Setting aside a notice of discontinuance

In Sheltam Rail Co (Pty) Ltd v Mirambo Holdings Ltd [2008] EWHC 829 (Comm) the claimant commenced proceedings to challenge an award on jurisdictional grounds, and then sought to bring the proceedings to an end by serving a notice of discontinuance. The question for Mr Justice Aikens was whether the notice should be set aside so that the validity of the award could be determined by the English court, or whether it was appropriate to leave the jurisdictional validity of the award an open question which could potentially be raised in enforcement proceedings abroad. Unsurprisingly, Aikens J held that a notice of discontinuance should in principle be set aside in those circumstances.

Sheltam: the facts

A consortium agreement was entered into between a number of parties, including Sheltam (a South African company), Mirambo (a Tanzanian company) and Primefuels (a Kenyan company). The agreement provided that the parties would bid jointly for concessions to run railways in Kenya and Uganda by means of a new company, Rift Valley Railway Co (RVR). Sheltam, as the ‘leader’, was to arrange for the drafting of a shareholders’ agreement if the consortium was successful. The parties agreed that any disputes would be resolved by arbitration in London. In the event, late in 2005 the concessions were awarded to the consortium, and RVR was duly formed in Mauritius. Subsequently, however, Sheltam purported to exclude Mirambo and Primefuels from participation on the basis that they had failed to sign the shareholders’ agreement. Their response was that the shareholders’ agreement did not comply with the terms of the consortium agreement.