In December 2022, BHP Group UK and BHP Group Australia (“BHP”) brought an Additional Claim against Vale S.A. (“Vale”), the well-known Brazilian mining company. In that Additional Claim, BHP contend that if they are held to be liable to the Claimants (which they deny) then Vale would also be liable to the Claimants.
Vale challenged the Court’s jurisdiction, but that was rejected by O’Farrell J in August 2023 (see previous OEC news item here). In September 2023, Vale then brought a challenge under s.9 of the Arbitration Act, contending that BHP’s claim against Vale was subject to a binding arbitration clause in a Shareholders’ Agreement between BHP Brasil (an indirect subsidiary of BHP Group Australia), Vale and Samarco (the company which owned the Dam). Vale contended that, as a matter of Brazilian law (the law of the Shareholders’ Agreement), the arbitration clause would bind non-parties such as BHP in some circumstances said to be present here.
That challenge was tried by Waksman J on 12 and 13 December 2023, who heard evidence from the Brazilian law experts, and then rejected that challenge in a judgment dated 21 December 2023.
The application turned on a detailed consideration of the nature of the claim brought and the clause in question, bearing in mind the applicable principles of Brazilian law. But a point arose under English law as to whether the question of a non-party being ‘bound’ by an arbitration clause arose under s.9(1) or s.9(4) of the Arbitration Act. Vale submitted that it arose under s.9(4), relying on the decision of Lewison LJ in Lifestyle Equities v Hornby Street [2022] EWCA 51 at [96]-[98]. If that were right, it would be a respondent’s burden to disprove that it was bound by the clause, rather than the applicant’s burden to prove that the respondent was so bound. Waksman J rejected that submission, and agreed with BHP that the question arose under s.9(1), and thus it was Vale’s burden to prove. Waksman J noted that Lewison LJ did not appear to have heard argument on this particular point, it was obiter, and in any event was to be treated as impliedly overruled by the Supreme Court’s decision in Mozambique v Privinvest [2023] UKSC 32. As to the latter, Waksman J explained that
“[41] …This is because the Court expressly approved at paragraph 35 of the judgment of Lord Hodge, the expression of some of the underlying principles set out by Carr LJ in the Court of Appeal:
“..She also correctly recognised that there were two stages to the inquiry by the court when addressing an application for a section 9 stay: (i) to identify the matters in respect of which the proceedings are brought, and (ii) to assess whether those matters are matters which the parties have agreed to refer to arbitration.”
[42] It is implicit in that statement that the Court is to examine the matters arising in the proceedings between the parties and is then to assess whether they were ones which “the parties” agreed to refer to arbitration. If there is an issue as to whether one of the parties to the proceedings was a party to the clause at all, that should be considered in the context of these primary questions which fall under s9(1), and not s9(4).”
Daniel Toledano KC and Nicholas Sloboda appeared for BHP, instructed by Slaughter and May.
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