Mauritius: The Supreme Court Of Mauritius Re-Affirms Its Pro-Arbitration Approach And Brings Clarity On Referral Under The International Arbitration Act 2008

In Mall of Mont Choisy Limited v Pick N' Pay Retailers (Proprietary) Limited & Ors 2015 SCJ 10 (Mont Choisy) the defendants challenged the jurisdiction of the Commercial Division of the Supreme Court (Commercial Division) on the basis of (1) an arbitration clause in the rental agreement entered into by the parties and (2) the Mauritian Civil Code. However, reliance on the Mauritius Civil Code was subsequently dropped in favour of section 5 of the International Arbitration Act 2008 (IAA).

Section 5(1) of the IAA casts an obligation on a Court‟ (as defined thereunder) to automatically transfer an action of which it has been seized to the Supreme Court provided the party who requests the transfer does so "not later than when submitting his first statement on the substance of the dispute". Furthermore, under rules 13(1) and (2) of the Supreme Court (International Arbitration Claims) Rules 2013 (Rules), an application for transfer under section 5(1) of the IAA must be made either by an affidavit or a written statement which in turn is supported by written evidence and any other supporting documents.

Once the Supreme Court is in receipt of the transferred action from the Court‟, it must refer the parties to arbitration pursuant to section 5(2) of the IAA. However, it is entitled to decline the referral to arbitration if a party shows, on a prima facie basis, that there is a very strong probability that the arbitration agreement may be null and void, inoperative or incapable of being performed.

In Mont Choisy, consistent with the pro-arbitration approach of the Supreme Court in earlier cases, the Commercial Division exercised its discretion and granted the application for transfer even though the application did not meet the requirements of the Rules. However, the Supreme Court warned when it referred the matter to arbitration, that while it was minded to condone the procedural defect in the application for transfer before the Court‟, it would be less lenient vis-à-vis such irregularities in the future.

Importantly, in Mont Choisy, the Supreme Court addressed the issue that arises when the validity of an arbitration agreement is challenged under section 5(2) of the IAA. It reviewed both the travaux préparatoires to the IAA and foreign approaches to the question and took the view that it was the intention of the legislator that a non-interventionist judicial approach be taken. The latter, which is also known as the prima facie threshold', aims at preventing delaying tactics and follows the principle of competence-competence' by which arbitrators are entitled to be the first to rule on their own jurisdiction.

In this regard, the Supreme Court confirmed that the test to be satisfied when deciding the issue of referral was whether "there is a very strong probability that the arbitration agreement may be null and void, inoperative or incapable of being performed." Also, it fully endorsed the travaux préparatoires by which the prima facie threshold, referred at section 5(2) of the IAA as a "very strong probability", is a very high one. Furthermore, the Supreme Court adopted the principles laid down by the Canadian Supreme Court in Dell Computer Corporation v Union des Consommateurs and Olivier Dumoulin (2007) 2 SCR 80 that the test is likely to be satisfied when the challenge is based on law. However, when the challenge is based on factual issues or a combination of factual and legal issues, then the matter was fit for a referral to arbitration.

Applied to the Mont Choisy scenario, the Supreme Court took the view that this was a fit case for referral as it was a factual issue for the arbitrator to determine whether the signature of a sole director alone was sufficient to bind the plaintiff to the arbitration agreement.

The decision of the Supreme Court in Mont Choisy re-affirms the pro-arbitration approach of the Supreme Court in matters of arbitration. First, on matters of procedure, its caution that the Rules must be adhered to strictly. Secondly, its confirmation that it follows the non-interventionist approach. Finally, it has developed a fundamental point of substance that touches on the test to be applied for determining the prima facie threshold that underpins the non-interventionist approach.

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