Interim relief

The court has power under s44 of the Arbitration Act 1996 to protect the subject matter of the arbitration, and this includes preventing one party from breaking the substantive agreement to which the arbitration relates in a manner which might render the arbitration meaningless. The power can only be exercised in the case of emergency, and also the circumstances must be such that the arbitrators themselves cannot act. This normally means that the application to the court will be at a time before the arbitrators have been appointed. Sabmiller Africa v East African Breweries Ltd [2009] EWHC 2140 (Comm) illustrates the principles to be applied to the court when faced with a pre-arbitration application.

Sambiller: the facts

The parties were both brewers in Africa. Sabma and Tanzania Breweries Ltd (TBL) held up to 85% of the brewing marking in Tanzania, with EABL competing through an unprofitable subsidiary. In Kenya the position was reversed, EABL being the market leader and Sabma competing unprofitably. In 2002 the parties entered into arrangements whereby each sold to the other its shares in the unprofitable competitor in return for a 20% shareholding in the purchaser. The parties then entered into brewing and distribution arrangements. As far as Tanzania was concerned, the arrangement was as follows. Under a share purchase agreement EABL sold 100% of the shares in its subsidiary to TBL, and TBL allotted 20% of its shares to EABL. TBL was then to have for five years the exclusive right to brew and distribute EABL’s products in Tanzania. Either party could terminate the agreement for fundamental breach. There was also a ‘put option’ in a shareholders’ agreement, under which, in the event of the occurrence of a ‘put event’, EABL had the right to sell its shares in TBL to Sabma at a fair market value. The various arrangements were all subject to arbitration.