Republic of Sierra Leone v SL Mining Limited
Republic of Sierra Leone v SL Mining Limited  EWHC 286 Comm, 15 February 2021
In the High Court of Justice, Queen’s Bench Division, Commercial Court: Sir Michael Burton GBE, Sitting as Judge of the High Court
Charlie Lightfoot instructed by Jenner & Block (London) LLP, for the Claimant
Ali Malek QC, Tom Sprange QC and Kabir Bhalla instructed by King and Spalding International LLP, for the Defendant
CONTRACTUAL DISPUTE BETWEEN PARTIES: MULTI-TIER DISPUTE RESOLUTION PROVISION: PARTIES TO FILE FOR ARBITRATION IF NO AMICABLE SETTLEMENT REACHED WITHIN 3 MONTHS: NON-COMPLIANCE WITH MULTI-TIER DISPUTE RESOLUTION PROVISION: WHETHER NON-COMPLIANCE VITIATED TRIBUNAL’S JURISDICTION: WHETHER NON-COMPLIANCE A MATTER OF ADMISSIBILITY: CHALLENGING AN AWARD UNDER SECTION 67 OF THE ARBITRATION ACT 1996
This was a case where the respondent to an arbitration challenged the jurisdiction of the tribunal under section 67 of the Arbitration Act 1996 on the basis of non-compliance with a multi-tier dispute resolution provision. The English Commercial Court held that there was no basis for a challenge to the Partial Final Award under section 67 of the Arbitration Act as non-compliance with a multi-tier dispute resolution provision is an issue of admissibility rather than jurisdiction.
Case Note contributed by Sri Azali BB (Human Resource Management & Business Law), Paralegal at Penningtons Manches Cooper LLP Singapore.
The proceedings concerned a dispute which arose out of the suspension and subsequent cancellation of a 25-year mining licence and licence agreement (MLA) granted by Republic of Sierra Leone to SL Mining Ltd. The mining licence agreement contained a multi-tier dispute resolution provision, namely clause 6.9 (c), which stated that: “In the event that the parties shall be unable to reach an amicable settlement within a period of 3 (three) months from a written notice by one party to the other specifying the nature of the dispute and seeking an amicable settlement, either party may submit the matter to the exclusive jurisdiction of a Board of 3 (three) Arbitrators who shall be appointed to carry out their mission in accordance with the International Rules of Conciliation and Arbitration of the… ICC…” –see fn.1.
Following the cancellation of the mining licence agreement by Sierra Leone, SL Mining issued a formal Notice of Dispute on 14 July 2019. On 20 August 2019, SL Mining filed an Application for Emergency Measures under the International Chamber of Commerce (ICC) Emergency Arbitration Rules. The ICC Emergency Arbitration Rules required SL Mining to file its Request for Arbitration (RFA) within 10 days of the Application for Emergency Measures – which in this case, meant that the RFA had to be filed by 30 August 2019. SL Mining proposed to defer service of its RFA to 14 October 2019 (which was the end of the 3-month cooling off period referred to in clause 6.9) but Sierra Leone refused that proposal. Hence, SL Mining served its RFA on 30 August 2019 and the arbitration commenced around 5 weeks before the end of the cooling off period.
Sierra Leone challenged the jurisdiction of the Tribunal on the basis that no arbitration proceedings could be commenced before 14 October 2019, being 3 months from the Notice of Dispute. The Tribunal concluded in the Partial Final Award that the multi-tier dispute resolution provision had indeed been complied with and that SL Mining’s claim was admissible.
Challenging the Partial Final Award and the Issues of Law
Sierra Leone challenged the Partial Final Award in the English Commercial Court under section 67 of the Arbitration Act 1996 (the “Act”) – see fn.3 - which allows a party to challenge the jurisdiction of the Tribunal. The issues of law before the English Commercial Court were:
(i) whether Sierra Leone’s challenge to the alleged prematurity of the RFA was a challenge to the substantive jurisdiction of the Tribunal and thus within section 67;
(ii) if so, had there been consent by Sierra Leone to the issue of the RFA or waiver of any condition precedent to the commencement of arbitration proceedings, if needed;
(iii) what was the proper construction of the multi-tier dispute resolution clause; and
(iv) did SL Mining breach that clause.
Decision of the English Commercial Court
On issue (i), the Commercial Court found that there was no basis to challenge the award under section 67 of Act. A challenge under section 67 had to be a challenge to the substantive jurisdiction of the Tribunal as defined by section 30 of the Act.
In particular, Sierra Leone relied on section 30(1)(c) – see fn.2 - of the Act to argue that the case was not submitted in accordance with the arbitration agreement, as the multi-tier dispute resolution clause was not complied with. This argument was, however, rejected, because there is a clear distinction between admissibility and jurisdiction. If the issue relates to whether a claim should not be heard by arbitrators at all or at least not yet, the issue is one of admissibility – the decision of the Tribunal is final and section 30(1)(c) does not apply. If the issue relates to whether a claim could not be brought to arbitration, the issue is ordinarily one of jurisdiction and hence subject to further recourse under section 67 of the Act. In this case, the issue was not whether the claim was arbitrable, but whether the claim was presented too early – a question of admissibility, and this was a matter for the Tribunal to determine rather than the court. Therefore, section 30(1)(c) and section 67 does not apply.
Moreover, the Judge found that international authorities and commentaries support the case that alleged non-compliance with multi-tier dispute resolution provisions does not relate to the question of the Tribunal’s jurisdiction. In supporting his decision, the Judge cited two recent decisions of the Singapore Court of Appeal in BBA v BAZ  2 SLR 453 and BTN v BTP  SGCA 105 which found that cases involving alleged premature arbitration/fulfilment of pre-conditions to arbitration such as time limits, were matters of admissibility and not jurisdiction.
On issue (ii), the court had found that by rejecting SL Mining’s proposal to defer service of the RFA to 14 October 2019 and instead insisting on service of the RFA on 30 August 2019, Sierra Leone had waived its right to assert non-compliance with the three-month cooling off period.
On issues (iii) and (iv), the court found obiter that there was no breach of the multi-tier dispute resolution clause. On its proper construction, clause 6.9 was not an absolute bar to bringing proceedings within three months. Instead, the three-month cooling off period was a window in which the parties could explore settlement and, in the event that the objective of an amicable settlement could not be achieved, proceedings could indeed be brought before the end of the cooling off period. Given the evidence and facts of the case, the Judge found that as at 30 August 2019, there was no chance of an amicable settlement by 14 October 2019 - even if the three-month period had not been waived by Sierra Leone. Therefore, there had been no failure to comply with clause 6.9(c).
This decision provides clarity regarding the distinction between admissibility and jurisdiction in English arbitration law, namely that questions of compliance with multi-tier dispute resolution provisions are a procedural matter which will be determined by the Tribunal and that non-compliance with a multi-tier dispute resolution provision is not a basis on which to challenge the jurisdiction of the Tribunal before the English Court under section 67 of the Act. The judgment here also provides a clearer understanding and interpretation of a multi-tier dispute resolution clause – that a cooling-off period or an obligation to negotiate does not constitute an absolute bar to the commencement of arbitration proceedings.
Fn.1. 6.9 Interpretation and Arbitration
a) Except as may be otherwise herein expressly provided, this Agreement shall be construed, and the rights of [the Claimant and the Defendant] hereunder shall be determined, according to the Laws of Sierra Leone.
b) The parties shall in good faith endeavour to reach an amicable settlement of all differences of opinion or disputes which may arise between them in respect to the execution performance and interpretation or termination of this Agreement, and in respect of the rights and obligations of the parties deriving therefrom.
c) In the event that the parties shall be unable to reach an amicable settlement within a period of 3 (three) months from a written notice by one party to the other specifying the nature of the dispute and seeking an amicable settlement, either party may submit the matter to the exclusive jurisdiction of a Board of 3 (three) Arbitrators who shall be appointed to carry out their mission in accordance with the International Rules of Conciliation and Arbitration of the… ICC. ……
d) In the event of any notified dispute hereunder, both parties agree to continue to perform their respective obligations hereunder until the dispute has been resolved in the manner described above.
Arbitration Act 1996
30 Competence of tribunal to rule on its own jurisdiction.
(1) Unless otherwise agreed by the parties, the arbitral tribunal may rule on its own substantive jurisdiction, that is, as to –
(a) whether there is a valid arbitration agreement
(b) whether the tribunal is properly constituted, and
(c) what matters have been submitted to arbitration in accordance with the arbitration agreement
67 Challenging the award: substantive jurisdiction
(1) A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court –
(a) challenging any award of the arbitral tribunal as to its substantive jurisdiction; or
(b) for an order declaring an award made by the tribunal on the merits to be of no effect, in whole or in part, because the tribunal did not have substantive jurisdiction.