Setting aside notice of discontinuance

Sheltam Rail Company (Proprietary) Ltd v Mirambo Holdings Ltd and another [2008] EWHC 829 (Comm); [2008] Lloyd’s Rep 2 195

The defendants had been successful in arbitration proceedings in establishing their rights in a consortium, which had obtained a concession to run the railways of Kenya and Uganda. The claimants commenced arbitration claims under ss67 and 68 of the Arbitration Act 1996 challenging the award on the grounds that the tribunal lacked substantive jurisdiction to grant equitable and declaratory relief in the terms set out in the award, and that there had been serious irregularity, because the tribunal had exceeded its powers. A few days before the court was due to hear its arbitration claims, the claimant served notice of discontinuance under CPR 38.2. The defendants applied to set aside the notice of discontinuance under CPR 38.4 and asked the court to make orders under ss67(3) and 68(3) of the Act to confirm the third partial final award. They contended that where a party had started an arbitration claim in order to challenge an award under s67 of the Act, it was not open to that party to subvert the supervisory jurisdiction of the English court by entering a notice of discontinuance. To do so would enable the discontinuing party to keep the option of using the same jurisdictional objections to delay or resist enforcement in another New York Convention State. The claimant said that it had discontinued the arbitration claims, because it had run out of funds to instruct counsel. It said that it was prepared to undertake not to resist enforcement of the third partial final award in a New York Convention State by raising any argument under art V.1(c) of the Convention, based on lack of jurisdiction of the arbitral tribunal.