Republic of Mozambique v Credit Suisse International & Ors

This is an appeal against the judgment of Waksman J ("the Judge") dated 30 July 2020 (Footnote: ¹) ("the Judgment") whereby he dismissed the application of the Appellants (together "the Privinvest companies") for a stay pursuant to s. 9 of the Arbitration Act 1996 ("s. 9") ("the 1996 Act") of the proceedings brought against them by the Respondent, the Republic of Mozambique ("the Republic"). The Judge did so on the basis that, on a proper construction and applying Swiss law, none of the Republic's pleaded claims against the Privinvest companies fell within the scope of three arbitration agreements (together "the Arbitration Agreements").

Three corporate vehicles wholly owned by the Republic ("the SPVs") entered into three Supply Contracts with three of the Privinvest companies ("the Supply Contracts") by which the SPVs acquired valuable goods and services in connection with the Republic's development of its Exclusive Economic Zone ("EEZ"). The SPVs borrowed the purchase funds from the First and Second Defendants, Credit Suisse International and Credit Suisse AG (together "Credit Suisse"), and a third bank, VTB Capital plc ("VTB"). In turn, the Republic gave sovereign guarantees over that borrowing ("the Guarantees").

The Republic claims that it has been the victim of a conspiracy involving the various named Defendants. It brings claims for deceit, bribery, conspiracy to injure by unlawful means, dishonest assistance, knowing receipt and also makes proprietary claims. The Republic accuses the Privinvest companies (and their ultimate owner and controller, now the Twelfth Defendant (Mr Iskandar Safa ("Mr Safa")), of paying very significant bribes to its corrupt officials, exposing the Republic to a potential liability of some US$2 billion under the Guarantees.

The Supply Contracts are governed by Swiss law and contain the Arbitration

Further to a review by the Republic in accordance with CPR PD52C 27.10, the contested issues on appeal have narrowed to the following:

The Republic resists the appeal, save in two discrete respects relating to the Judge's findings on scope in relation to allegations that i) the Supply Contracts were instruments of fraud, alternatively a sham and ii) the entry into the Supply Contracts was one of the (six) unlawful means in the conspiracy to which the Privinvest companies are alleged to have been party (referred to respectively as the "IFA" (the instrument of fraud allegation) and the "UMIFA" (the unlawful means instrument of fraud allegation)). The Republic no longer seeks positively to uphold the Judge's findings that the IFA and the UMIFA were matters falling outside the Arbitration Agreements. Its position is that whether or not those matters are stayed does not materially affect the substantive or practical outcome of the appeal. The IFA is not a claim as such; no relief is sought pursuant to it. The UMIFA is only one of multiple alleged unlawful means for the purpose of the conspiracy claim.

Subject always to the court's view, the Republic does not therefore stand in the path of a declaration that the IFA and UMIFA are within the scope of the Arbitration Agreements, and of a stay of the proceedings against the Privinvest companies to that extent. This has been described by the Privinvest companies as "the Concession"; it is a development which has loomed large in the submissions made on their behalf.

Beyond that, the Republic contends that the stay application (and now this appeal) are "contrived, both as to…purpose and premise". As to purpose, amongst other things, a stay would not extricate the Privinvest companies from these proceedings in any event (because of the existence of Part 20 proceedings brought against them by Credit

The court has had the benefit of able submissions on both sides, including oral argument from Mr Matthews QC for the Privinvest companies and Mr Pillow QC for the Republic.

The SPVs are Proindicus SA ("Proindicus"), Empresa Moçambicana de Atum SA ("EMATUM") and Mozambique Asset Management ("MAM"). Each is a Mozambique company wholly owned by the Republic and set up for the purpose of entering the Supply Contracts as follows:

Each Supply Contract contained a Preamble recording the Republic's interest in the subject-matter of the contract in question. Each Supply Contract used the defined term "Project" and referred to specific "Assets" and "Services"; in each Supply Contract the obligations of the relevant Privinvest company were "owed solely to the Customer [defined as the SPV] and not to any other person or entity".

The Proindicus and EMATUM Contracts provided expressly that their governing law was Swiss law and contained the following arbitration clause ("the ICC Arbitration Agreement"):

The MAM Contract also provided expressly that its governing law was Swiss law and contained the following arbitration clause ("the SCAI Arbitration Agreement"):

Holding, Mar and Shipbuilding each subcontracted its role almost immediately after execution of the Supply Contract in question (and on a "back to back" basis) as follows:

The EMATUM and MAM Sub-Contracts are expressed to be governed by English law, with an exclusive jurisdiction clause in favour of the courts of England and Wales. The Proindicus Sub-Contract contained no such clause.

Under each of the Supply Contracts, the relevant SPV was liable to pay the purchase price to the supplier upfront, whereupon the Supply Contract in question became deemed “[e]ffective”. The funds for this purpose were borrowed initially from Credit

The borrowing by the SPVs was guaranteed by the Republic through the Guarantees, each of which was dated shortly after the relevant Supply Contract and signed by the Republic's then Minister of Economy and Finance, Mr Manuel Chang, as follows:

The Guarantees are expressed to be governed by English law, each with an exclusive jurisdiction clause in favour of the courts of England and Wales.

Holding, Mar and Shipbuilding received payment in full under the Supply Contracts (direct from the lenders). The Republic is said to have accrued a total present liability under the Guarantees of some US$2.1 billion. Of a US$504 million syndicated loan to Proindicus by Credit Suisse, only US$11.8 million has been repaid. The balance of the loan in respect of the EMATUM Contract has been refinanced, including by the issue by the Republic of fixed rate notes and falling due in 2023 ("the 2023 Eurobonds") (given in exchange for earlier loan participation notes issued by the Republic falling due in September 2020) ("the 2020 Notes").

On 19 December 2018 the United States Department of Justice commenced criminal proceedings against, amongst others, the Third to Fifth Defendants (“the CS Team Defendants”) (who were employees at the material time of Credit Suisse Europe) and

The Republic commenced the present proceedings in February 2019 (Footnote: ²). It issued separate proceedings against Mr Safa; those proceedings (in which, broadly speaking, the same allegations were made against Mr Safa as are made against the Privinvest companies) were consolidated by order of the Judge dated 30 July 2020.³

By its Amended Consolidated Particulars of Claim ("ACPOC") the Republic alleges that bribes (amounting to at least $143 million) were paid to:

As against the Privinvest companies, and as set out more particularly below, the Republic pleads:

The Privinvest companies' position is that the Supply Contracts were valid, genuine and commercial contracts, from which the Republic was to benefit. Witness statements were served from those involved within the Privinvest companies in support of the application for a stay seeking to confirm this, and to the effect that the

The CS Team Defendants deny being part of any conspiracy against the Republic or related wrongdoing against it. The Third Defendant, Mr Surjan Singh (“Mr Singh”), admits receiving secret commissions from the Privinvest companies; the Fourth

In June 2020 Credit Suisse and Credit Suisse Europe issued Part 20 proceedings against the Privinvest companies and ten individuals, including those alleged to have been the recipients of bribes (as set out above).

By application notices dated 11 November 2019 the Privinvest companies applied for stays under s.9 (Footnote: ³), contending as follows:

The Republic takes issue with each of these propositions. At a directions hearing in April 2020 the Judge resolved to proceed by way of preliminary issue hearing on the last of them. By the agreement of the parties, he was to decide the issue on the assumption that the Republic is bound by the Arbitration Agreements (“the Assumption”) (Footnote: ⁴).

Since the Judgment, the Republic has served Re-Amended Consolidated Particulars of Claim ("RACPOC") and the Privinvest companies and Mr Safa have served a joint (and very full) Defence.

Further, as set out in the Judgment (at [24] to [40]), in 2019 the Privinvest companies commenced various arbitrations in Switzerland (under the ICC or SCAI Rules) against Proindicus, EMATUM, MAM and the Republic.

The preliminary issue hearing spanned three days in May 2020. Written statements were adduced on both sides. The Judge also received written and oral expert evidence on Swiss law as follows:

At the outset of the Judgment, the Judge recorded the Assumption. However, he stated this could not alter the fact that the claims for his consideration are made on the basis that the Republic is not a party. The Republic's losses can only be referable to its liabilities under the Guarantees.

The Judge rehearsed a summary of the pleaded claims and then set out the parties' positions on the application, which he described as "diametrically opposed".

He then considered the interpretation of arbitration clauses under Swiss law. He recorded that, although the wording of the ICC Arbitration Agreement and the SCAI Arbitration Agreement was different, it was not suggested that anything turned on such difference. Both clauses refer to "disputes" and neither was confined to claims made under the Supply Contracts (as denoted by the words "in connection with this Project" and "in relation to this contract" respectively).

There was much common ground between the experts and he did not distinguish between them in terms of general plausibility. The Judge doubted whether, ultimately, "there was much difference between Swiss Law and English Law on the question of interpretation".

He reviewed the expert evidence, commenting amongst other things as follows:

He made the following findings as to Swiss law interpretive principles relating to arbitration clauses:

The Judge next considered the law, recording the common ground that a stay under s. 9 can be applied pro tanto and referring to Tomolugen v Silica [2015] SGCA 57

The Judge went on, in overview, to recognise that the overall misconduct alleged arises out of the alleged corrupt procuring by the Defendants of a number of transactions with the SPVs or the Republic which consist of the Supply Contracts, their financing and the Guarantees. However, the emphasis in the main action on the provision of the Guarantees and the description of that as “a key aim of the conspiracy” was not artificial, but “the” key element (from the Republic’s point of view). The fact of multiple arbitration clauses suggested that in general terms, a "narrower approach to the sufficiency of the connection" is required. A further contextual point was that the EMATUM and MAM Sub-Contracts prescribed English governing law and conferred exclusive jurisdiction on the English courts (and the Proindicus Sub-Contract contained no dispute resolution clause):

The Judge concluded that, although the Supply Contracts were "important background", the bribery, dishonest assistance, knowing receipt and proprietary claims, as well as the IFA, were not sufficiently connected with the Supply Contracts as to fall within the Arbitration Agreements. The remedies claimed were not concerned with the proceeds of sale from the Supply Contracts. As for the conspiracy

At the time of the hearing before the Judge, the Republic's case against the Privinvest companies was set out in the ACPOC. In the introductory section, the Republic summarised its claim as follows:

Section C of the ACPOC rehearsed "The Facts". Each of the three transactions (as defined) was addressed in a separate section. By way of illustration, in relation to the Proindicus transaction, there were allegations first in relation to events in 2011 and 2012, including as to bribery agreements between Mr Boustani and representatives of the Republic and then the enlisting by the Privinvest companies of Credit Suisse to provide finance. Then under the sub-heading "Proindicus transaction", the following appears:

The IFA in relation to the Proindicus Supply Contract was then pleaded:

The Proindicus Guarantee and the Proindicus Facility Agreement were then pleaded.

A similar pattern was adopted (and similar allegations repeated) in respect of the EMATUM and MAM transactions: the relevant Supply Contract was pleaded, followed by the IFA, followed by the relevant Guarantee and Facility Agreement.

In Section D the Republic set out its claims:

At Section E the Republic set out its Particulars of Loss, including all amounts paid by the Republic "in respect of the Proindicus, EMATUM or MAM transactions or which the Republic is liable to pay", all payments made by the Republic under the

As indicated, subsequent to the Judgment (on 27 October 2020), the Republic obtained permission to file and serve Re-Amended Consolidated Particulars of Claim ("RACPOC"). The Privinvest companies (and Mr Safa) filed and served a joint Defence in January 2021.

The parties' respective positions are set out in detail in their skeleton arguments. What follows is a summary only of the arguments advanced in writing and orally.

The overarching submission for the Privinvest companies is that, however the Republic seeks to “dress up its claims” against them, the claims arise “in connection with” or “out of” or “in relation to” the Supply Contracts, and thus are caught by the

In relation to Ground 1, although the Privinvest companies submit that the outcome of the appeal does not turn on it, it is said that there was no proper basis for the narrow approach adopted by the Judge. Neither reason that he gave was sufficient to justify his conclusion that he should reject the general rule that arbitration agreements are to be interpreted broadly.

The existence of multiple arbitration clauses was irrelevant. Amongst other things, this is not a case involving a series of agreements between the same parties. Further, despite holding that there was no essential difference between English and Swiss law, the Judge’s conclusion is said to be starkly at odds with the assumption identified in Fiona Trust & Holding Corp and others v Privalov and others [2007] UKHL 40;

The Judge’s reliance on the Sub-Contracts as a relevant “contextual point” was misplaced: it was wrong as a matter of Swiss law and unsupported by evidence. Specifically, there was no evidence that the parties subjectively had the (jurisdiction clauses in the) Sub-Contracts in mind at the time of the Supply Contracts (such intentions being relevant as a matter of Swiss law), and there was no basis for recourse to the Sub-Contracts by reference to their objective intentions. The Republic’s suggestion that the Sub-Contracts are a legitimate aid to construction because the “Effective Date(s)” for the Supply Contracts post-dated the Sub-Contracts is wrong: as a matter of Swiss law the Supply Contracts came into existence on the day that they were signed but remained conditional until the Contract Price was paid.

Turning to Ground 2, it is said that the factual aspects under the IFA (pleaded by way of example at paragraph 64 of the ACPOC) (ie the alleged bribery, payment of contractor fees, one-sided terms, price paid, subsequent changes to the assets and payment of money to the SPV in question) are a fundamental and necessary part of the claims which need to be made good for any of the causes of actions to be sustained. If those issues are not ventilated, the causes of action cannot succeed. The alleged wrongdoing in procuring the suite of contracts – the Supply Contracts, the Financing Agreements and the Guarantees – lies at the heart of the Republic’s claims.

It is also suggested that the Judge created an inconsistency in considering the question of sufficiency of connection on the basis that the Republic was not a party to the Supply Contracts. Given the Assumption, he ought to have proceeded on the basis that it was. Beyond this, the Privinvest companies challenge the Judge’s reasoning and conclusions in relation to the IFA and each of the individual causes of action:

For the Republic it is said in broad terms that the Privinvest companies’ case is pervaded with both logical and legal fallacies; it is wholly lacking in the necessary analytical rigour. The premise that the Republic’s claims against the Privinvest companies are unsustainable without the IFA is fundamentally erroneous. All of the Republic’s causes of action against the Privinvest companies are available even if the Supply Contracts were entirely valid, lawful and commercial. That is why the Republic made the Concession. The Republic’s position has always been that its claims have only (at best) been peripherally related to the Supply Contracts; the whole nature of its claim is in respect of its putative liability under the Guarantees. Once the Concession is made, there is nothing onto which s. 9 can latch.

In any case, it is said that the two grounds of appeal are erroneous. The Judge’s construction of the Swiss-law governed Arbitration Agreements was correct. It followed his careful consideration of the Swiss law. Having determined the correct principles to apply, his application was “without fault” and the result was the right one. The Republic emphasises that the Judge’s conclusion as to the meaning of Swiss law provisions are findings of fact. The findings, the application of which depended on his understanding derived from them, are to be given particular weight in circumstances where the Judge heard oral evidence from the experts: see Dallah Estate and Tourism Holding Company v The Ministry of Religious Affairs, Government of Pakistan [2009] EWCA Civ 755; [2010] Bus LR 586 (at [28] to [29] per Moore-Bick LJ).

In relation to Ground 1, the Republic suggests that the Judge did not in fact find that the Arbitration Agreements should be “construed narrowly”. Instead, he found that the fact of multiple arbitration clauses suggested a narrower approach to the question of sufficiency of connection. He was entitled to rely on the presence of multiple arbitration agreements and the Sub-Contracts as relevant interpretative context for the objective exercise of contractual construction. And even if he was wrong to do so, the correct objective construction of each Arbitration Agreement was that the parties intended that the scope of each Arbitration Agreement was confined to the legal relationship constituted by the four corners of the relevant Supply Contract.

As for Ground 2, the Republic contends that the challenge involves a direct attack on the Judge’s application of Swiss law, with which the court should not interfere.

As an overarching submission, the Republic emphasises that it is for the Privinvest companies to establish an “absolute right” to arbitrate some or all of the claims against them.

S. 9 provides materially:

Ss. 9(1) and (4) are based on Article II of the New York Arbitration Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958. Their purpose is to give effect to (and respect) the parties' agreement to arbitrate. What it means is that the parties have agreed, not only that the matters under the agreement should be arbitrated, but that they should not be decided by a court (see for example Bridgehouse (Bradford No 2) Ltd v BAE Systems plc [2020] EWCA Civ 759; [2020] Bus LR 2025 (per Males LJ at [73])). The power to stay under s. 9 is not discretionary: if the "matter" in question falls within the scope of the arbitration agreement, the court must grant a stay, unless it is satisfied that the arbitration agreement is void, inoperative or incapable of being performed (see s. 9(4)). The burden of proving (on the balance of probabilities) that the legal proceedings are brought in respect of a matter that must be referred to arbitration is on the party seeking the stay. If the burden is not discharged, the court has no jurisdiction under s. 9 (see JSC Aeroflot Russian Airlines v Berezovsky [2013] EWCA Civ 784; [2013] 2 Lloyds Rep 242 (at [73])).

A "matter" is not the same as a cause of action; it includes any issue capable of constituting a dispute under the relevant arbitration agreement. And a mandatory stay under s. 9(4) can be applied pro tanto (as reflected in the words "so far as they concern that matter" in s. 9(1)).

There are two stages of inquiry for a court (although there may be overlapping considerations): first, to identify the "matters" in respect of which the proceedings are brought; secondly, to assess whether those matters are "matters" which the parties have agreed are "to be referred to arbitration". That is to be resolved by reference to the scope of the relevant arbitration agreement properly construed in context. Not every matter that could theoretically be arbitrable is one that the parties are necessarily to be taken to have agreed as a matter that must be referred to arbitration.

The relevant principles were summarised neatly and sufficiently for present purposes by Popplewell J (as he then was) in Sodzawiczny (Footnote: ⁵):

The position identified by Popplewell J was consistent with (and followed) the earlier decision of the Singapore Court of Appeal in Tomolugen, to which reference should also be made. There Sundaresh Menon CJ (at [111]) addressed the "methodological question", comparing characterisation "at a high level of abstraction" with "a more granular approach". At [113] (Footnote: ⁶) he commented that the courts should guard against taking "an excessively broad view of what constitutes a "matter" or treating it is a synonym for the court proceedings as a whole":

Sundaresh Menon CJ went on (at [121]) to stated that an overly broad approach would be:

Ultimately, whether or not a matter is one "which under the agreement is to be referred to arbitration" turns on the scope of the relevant arbitration agreement, properly construed in context.

As indicated, the analysis proceeds on the assumption that the Republic is bound by the Arbitration Agreements. Equally, whilst Logistics Offshore and Logistics Investments were not themselves party to the Supply Contracts, none of the parties sought to draw any material distinction between their position and that of Holding, Mar and Shipbuilding for the purpose of the preliminary issue. As set out above, it is the Privinvest companies' position that Logistics Offshore and Logistics Investments are entitled to invoke the Arbitration Agreements, a matter to be determined in due course if necessary.

It is trite law that an arbitration agreement is a contractual agreement to which statute dictates that mandatory effect must be given in so far as it applies: Sodzawiczny at [44]. The application of s. 9 can give rise to particular difficulties both as a matter of analysis and procedure, but the sanctity of the parties' agreement takes priority.

Thus, whether or not there is futility in practical terms of any stay is immaterial. Equally, the fact that there may be (on the facts of this case particularly acute) unwelcome case management complications if all or parts of claims are stayed is

I also accept that there is a two-stage test (although the considerations that arise may overlap and it may be convenient to consider the questions together): first to identify the matter and secondly to decide if that matter is one that the parties have agreed can only be arbitrated. Further, the court looks to substance and not form, adopting a practical and common-sense approach. It should guard against placing undue weight on what may be nuanced emphases or artificial characterisations adopted for tactical or other purposes. This is of course not to say that the parties’ pleaded position is to be ignored, but rather to emphasise that the search is for the reality of the dispute.

The Judge made the following clear findings as to Swiss law, having read and heard the evidence of the experts:

There is no proper basis to interfere with these findings, nor was it suggested that there was. What is challenged in reality is not the Judge's findings on Swiss law, but rather his analysis in the later "Overview" section in the Judgment when, faithful to his findings on Swiss law, he carried out the exercise of viewing "sufficiency in the context of the particular case".

Centrally, the Privinvest companies criticise what is said to be a finding by the Judge that the Arbitration Agreements fell to be construed narrowly. The Privinvest companies’ case here is overstated: I do not consider that, fairly read, the Judge made that finding, at least no such finding in such stark terms. What he in fact said (at [95]) was that the fact of multiple arbitration clauses suggested that:

“…in general terms, a narrower approach to the sufficiency of the connection is required.” (Footnote: ⁷) (emphasis added)

This was a broad conclusion to which the Judge was entitled to come on the basis of his earlier conclusions that i) in favorem arbitri was a supplemental principle that did not override the objective exercise required by Swiss law and ii) the relevant connection between the matters said to be arbitrated and each Arbitration Agreement had to be sufficient, something to be viewed in the context of the particular case.

It is clear that the Judge took into account the presence of multiple arbitration clauses and the existence of the EMATUM and MAM Sub-Contracts (each of which followed within days of execution of the relevant Supply Contracts) as “contextual points” only.

The Judge was entitled to accept the evidence of the Swiss law experts that the existence of multiple arbitration agreements was a relevant factor. All three Supply Contracts were said by the Privinvest companies to be part of “a package”, to be considered together. As for the Sub-Contracts (with their English governing law and exclusive English court jurisdiction clauses), they were expressly “back to back” with the Supply Contracts. The Judge was entitled to rely, to the limited extent that he did, on their existence, and to take the view that the Swiss version of the “one-stop shop” principle carried less force in these circumstances.

The Privinvest companies suggest that the Judge made a finding that Swiss law was the same as English law, and so criticise him for not heeding the jurisprudence in Fiona Trust. I do not consider that the Judge made any finding that Swiss law was the same as English law. What he said (at [73] of the Judgment, in the context of introducing the expert evidence on Swiss law,) was this:

This was no more than a passing comment before setting out his "observations and findings" on the expert evidence. In any event, Fiona Trust does not countermand a context-sensitive approach to construction (see [5] per Lord Hoffmann).

In summary, I see no good reason for interfering with the Judge's findings as to the general approach to be taken to the question of construction as a matter of Swiss law (Footnote: ⁸).

However, as will become apparent, whether or not the Judge was right to adopt a "narrower" approach does not make a material difference to the outcome on appeal. What lies at the heart of this appeal is whether or not the Judge's application of the law to the facts of the case is sustainable. This is the issue raised under Ground 2, to which I now turn.

It is important to bear in mind that this appeal is limited to a review and does not proceed by way of re-hearing (see CPR 52.21(1)). The position is therefore to be

I accept at the outset that sufficiency of connection is a nuanced concept in respect of which there is scope for reasonable disagreement. It was for the Judge to carry out what was an evaluative exercise in context. An appellate court should be slow to interfere - absent an obvious error of principle or approach – with the Judge’s conclusions on the application of the law to the facts.

Although the Judge considered the IFA last, it is convenient to consider it first on appeal, not least given the importance attached by the Privinvest companies to the consequences of the Concession (or, more accurately, of a finding that the Judge was wrong to decide that the IFA fell outside the scope of the Arbitration Agreements). It is also logically the anterior question.

The Judge's reasoning with regard to the IFA is, with respect, difficult to follow. It may be that the Judge was (even if only sub-consciously) influenced by the instinctive desire to avoid fragmentation. (By the time that he reached this part of his decision, he had rejected the submission that any of the causes of action fell within the scope of the Arbitration Agreements. Nevertheless, as the authorities make clear, this would not have been a permitted consideration.)

The Judge first found that, as a matter of objective intent, it was unlikely that the parties would have agreed to a stripping out of one particular allegation for arbitration. That reasoning depends on the correctness of his findings on scope elsewhere (addressed below); but in any event whether a plea is within scope depends on the substance of what is pleaded and the construction of the arbitration agreement in question (and not on what other matters are pleaded). He further relied on the fact that the IFA did not involve any legal analysis of any particular contractual term (as opposed to the commerciality of the contract as a whole). This distinction is, with respect, illogical. On either basis the terms of the contract are in issue; and it can be said that an allegation relating to the commerciality of the contract as a whole is more, not less, closely connected to the contract (and a paradigm example of the type of issue suitable for determination by an arbitral tribunal).

The Judge then relied on the fact that no relief was claimed pursuant to the IFA.

In my judgment it is clear that the IFA was sufficiently connected to the Supply Contracts and so fell within the scope of the Arbitration Agreements. The IFA was an allegation that the Supply Contracts were “instruments of fraud” or “shams”. It is hard to imagine a plea more directly related to a contract (apart from a direct claim for

I would therefore allow the appeal against the Judge's conclusion that the IFA was not sufficiently connected to the Arbitration Agreements. It falls within scope and the Privinvest companies are entitled to relief accordingly.

As set out above, the Republic anticipates this development by contending that it does not "need" the IFA to succeed on its claims against the Privinvest companies. The IFA forms no part of its claims against them (Footnote: ¹⁰); the court can proceed as if the IFA (and the UMIFA) were deleted from its pleaded claim against the Privinvest companies. Thus the IFA can be ignored for all purposes so far as the claims against the Privinvest companies are concerned; whether or not the Supply Contracts were valid and genuine is simply not in issue between them. Adopting a granular analysis of each of the claims advanced, none touch on anything the subject-matter of the Arbitration Agreements.

This of course was not a position advanced before the Judge and it did not otherwise arise for him, given his finding on the IFA.

The central flaw in the Republic's approach is that it addresses the question of what is and is not a "matter" for the purpose of s. 9 solely from the Republic's perspective as claimant. The fact that the Republic does not deem it necessary to succeed on the IFA in order to succeed on its claims against the Privinvest companies does not mean that the IFA is not a "matter" for the purpose of s. 9. This is to ignore reasonably foreseeable defences.

The Judge fell into the same error. Thus, by way of example, at [94] of the Judgment when considering the emphasis on the provision of the Guarantees, he viewed the matter only “from the Republic’s point of view”. At no stage does he appear to have considered the question of reasonably foreseeable defences when identifying the scope of matters for the purpose of s. 9.

As set out above, the search under s. 9 is for the substantial issues to which the claim gives rise, including identified or reasonably foreseeable defences. The rationale for the inclusion of reasonably foreseeable defences is obvious: it is to give effect to the principle of party autonomy. Otherwise, where there is an arbitration agreement wide enough to cover the dispute comprised by the defence, the parties' agreement that it should be decided in arbitration would be frustrated (see in particular [43(4)] and [46] of Sodzawiczny).

Even with the IFA effectively removed from the pleaded claim against the Privinvest companies, the validity and genuineness of the Supply Contracts (and the circumstances surrounding their entry and their performance) are matters bound to be relied upon by the Privinvest companies at least as part of the defence of the allegations of dishonesty maintained against them (Footnote: ¹¹). At the very least, it is reasonably foreseeable that they will be issues raised by way of defence. They are substantial (and not peripheral or tangential) matters: the Supply Contracts (and the SubContracts) were the only contracts into which the Privinvest companies entered and, as considered further below, were an integral part of what was a suite of interconnected transactions.

Further, they are issues which will be in dispute: the Republic does not accept that the Supply Contracts were bona fide. (The position might be different if the Republic not only abandoned the IFA but also accepted (for all purposes) that the Supply Contracts were unobjectionable, valid and genuine contracts. But that is clearly not (and could never in reality be) its position, given (amongst other things) its allegation of a single fraudulent (conspiratorial) scheme.)

Thus, at the first stage of the exercise, the matters in respect of which the proceedings are brought against the Privinvest companies include the question of whether or not the Supply Contracts were valid and genuine commercial contracts. The Republic cannot avoid that conclusion simply by referring to the scope of what is necessary for it to establish its claims against the Privinvest companies (without the IFA) (as opposed to the scope of the issues naturally arising as a result in the proceedings against the Privinvest companies as a whole).

I turn then to the second stage of the exercise, and whether or not the defence (that the Supply Contracts were valid, genuine and bona fide commercial contracts) is sufficiently connected to the Supply Contracts. The defence is the mirror reflection of the IFA: it asserts the integrity of the Supply Contracts as opposed to alleging their dishonesty. Like the IFA, and even adopting the narrowest of tests, it is clearly sufficiently connected to the Arbitration Agreements: it relates directly to the Supply Contracts, raising a dispute as to their validity, genuineness and commerciality.

It is also a defence that arises in response to every cause of action pleaded against the Privinvest companies: bribery, dishonest assistance, conspiracy and knowing receipt (and the proprietary claims).

The result is that all of the claims against the Privinvest companies are matters which fall within the scope of the Arbitration Agreements. Objectively construed, this is what the parties are to be taken to have intended, acting reasonably and in good faith.

For the sake of completeness, I would add this: the Privinvest companies’ position has been to accept that the plea at paragraph 133.2 of the ACPOC (relating to the entry by Credit Suisse into the Proindicus and EMATUM Guarantees as one of the unlawful means of conspiracy) is not within scope because it “does not relate to the Privinvest companies”. I am not convinced that this concession is correct. As I understand the

The conclusion at paragraph 101 above sits comfortably with a common-sense (and still granular) approach to the issues raised in the Republic's claims against the Privinvest companies. The underlying analysis reveals the fundamental artificiality of seeking to strip the question of the validity and genuineness of the Supply Contracts out of the relevant factual equation.

I do not accept that, as appeared to be suggested for the Privinvest companies, there is an automatic fall-out of – or “domino” effect on - the causes of action against the Privinvest companies, once it is accepted that the IFA is within the scope of the Arbitration Agreements.

However, the Republic’s analysis appears to me to be devoid of reality. The claims arise out of a series of interdependent contracts: the Supply Contracts (which came first), the Facility Agreements and the Guarantees supporting them. The Republic was not a third party guarantor; the purpose of the Supply Contracts was to protect the EEZ. The Supply Contracts, with the Facility Agreements, the Guarantees and the bribes were together (and each) the key elements of an allegedly fraudulent scheme designed to obtain, and to render the Republic liable for, around US$2 billion. The fact that a key aim of the conspiracy was pleaded as being the provision of the Guarantees does not alter this. It is not said to be the sole aim. Even if it was, the Supply Contracts were a key element of what is said to have been a single fraudulent scheme allegedly designed to achieve that aim. This is the position not only as a matter of substance, but also form: it is reflected in particular in paragraphs 26 to 28 of the ACPOC.

An analysis of the individual causes of action bears this out.

On any fair reading, the factual premise of the bribery claim is that bribes were paid to secure the three transactions, including the Supply Contracts. Indeed, the Republic expressly pleaded that the bribery was used to procure the Supply Contracts (in the IFA):

“…28.1 the three transactions involved the payment of large bribes to government officials of the Republic, including to Mr Chang;…

The bribes and secret commissions the Republic understands to have been received by inter alios the CS Deal Team Defendants and the Mozambican Officials from the Privinvest Defendants are set out in Schedule 2 hereto.”

Schedule 2 set outs the bribes (or kickbacks) alleged. It is to be noted that the Mozambican Officials alleged to have been recipients extend well beyond Mr Chang (the signatory of the Guarantees). Allegations are made that Mr do Rosario, Mr Matusse, Ms Dove, Mr Nhangumele, Mr Langa and Mr Ndambi Guebuza, each also received very substantial bribes or kickbacks.

The Judge recorded the Republic’s pleaded case (at [99] (Footnote: ¹³) of the Judgment):

“It is obviously correct that part of the Republic’s case on bribery is that the reasons for paying the bribes included the procuring of the Supply Contracts along with their financing and on the Guarantees.”

I do not accept that, as a matter of substance, the pleaded case that the bribes were paid to procure the Supply Contracts can be ignored on the basis of the Republic’s suggestion that the pleaded allegation in paragraph 64 (and 79 and 87) of the ACPOC is a particular which is relevant only to the unlawful means pleaded at paragraph 133. That this would be wholly artificial is borne out for example i) by the summary of the

Although I do not consider that the Judge was right to take into account the question of timing of any election as to remedy, the Republic’s claim for an account of profits (under which the Republic could claim the proceeds of the Supply Contracts) does not inform the outcome on appeal to any material extent. Nor am I persuaded that any reliance by the Privinvest companies on the doctrine of culpa in contrahendo advances their position. It involves a detailed analysis of the evidence of Swiss law. There is a dispute as to whether the doctrine was relied upon fully or fairly below. The Judge was entitled to focus on the “overarching” question of sufficiency of connection.

Further, and in any event, the bribery claim will give rise (inevitably and at least reasonably foreseeably) to a staunch defence by the Privinvest companies of the validity, genuineness and commerciality of the Supply Contracts.

There are two acts of dishonest assistance alleged by the Republic against the Privinvest companies:

As set out above, the Judge ought to have held that the allegations of bribery fall within the scope of the Arbitration Agreements. As for the entry into the Supply Contracts, the Judge commented that this was a “less direct form of assistance” (than the bribes) which did not “really [add] … much to the claim”. I do not consider that this consideration was relevant to the question of sufficiency of connection.

As with the UMIFA (which the Republic no longer positively asserts was outside the scope of the Arbitration Agreements), the Judge ought to have held that the second act of alleged assistance, namely entry into the Supply Contracts, is sufficiently connected to the Arbitration Agreements. The Republic’s position (to the effect that the fact of entry into the Supply Contracts is not in dispute and the propriety of that entry is immaterial to the only relevant question (of causation)) is counter-intuitive. First, in order to be relevant the Supply Contracts must have involved or caused a breach of fiduciary duty on the part of the Mozambican Officials and so in some way have been improper. Secondly, dishonesty on the part of the Privinvest companies is an essential ingredient of the cause of action against them.

Further and in any event, the dishonest assistance claim will give rise (inevitably and at least reasonably foreseeably) to a staunch defence by the Privinvest companies of the validity, genuineness and commerciality of the Supply Contracts.

The Republic’s position in respect of its knowing receipt/proprietary claim against the Privinvest companies is somewhat unsatisfactory. Whilst it eschews any claim for sums received by the Privinvest companies under the Supply Contracts, there is no attempt to identify any other assets received by the Privinvest companies traceably representing the Republic’s assets.

The short answer here, again, is that the claims will give rise (inevitably and at least reasonably foreseeably) to a staunch defence by the Privinvest companies of the validity, genuineness and commerciality of the Supply Contracts.

The Republic relies on six unlawful means:

The Judge held that it could not be right that the inclusion of the UMIFA could “infect” the entire conspiracy claim, proceeding on the basis that none of the other matters fell within scope. However, as set out above, even without consideration of the further matters identified in paragraphs 121 and 122 below, the Judge ought to have held that four out of the six means relied upon fell within scope (ie the bribery, the UMIFA, dishonest assistance and knowing receipt allegations).

Further, the essence of the conspiracy claim is the alleged conspiratorial agreement or combination. The Republic pleads that one aim of that agreement or combination was to render the Republic liable under the Guarantees. But, as set out above, it is to take too artificial an approach to isolate the Guarantees from the Supply Contracts which they supported. The substance of the dispute relates to a single fraudulent scheme involving all three transactions, namely the Supply Contracts, the Facility Agreements and the Guarantees. The conspiracy claim is a matter sufficiently connected to the Arbitration Agreements to fall within scope.

Further and in any event, once reasonably foreseeable defences are taken into account, the Judge ought to have held that the conspiracy claim as a whole was a matter sufficiently connected to the Arbitration Agreements: the validity of the Supply Contracts is a matter upon which the Privinvest companies will wish to rely in support of their denial of participation in any conspiratorial agreement or unlawful means of the type alleged.

Overall the Judge, properly applying his findings of Swiss law, ought to have held that there was a sufficient connection between i) the IFA and each of the causes of action (in bribery, dishonest assistance, unlawful means conspiracy and knowing receipt (and the claim for proprietary relief) and ii) the Arbitration Agreements for those matters to fall within scope. Objectively construed, this is what the parties are to be taken to have intended, acting reasonably and in good faith.

For these reasons, I would allow the appeal. The Republic's claims against the Privinvest companies fall within the scope of the Arbitration Agreements. Whether or not the Republic is in fact a party to the Arbitration Agreements and whether or not Logistics Offshore and Logistics Investments can invoke the Arbitration Agreements remains to be seen.

I agree.

I also agree.