) or the geographical place (physical location). Both meanings of "place" are used in the LCIA rules, and that reduces some of the significance that the word would otherwise have for this purpose. It is also raises what it calls the "modest" point that clause 9.7 refers to both "place" and "language". That might indicate, it says, faintly at least, that the clause is concerned only with matters of an administrative character not jurisdictional or juridical matters. Taking all of these matters into account, KCM submits that the parties' reference to the High Court of Zambia as having "exclusive jurisdiction" means that subject to the arbitration agreement only that court would have jurisdiction. Therefore insofar as the parties' arbitration agreement (and/or the law of Zambia to which the parties have also agreed) permits or requires any court to perform some role, it would be that court. The supervision of the arbitration is to be by that court and therefore the juridical seat of the arbitration is Zambia. Reliance is placed on Braes of Doune Wind Farm (Scotland) Ltd v Alfred McAlpine Business Services Ltd [2008] EWHC 426 (TCC) . On its part, U&M submits as follows. Clause 9.5 of the FW/HW Contract says that the arbitration shall be in London. There is then an additional clause 9.7 which says, in addition to the arbitration being "in London" (clause 9.5), that the "place" is England. That clause is entirely unnecessary on U&M's argument. U&M points to the fact that the "place" is England, not London. Clause 9.7, it submits, is the plainest agreement that England is the seat. The language of "seat" is not used in terms, and does not need to be. There is no evidence, U&M submits, that the parties agreed to choose another seat for the arbitration. If the parties truly agreed to have a Zambian seat, or oust the jurisdiction of the English courts in favour of the Zambian courts as regards arbitration matters, they would have said so clearly. Moreover, the presence of clause 9.10 of the FW/HW Contract is (it submits) fatal to KCM's case. The parties expressly turned their minds to the role of the Zambian courts in the arbitration, and they agreed that their only role was in relation to enforcement. Discussion and conclusion on the first issue Mr Justin Mort, counsel for KCM, pressed this issue (as he put it) lightly. As I understand it, it is not raised at all as regards the Settlement Agreement of 26 October 2012, which provides expressly that "the seat, or legal place, of arbitration shall be London, England". That wording tracks the meaning of "seat" as set out in Article 16 of the LCIA Rules, and puts the matter beyond any doubt. His strongest argument is based on clause 9.12 of the FW/HW Contract by which, "The High Court of Zambia shall have exclusive jurisdiction". However, it is to be noted that this clause does not appear in the part of the agreement with the heading "Dispute Resolution/Arbitration". It appears under a different heading, "Governing Law and Jurisdiction". Despite the reference to the High Court of Zambia having exclusive jurisdiction, the parties have agreed that disputes relating to and/or arising out of the contract shall be referred to arbitration. It obviously follows that the arbitrators have exclusive jurisdiction to determine such disputes. All this is common ground between the parties. U&M say that it has not proved possible to determine why this clause was included in the contract, but at the least the provision must be read subject to the LCIA Arbitration provisions, and must mean that, if the parties decide not to arbitrate, but instead to litigate, then that litigation would be in Zambia. However, given the view I take as to the contractual choice of seat, I need not determine that issue. As Cooke J pointed out in Shashoua v Sharma [2009] 1 CLC 716 at [26], the concept of the "seat" is a fundamental one, and the seat can be different from the physical place in which the arbitration hearings take place. Hearings may take place in more than one jurisdiction for reasons of convenience, and where a hearing takes place by phone or video link, it may not be possible to ascribe a "place" at which the hearing happens. For juridical purposes, significance lies in the legal place, or seat, of the arbitration. If England is the seat of the arbitration, it follows that English law is the curial law of the arbitration ( C v D [2008] Bus LR 843 at [15], Longmore LJ). In Shashoua at [31], Cooke J distinguishes the Braes of Doune decision relied on by KCM, and on the terms of the contract I adopt his reasoning in this case. Exceptionally, in Braes of Doune the reference to the "seat" of the arbitration was merely a designation of the place where the arbitration was to be held, whereas all other references showed that the parties were agreeing that the seat and the curial law which governed the arbitral proceedings was to be English law. That decision does not assist KCM, therefore. In the case of the FW/HW Contract, the term "seat" is not used. However, by clause 9.5, disputes are to be referred to LCIA arbitration "in London". By clause 9.7, "the place of the arbitration shall be England…". It is, in my view, plain that the parties thereby agreed that the seat of the arbitration should be England. In this regard, I would adopt (as Cooke J did in Shashoua at [32]), the following statement of principle in Dicey, Morris & Collins (ibid) at paragraph 16-035: "This "seat" is in most cases sufficiently indicated by the country chosen as the place of the arbitration. For such a choice of place not to be given effect as a choice of seat, there will need to be clear evidence that the parties (or the arbitrators if so authorised by the parties) agreed to choose another seat for the arbitration; and that such a choice will be effective to endow the courts of that country with jurisdiction to supervise and support the arbitration." I accept U&M's submissions that there is no such evidence in the present case, and that the term "place" used in clause 9.7 of the FW/HW Contract means "legal place" or seat, as indeed is expressly stated in the Settlement Agreement. Whatever the precise scope of clause 9.12, it does not affect in my view this clear result. The second issue: if the seat of the arbitration is in England, was KCM nevertheless entitled to use the local court to obtain interim remedies? At the hearing, KCM put the second issue at the forefront of its case, and it raises more difficult questions. It submits that whether or not the seat of the arbitration is in Zambia, KCM is still entitled to use the Zambian court as the local court to obtain interim remedies. If it is correct about that, it is common ground that the injunction granted on 1 February 2013 cannot be maintained. In support of its position, KCM has relied primarily on Article 25.3 of the LCIA Arbitration Rules. Though it puts its case in a number of ways, it argued primarily that the parties were entitled to use the Zambian court (as the local court) or the English court (if that were held to be the court of the seat) to obtain interim remedies. Reliance was also placed on clause 9.12 of the FW/HW Agreement discussed above, which provides that, "The High Court of Zambia shall have exclusive jurisdiction". U&M's answers to KCM's case were summarised orally by Mr Andrew Mitchell QC, leading counsel for U&M, in four propositions. First, he submits that the seat of all the arbitrations is London. Second, he submits that the law of the arbitration agreements is English (though he says that not much turns on that in this case). Third, he submits that as a matter of English arbitration law, the courts of the seat have exclusive supervisory jurisdiction subject to valid contrary agreement. Fourth, he submits that there is no contrary agreement in this case by reference either to clause 9.12 of the FW/HW Agreement, or by reference to Article 25.3 of the LCIA Rules. It follows from those propositions, he submits, that the English court, as the court of the seat, and only the English court, has power to grant interim relief. Had KCM genuinely required interim relief, it could, and was required to, apply to the English court. In those circumstances, he submits that, upon the authority that I have referred to above, KCM should be obliged to discontinue the proceedings in Zambia. A draft order was submitted requiring discontinuance within 7 days. Discussion and conclusion on the second issue The central point is whether U&M is correct to submit that the English court, as the court of the seat, and only the English court, has power to grant interim relief. The parties take diametrically opposite positions. U&M submits that "as a matter of well-established arbitration law", absent a valid express agreement to the contrary, a choice of seat amounts to a choice of the courts of the seat as the exclusive forum from which to seek interim relief, whether before or during or after an arbitration. KCM submits, on the other hand, that the right to make interim applications for relief in a country other than the seat of the arbitration is "absolutely fundamental" and a "normal adjunct to international arbitration". (Neither party, however, cited any material by way of academic commentary or otherwise to make good their respective propositions.) The starting point for KCM is the UNCITRAL Model Law (which the Zambian Arbitration Act 2000 adopts with modifications). By Article 1(2), the provisions of the Model Law apply only if the place of arbitration is in the territory of the state in question. (So in the present case, assuming that the place of this arbitration, in the sense of its seat, is in England, the Law would not apply.) However, Article 1(2) stipulates for a number of exceptions, one of which is in Article 9. This provides that: Arbitration agreement and interim measures by court It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure of protection and for a court to grant such measure. It is to be noted that the provision is the same in the Model Law as it stands with amendments adopted in 2006. Treating the issue as specific to this case, it follows that even though the seat of the arbitration is England, under the Model Law (incorporated in the Zambian Arbitration Act) it was not incompatible with the arbitration agreement for KCM to request from the Zambian court an interim measure of protection, or for the court to grant such measure. I do not understand U&M to dispute this point. Furthermore, KCM submits, the position is the same under the English Arbitration Act 1996. This follows from s.2(3), which provides that the court powers set out in s. 44 exercisable in support of arbitral proceedings apply even if the seat of the arbitration is outside England, or no seat has been designated or determined. (That is subject to the proviso that the court may refuse to exercise such power if the fact that the seat of the arbitration is outside England makes it inappropriate to do so.) Section 44 is the analogous provision to s.11 in the Zambian Arbitration Act 2000. Again, I do not understand this to be in dispute. It follows, KCM submits, that under both the Model Law and the Arbitration Act 1996, the fact that the seat of the arbitration is in one country, does not preclude the obtaining of interim measures from a court in another country. A number of authorities were cited to me on this issue, but none of them appears to be conclusive. It was held in C v D , ibid, that the choice of seat for arbitration is a choice of forum for remedies seeking to attack the award. By choosing London as the seat of arbitration, the parties agree that any award will only be challenged under English law. In that case, it was held that the claimant was entitled to an anti-suit injunction. At [17], the court approved the statement of principle by Colman J in A v B [2007] 1 All ER (Comm) 591 at [111]: "An agreement as to the seat of an arbitration is analogous to an exclusive jurisdiction clause. Any claim for a remedy going to the existence or scope of the arbitrators' jurisdiction or as to the validity of an existing interim or final award is agreed to be made only in the courts of the place designated as the seat of the arbitration". However, as KCM submits, in my view correctly, the interim relief the subject of the present proceedings in Zambia falls outside the scope of that principle, because it does not go to the arbitrators' jurisdiction, or to the validity of an award. In Shashoua , ibid, an application had been made by the claimants to the Indian courts seeking "interim measures of protection" prior to the institution of the arbitration under s.9 of the Indian Arbitration and Conciliation Act 1996. At [46], Cooke J deals with the application, but nothing he says is in any way inconsistent with the submissions made by KCM, or supportive of those of U&M. As U&M acknowledged, the decision in the English court was post-award, and concerned a challenge to the award in India in circumstances in which a challenge had failed in the courts of the seat of the arbitration. So that decision is not in point. U&M submits that authority and guidance on the point is found in Sulamérica Cia Nacional de Seguros S. A. v Enesa Engenharia S. A. [2012] EWHC 42 (Comm) , affmd [2013] 1 WLR 102 . It is submitted, to quote its skeleton argument, that at first instance Cooke J found that the English courts had exclusive supportive and supervisory jurisdiction over the arbitration, notwithstanding an apparently free-standing clause providing for the Brazilian courts having exclusive jurisdiction. It is necessary therefore to consider further what the Sulamérica case did decide. It concerned the effect of a clause in an insurance policy stating that disputes would be subject to the exclusive jurisdiction of the courts of Brazil (Condition 7), together with a clause providing for an arbitration, the seat of which was to be London, England (Condition 12). I note that this is not unlike the effect of the provisions in the present FW/HW Contract. The insured obtained an injunction in Brazil restraining the insurers from pursuing arbitration proceedings, whereupon the insurers applied to the English court for, and were granted, an ex parte interim injunction to restrain the insured from pursuing proceedings in Brazil. Having held that all disputes had to be referred to arbitration under the terms of Condition 12, Cooke J asked what was left of the exclusive jurisdiction of the courts of Brazil under Condition 7, saying: "48. … The answer is very little in practice — much the same as found by Christopher Clarke J in paragraph 82 of the ACE decision. It enables the parties to found jurisdiction in a court in Brazil to declare the arbitrable nature of the dispute, to compel arbitration, to declare the validity of the award, to enforce the award, or to confirm the jurisdiction of the Brazilian courts on the merits in the event that the parties agree to dispense with arbitration. It specifically operates to prevent the parties proceeding in another court on the merits. Use of the Condition 7 rights for these purposes does not detract from the arbitration clause but gives them meaning. Furthermore, enforcement in Brazil against Brazilian parties is self-evidently a realistic possibility." The ACE decision he refers to is Ace Capital Ltd v CMS Energy Corpn [2008] EWHC 1843 (Comm) ; [2009] Lloyd's Rep IR 414 . It is correct that interim measures of the kind at issue in this case are not included in this list, but as KCM submits, the court was not concerned with the question that arises here. Although at [11], Cooke J noted that it was accepted that the fact that the seat of the arbitration was London "necessarily carried with it the English court's supervisory jurisdiction over the arbitration process", he made no reference to an exclusive supportive jurisdiction. I think that Mr Mitchell QC accepted this in oral argument. The case is not in my view authority for the proposition for which U&M cites it. Reliance is also placed by U&M on Nomihold Securities Inc v Mobile Telesystems Finance SA (No 2) [2012] Bus LR 1289 . This case concerned an application for an anti-arbitration injunction, whereby the claimant sought the discontinuation of arbitrations under s. 37 Senior Courts Act 1981 on the basis that the defendant was launching a collateral attack on an award made by a properly constituted tribunal. At [31] Andrew Smith J said: "Thus … [the parties] agreed both to LCIA arbitration and to the supervisory jurisdiction of the English court subject to their agreement through the rules restricting the circumstances in which they might invoke the supervisory jurisdiction. That "supervisory" jurisdiction is not only supervisory in a narrow sense of a court overseeing arbitrations in order to correct error. It includes the jurisdiction to make orders to support the arbitration under section 44 of the 1996 Act (see Sheffield United Football Club Ltd v West Ham United Football Club plc [2009] 1 Lloyd's Rep 167 , para 40) and orders to enforce an award and to make effective the agreement to refer disputes to arbitration. Thus it is a breach of an arbitration agreement to bring proceedings to make "an unlawful attempt to invalidate the award" ( C v D [2007] 2 All ER (Comm) 557 , para 55) or to make a "collateral attack on a binding judgment or award of a properly constituted tribunal" ( Noble Assurance Co v Gerling-Konzern General Insurance Co [2008] 1 Lloyd's Rep IR 1, para 87). I respectfully agree that the English court's supervisory jurisdiction is not only supervisory in the narrow sense of the court overseeing arbitrations in order to correct error, but includes the jurisdiction to make orders to support the arbitration under s. 44 of the 1996 Act. Again however, this statement of principle does not support U&M's submission that the courts of the seat are the exclusive forum from which to seek interim relief. There is in fact a more direct authority on the point, and I am indebted to Mr Mitchell QC for bringing it to my attention in the course of oral argument. In Econet Wireless Ltd v Vee Networks Ltd [2006] EWHC 1568 (Comm) at [19], Morison J accepted as correct counsel's submission that the natural court for the granting of interim injunctive relief must be the court of the country of the seat of arbitration, especially where the curial law of the arbitration is that of the same country. Russell on Arbitration , 23 rd edn, paragraph 7-183 cites this case, adding that where the seat of the arbitration is abroad, the court will need a very good reason to exercise its jurisdiction under s. 44. I accept this as a correct statement of the law, noting however that it runs contrary to U&M's case, because it recognises that the power to grant interim relief is not confined to the court of the seat. What it shows, in my view, is that a party may exceptionally be entitled to seek interim relief in some court other than that of the seat, if for practical reasons the application can only sensibly be made there, provided that the proceedings are not a disguised attempt to outflank the arbitration agreement. Insofar as I have to decide the point, the principle is (in my view) correctly stated in Dicey, Morris & Collins, ibid, at paragraph 16-036, to the effect that "the courts of the seat will have the sole supervisory and primary supportive function in relation to the conduct of the arbitration…". That passage seems to me to state the position as far as the authority cited to me goes. It does not justify the proposition for which U&M argues. However, it is not necessary to decide the point, because it is common ground that the matter is governed by the agreement between the parties. The agreement provided for an LCIA Arbitration, and KCM places strong reliance on the LCIA Arbitration Rules in this regard. Article 25 of the Rules deals with interim and conservatory measures. KCM places particular reliance on Article 25.3, but U&M refers to earlier parts of it, and I shall set out the whole article. Article 25 Interim and Conservatory Measures 25.1 The Arbitral Tribunal shall have the power, unless otherwise agreed by the parties in writing, on the application of any party: (a) to order any respondent party to a claim or counterclaim to provide security for all or part of the amount in dispute, by way of deposit or bank guarantee or in any other manner and upon such terms as the Arbitral Tribunal considers appropriate. Such terms may include the provision by the claiming or counterclaiming party of a cross-indemnity, itself secured in such manner as the Arbitral Tribunal considers appropriate, for any costs or losses incurred by such respondent in providing security. The amount of any costs and losses payable under such cross-indemnity may be determined by the Arbitral Tribunal in one or more awards; (b) to order the preservation, storage, sale or other disposal of any property or thing under the control of any party and relating to the subject matter of the arbitration; and (c) to order on a provisional basis, subject to final determination in an award, any relief which the Arbitral Tribunal would have power to grant in an award, including a provisional order for the payment of money or the disposition of property as between any parties. 25.2 The Arbitral Tribunal shall have the power, upon the application of a party, to order any claiming or counterclaiming party to provide security for the legal or other costs of any other party by way of deposit or bank guarantee or in any other manner and upon such terms as the Arbitral Tribunal considers appropriate. Such terms may include the provision by that other party of a cross-indemnity, itself secured in such manner as the Arbitral Tribunal considers appropriate, for any costs and losses incurred by such claimant or counterclaimant in providing security. The amount of any costs and losses payable under such cross-indemnity may be determined by the Arbitral Tribunal in one or more awards. In the event that a claiming or counterclaiming party does not comply with any order to provide security , the Arbitral Tribunal may stay that party's claims or counterclaims or dismiss them in an award. 25.3 The power of the Arbitral Tribunal under Article 25.1 shall not prejudice howsoever any party's right to apply to any state court or other judicial authority for interim or conservatory measures before the formation of the Arbitral Tribunal and, in exceptional cases, thereafter. Any application and any order for such measures after the formation of the Arbitral Tribunal shall be promptly communicated by the applicant to the Arbitral Tribunal and all other parties. However, by agreeing to arbitration under these Rules, the parties shall be taken to have agreed not to apply to any state court or other judicial authority for any order for security for its legal or other costs available from the Arbitral Tribunal under Article 25.2. The difference of opinion between the parties can be briefly stated. KCM submits that an application to the local court for interim measures is explicitly anticipated in rule 25.3 with its reference to "any party's right to apply to any state court … for interim or conservatory measures". U&M submits that the point can be dismissed immediately. Unlike some other institutional rules such as those of the ICC, it submits, the LCIA Rules confer no right to seek interim relief from any court. They merely make clear that the conferral on the Tribunal of rights to order interim relief shall not prejudice any right to seek interim relief from any court, and there is none in this case. In support of its argument, U&M referred to Article 23(2) of the ICC Arbitration Rules 1998 (I note that Article 28(2) of the 2012 Rules is in the same form). This provides that: "Before the file is transmitted to the arbitral tribunal, and in appropriate circumstances even thereafter, the parties may apply to any competent judicial authority for interim or conservatory measures. The application of a party to a judicial authority for such measures or for the implementation of any such measures ordered by an arbitral tribunal shall not be deemed to be an infringement or a waiver of the arbitration agreement and shall not affect the relevant powers reserved to the arbitral tribunal. Any such application and any measures taken by the judicial authority must be notified without delay to the Secretariat. The Secretariat shall inform the arbitral tribunal thereof." It is not immediately apparent to me why U&M suggests that LCIA Rules should have a more limited effect than the ICC Rules, or for that matter the UNCITRAL Model Law, but of course it depends on their true construction. In my view, construed against the above background, Article 25.3 of the LCIA Rules does not have the limited effect that U&M argues for. By expressly stipulating that the power of the Arbitral Tribunal to order interim and conservatory measures is not to prejudice a party's right to apply to a state court before the formation of the Arbitral Tribunal, in my view Article 25.3 implicitly recognises the party's right to do so. That must be subject to the terms of the arbitration agreement between them. I agree with KCM that the terms of the FW/HW Agreement are not in any way inconsistent with its contention. The fact that clause 9.10 provides that the High Court of Zambia shall have exclusive jurisdiction to execute the Arbitration award merely reflects the fact that both parties are Zambian companies, and so far as the evidence in this case is concerned, their assets are to be found in Zambia. Overall, I prefer KCM's submissions on this point. There is a further consideration which in my view supports its case that the parties are contractually entitled to apply to the Zambian courts for interim protective measures. This dispute concerns an application to the court by the mine owner, KCM, but the contractual terms must equally accommodate the position of the mine operator, U&M. The effect of U&M's submission, as Mr Mitchell QC recognised, is that had this been a case in which U&M had wished to invoke the court's protection, such application could only be made to the English court. He further accepted that on the facts of this case, essentially it would be seeking an order directing KCM to refrain from excluding U&M from the mine and refrain from removing its equipment, in other words the converse of that obtained by KCM in the Zambian proceedings. I am not persuaded that the English court could, or if it could, would, make such an order. This dispute arises between two Zambian companies. It concerns the operation of a copper mine in Zambia. Pending the appointment of the arbitrators, issues arise as to the possession of the mine, and the possession of the equipment within the guarantees. The matter is of national as well as local importance since, as I have been told, the mine contributes a substantial proportion of Zambia's total GDP. So far as judicial assistance by way of interim measures pending the appointment of the arbitrators is required, in my view the natural forum for such proceedings is in Zambia, not in England. U&M drew attention to the potential for conflict between judicial decisions, because it is not possible to contract out of the English court's power to grant an injunction under s.37 Senior Courts Act (see Nomihold ibid at [26]). It is submitted that to allow two courts to have jurisdiction in this regard is potentially chaotic and potentially problematic. However that assumes that in present circumstances the English court would grant interim relief. As regards an issue as to which Zambian party has access to a copper mine in Zambia, and the disposition of heavy equipment within that mine pending the appointment of arbitrators, the court in Zambia is in my view best placed to take the decision. The inter partes arguments are different from those put to the judge on the ex parte application. On the submissions made to me, I have come to the conclusion that the Zambian proceedings were not in breach of the arbitration agreement between the parties, and on that basis, it is common ground that the injunction should be discharged. KCM has also applied for a stay under s. 9 Arbitration Act 1996. The parties are however agreed that the decision in respect of the injunction one way or the other disposes of these proceedings, and that it is not necessary for the court to rule on this application. I am grateful to the parties for their assistance, and will hear them as to consequential matters. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII