Arbitration Seat Designation: Key Takeaways from the Investcom Ruling Disputes: A Case Study

Introduction

Investcom Global Limited v PLC Investments Limited & Ors EWHC 2505 (Comm)

The recent Commercial Court decision Investcom Global Limited v PLC Limited  provides helpful insight into the court’s approach to determining whether it has jurisdiction to grant an anti-suit injunction to restrain foreign proceedings that are said to be in breach of an English arbitration agreement.

Background Facts and Legal Proceedings 

Investcom Global Limited ("Investcom") entered into Shareholders’ Agreement (the "SHA") with PLC Investments Limited ("PLC”) governing the operation of MTN Liberia (“MTN”), a telecommunications company. Under the SHA, MTN was co-owned by Investcom and PLC. The SHA contained an arbitration clause that stated that any disputes would be determined by “any international chamber of commerce outside Liberia”. 

Investcom and MTN subsequently entered into a Management and Technical Support Contract (the "MA"), which included an arbitration agreement providing for disputes to be resolved by ICC arbitration in London.

In 2018, the board of MTN sought to transfer shares in Momo Liberia (“Momo”) (a subsidiary of MTN) to several Liberian individuals. Investcom alleged that these individuals were proxies (the “Proxies”)  for two prominent Liberian businessmen who were the ultimate owners of PLC (the “Businessmen”). Investcom claimed that the Businessmen, through their alleged control of both PLC and the Proxies, sought to improperly extract funds from MTN and Momo.

Beginning in March 2024, a series of legal proceedings ensued in both Liberia and England:

• The Proxies initiated a petition in the Liberian Commercial Court (the “First Liberian Proceedings”) to compel Momo to issue share certificates. 
• Investcom commenced an ICC arbitration (the "Arbitration") against PLC, MTN, Momo, the Businessmen and the Proxies proposing that the arbitral seat should be London. PLC and the Businessmen agreed to the choice of London but later sought to withdraw their agreement whereas MTN and Momo did not agree. 

The ICC Court subsequently exercised its power under Article 18(1) of the ICC Rules to determine that the arbitral seat would be Toronto, Canada on the basis that not all the parties to the arbitration had agreed the arbitral seat.

• The Businessmen filed a petition in Liberia (the “Second Liberian Proceedings”) seeking to stay the Arbitration.
• PLC initiated further proceedings in Liberia (the “Third Liberian Proceedings”), seeking an account of MTN’s alleged liabilities to Investcom. 
• Investcom applied for an anti-suit injunction seeking to halt both the Second and Third Liberian Proceedings on the basis that they were in breach of the arbitration agreements under the SHA and MA respectively.  The injunctions were granted ex parte by Foxton J following which the Third Liberian Proceedings were discontinued. The injunctions were then revisited at a return hearing in the Commercial Court. 

The  Decision 

The court found that it had jurisdiction to grant the anti-suit injunction in respect of the Third Liberian Proceedings but lacked jurisdiction over the Second Liberian Proceedings due to the ICC’s designation of Toronto as the seat of the Arbitration. 

In reaching this conclusion, the court confirmed that:

• that the net result of the applicable Civil Procedure Rules for determining jurisdiction where none of the defendants were located in the England was that applicant had to show that it had a “good arguable case” that its claims related to an arbitration whose seat is or will be in England and Wales; and
• when considering whether to grant an interim anti-suit injunction on a contractual basis, the court must be satisfied “to a high degree of probability” that there is an arbitration clause binding of the defendant which his actions have or threaten to breach.

Third Liberian Proceedings

Granting the anti-suit injunction, the court found that Investcom had a good arguable case that the English court had jurisdiction as PLC was bound to arbitrate the dispute under the MA. 

The court rejected PLC’s argument that the anti-suit injunction would serve no purpose as the Third Liberian Proceedings had already been discontinued finding that the injunction was necessary and justifiable.  When discontinuing the proceedings PLC had stated that it was doing so “without prejudice” and “with reservation of the right to re-file”. The court found this a telling indication that, unless the injunction was granted, PLC was likely to re-start the proceedings or similar actions to circumvent the MA arbitration clause. 

Second Liberian Proceedings

The court discharged the relief granted in respect of the Second Liberian Proceedings, accepting that it lacked jurisdiction following the ICC Court’s decision to fix Toronto as the seat of the Arbitration. 

In reaching this conclusion, the court found that the ICC Court had acted within its powers under Article 18(1) of the ICC Rules by designating the seat as Toronto, given that the SHA arbitration agreement did not specify a seat.

The court rejected Investcom's argument that “the parties” under Article 18(1) of the ICC Rules  referred only to Investcom, PLC and the Businessmen (i.e. the parties who had initially agreed to London as the seat). The court found that MTN and Momo, although they had indicated an intention not to actively participate in the Arbitration, were also parties to the arbitration agreement and therefore relevant to the ICC Court’s determination of the seat. 

Analysis

The decision is useful in-depth reminder of how the court approaches the question of its jurisdiction over arbitration-related disputes and re-affirms the primacy of the parties’ choice of the arbitral seat. It is therefore crucial that parties carefully consider the designation of the seat when drafting arbitration agreements in order to avoid potential curve balls when the selection of the arbitral seat is left to the relevant arbitral body (as happened in this case in relation to the Second Liberian Proceedings).   

The case also highlights that it is still possible to get an anti-suit injunction in relation to proceedings that have been discontinued if there remains a risk that further vexatious proceedings are likely to be initiated unless the injunction is granted.