Supreme Court clarifies when a stay of court proceedings will be granted in favour of arbitration under s.9 Arbitration Act 1996

A recent Supreme Court decision has clarified the English courts’ approach to determining whether a matter falls within the scope of an arbitration agreement for the purposes of deciding whether to grant a stay of court proceedings under section 9 of the Arbitration Act 1996: Republic of Mozambique v Privinvest Shipbuilding SAL [2023] UKSC 32.

Section 9 enables a party to an arbitration agreement against whom legal proceedings are brought to apply for a stay of the proceedings so far as they concern a “matter” which under the agreement is to be referred to arbitration.

Although not set in a financial services context, the present case will be of interest to financial institutions as it demonstrates that, in considering whether to grant a stay, the court will analyse the substance of a claim rather than how it is presented by the parties. If a “matter” is not an essential element of the claim, or relevant defence to that claim, then it is not a “matter” which requires a stay.

Applying this approach in the present case, the court found that the Republic of Mozambique’s claims against the defendants for, among other things, bribery, conspiracy and dishonest assistance were “matters” which fell outside the scope of the arbitration agreements in a number of related supply contracts, and accordingly a stay was refused.

For more information see this post on our Arbitration Notes blog.