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Editorial

Legislative developments in 2013 in the field of international arbitration

A number of important refinements have been brought to the area of dispute resolution last year to further cement the position of Mauritius as a venue for adjudicating international disputes. Those changes to arbitration landscape were ushered through the International Arbitration (Miscellaneous Provisions) Act 2013 (the "Amending Act"), which was promulgated at the same time as the Supreme Court issued the Supreme Court (International Arbitration Claims) Rules 2013 (the "Rules"). Importantly, the Amending Act brought harmonising changes to the Civil Procedure Code.

In 2008, the International Arbitration Act (the "IAA 2008") was enacted by the Mauritian Parliament. The avowed aim of the IAA 2008 is "to promote the use of Mauritius as a jurisdiction of choice in the field of international arbitration, to lay down the rules applicable to such arbitrations and to provide for related matters". The IAA 2008 also established the Mauritius International Arbitration Centre, which in 2011 entered into an agreement with the London Court of International Arbitration, giving birth to the LCIA-MIAC Arbitration Centre and allowing international arbitrations taking place in Mauritius to be governed by a reputable and respected legal infrastructure.

The IAA 2008 is an adaptation of the Model Law on International Commercial Arbitration adopted by UNCITRAL in 1985, as amended in 2006 (the "Model Law"). It sits alongside the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act 2001 ("CREFAA 2001") in the area of international arbitration. CREEFAA 2001 transposes the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards into the law of Mauritius.

"International arbitration" in the IAA 2008 is any arbitration where -

  1. the parties to an arbitration agreement have, at the time of the conclusion of the agreement, their place of business in different States;
  2. one of the following places is situated outside the State in which the parties have their place of business: (i) the juridical seat of the arbitration, if determined in, or pursuant to, the arbitration agreement; or (ii) any place where a substantial part of the obligations of the commercial relationship is to be performed or the place with which the subject matter of the dispute is most closely connected;
  3. the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one State or that the IAA 2008 is to apply to their arbitration; or
  4. the arbitration arises under an arbitration clause included in the constitution of a global business (offshore) company.

In a gist, the IAA 2008 applies to international arbitrations which have Mauritius as their juridical seat, save for a few provisions which apply whether the juridical seat is in Mauritius or not; these relate to (i) referrals to the Supreme Court of Mauritius from other courts to determine whether the parties ought to be referred to arbitration instead, (ii) applications to the Supreme Court to obtain interim measures in connection with international arbitration proceedings and (iii) the recognition in Mauritius of interim measures granted by an arbitral tribunal.

The general purport of the IAA 2008 is to encourage parties to resort to international arbitration, and to limit the intervention by the Mauritian Courts. Appeals against decisions made by the Supreme Court under the IAA 2008 are made directly to the Privy Council. As a departure from the domestic rules on statutory interpretation, section 2B provides that in applying and interpreting the IAA 2008 and in developing the law applicable to international arbitration in Mauritius, regard shall be had to the origin of the Model Law, the need to promote uniformity in the application of the latter, the observance of good faith and the general principles on which the Model Law is based; in addition, recourse may be had to the international materials relating to the Model Law and to its interpretation.

The key changes brought in 2013 are:

  1. The repeal of provisions on the recognition and enforcement of foreign arbitral awards contained in the Code of Civil Procedure and the clarification that foreign arbitral awards shall be governed by the provisions of the IAA 2008 and CREFAA 2001; a welcome change because it removes the confusion of having two separate regimes for the recognition and enforcement in the statute books, and additionally, it removes the requirement previously found in the Code of Civil Procedure of reciprocity in the country where the award was delivered
  2. The introduction of the concept of "Designated Judges", being 6 judges designated for a period of 5 years by the Chief Justice as being the only judges who shall hear applications under the IAA 2008 and CREFAA 2001.  This should in the long term enable those judges to acquire an expertise in the field of international arbitration.
  3. The clarification that applications for interim measures before the Supreme Court are initially to be made before a single Designated Judge, but shall be returnable before a panel of three Designated Judges which includes the Designated Judge who made the initial determination.
  4. The ability of Designated Judges to exclude persons other than the parties and their legal representatives to attend the court proceedings, and to restrict the publication of information relating to the court proceedings, in order to preserve confidentiality.
  5. The introduction of witness statements as a method of adducing evidence in proceedings before the Supreme Court under the IAA 2008 and CREFAA 2001.  A witness statement only needs to be verified by a statement of truth by the witness.  This seems to indicate that witness statements (which, unlike affidavits, are not public documents) sworn abroad would not need to be subject to the cumbersome process of apostille before being admissible as evidence before the Supreme Court.

The Rules, which are intended to be a comprehensive and stand-alone procedural code for matters arising under the IAA 2008 or CREFAA 2001, also impose rigorous case management timelines in order to expedite the proceedings as much as possible.  Those timelines relate notably to the filing and serving of written evidence, the agreement between the parties of an estimated length of hearing of an application, the filing with the Supreme Court of an agreed estimate or each party's estimate of the length of the hearing, the filing of a court bundle or brief of evidence and documents to be used at the hearing, and the filing and serving of skeleton arguments and bundles of authorities by the parties.

From an investment perspective, the development of Mauritius as an international arbitration jurisdiction is important in the setting up of Category 1 global business ("GBC 1") companies, which are tax resident in Mauritius and benefit from deemed foreign tax credits of 80% and treaty benefits. 

In addition to the existing requirements to satisfy the Financial Services Commission (the "FSC") that a GBC 1 company has sufficient substance in the Mauritian jurisdiction to justify its tax resident status, the FSC will apply as from 1 January 2015 additional substance requirements which will require GBC 1 companies to comply with at least one of the following:

  1. The company has or shall have office premises in Mauritius;
  2. The company employs or shall employ on a full-time basis at administrative/technical level at least one person who is resident in Mauritius;
  3. The company's constitution contains a clause whereby all disputes arising out of the constitution shall be resolved by arbitration;
  4. The company holds or is expected to hold within the next 12 months assets (excluding cash in a bank account or shares/interest in another global business company) which are worth at least USD 100,000 in Mauritius;
  5. The company's shares are listed on a securities exchange licensed by the FSC;
  6. The company has or is expected to have a yearly expenditure in Mauritius which can be reasonably expected from any similar corporation which is controlled and managed from Mauritius.

The inclusion of an arbitration clause in the constitution of a GBC 1 company seems to be the most straightforward (and cheapest) manner in which to satisfy the new substance requirements, although care has to be taken to avoid conflicts of contractual interpretation whereby the constitution of a company provides for one arbitration regime whereas its shareholders' agreement provides for another.  Indeed, one area in which the Amending Act has sought to clarify the IAA 2008 is to provide that only disputes arising out of the constitution of a global business company are to be subject to arbitration and not additionally, as originally enacted in the IAA 2008, disputes "relating to the company".