Arbitrating shareholders’ disputes and beyond – the Mauritian Supreme Court re-affirms its non-interventionist and pro-arbitration stance

The dispute arose among shareholders of Chappal Energies Services (Mauritius) Limited (Chappal Mauritius), a global business corporation licensed by the Financial Services Commission. The Applicant had sought an interim injunction under section 23 of the IAA to prevent a board meeting from being held. Before the matter could be heard, the Applicant withdrew the application—prompting the Respondents to seek costs of EUR 72,000 on either an indemnity or standard basis.

The Supreme Court therefore shifted from considering the merits of the injunction to determining whether costs should be awarded. In declining to do so, the Supreme Court articulated several key principles on interim measures, judicial intervention, and cost discretion under the IAA.

Anticipated Impact on Shareholder Disputes

The Intermediate Investment Holdings Ltd v Imevbore & Ors 2026 SCJ 186 (IIHL Case) is expected to influence future shareholder disputes in Mauritius in several ways:

• Increased reliance on arbitration, with courts intervening only for urgent interim measures.
• Clearer thresholds for judicial intervention, ensuring courts act only when arbitral mechanisms cannot provide timely relief.
• Greater emphasis on reasonable, good faith conduct, with cost awards reflecting necessity and proportionality.
• Alignment with international best practices, reinforcing Mauritius’ reputation as a modern arbitration jurisdiction.

Key Factors Considered by the Supreme Court

In assessing whether costs should be awarded, the Supreme Court examined several considerations under the International Arbitration Act 2008 (IAA) and the Supreme Court (International Arbitration Claims) Rules 2013:

• Reasonableness of the Application — Whether the Applicant acted appropriately in seeking an ex parte interim injunction rather than approaching an emergency arbitrator.
• Urgency — Whether the circumstances justified invoking the Supreme Court’s powers under section 23(5) of the IAA.
• Reasonableness of the Withdrawal — Whether withdrawing the application 22 days later, once the urgency had passed, was justified.
• Conduct of the Parties — Including whether the Respondents acted reasonably in filing multiple witness statements containing legal submissions after being informed of the withdrawal.

The Supreme Court ultimately found that the Applicant had acted reasonably and in good faith, while the Respondents had not. Their extensive filings and request for EUR 72,000 in costs were deemed unnecessary and disproportionate. The Supreme Court therefore exercised its discretion to decline any award of costs.

Key Principles Clarified in the IIHL Case

1. Judicial Intervention in Arbitration

• The IAA mandates minimal court intervention, though the Supreme Court retains jurisdiction to grant interim measures (sections 6 and 23).
• Any intervention must support, not disrupt, the arbitral process—regardless of whether the seat of arbitration is Mauritius or elsewhere.

2. Discretion on Costs

• The Supreme Court’s discretion is guided by Rule 19 of the 2013 Rules.
• The Supreme Court will consider all the circumstances of the case, including factors such as parties’ conduct, partial success, and settlement offers.
• As there was no determination on the merits and no unreasonable conduct by the Applicant, costs were not awarded.

3. Reasonableness and Good Faith

• The Applicant acted reasonably in seeking interim relief when no tribunal or emergency arbitrator could act effectively.
• The urgency was genuine, given imminent board decisions affecting shareholders’ rights.

4. Application of International Arbitration Standards

• The IAA must be interpreted consistently with the UNCITRAL Model Law, including international case law and commentary.
• Domestic arbitration principles are not relevant when interpreting the IAA.

5. Reasonableness of Legal Costs

• Costs must be proportionate and justified, consistent with UNCITRAL and LCIA guidance.
• The Respondents’ claim for EUR 72,000 was found excessive and unnecessary.

6. Withdrawal of Applications

• Withdrawal is not penalised when done reasonably and without bad faith.
• Once urgency had lapsed, the Applicant was entitled to withdraw and allow arbitration to proceed.

Broader Implications for Future Disputes

Reinforcing Arbitration as the Primary Forum

• Shareholder disputes subject to arbitration clauses must be resolved through arbitration.
• Courts intervene only to facilitate the process, not to duplicate or replace it.

Guidance on Interim Measures

• Courts may act only when the arbitral tribunal or emergency arbitrator cannot provide effective relief.
• The IIHL Case illustrates when court intervention is justified due to timing and urgency.

Emphasis on Good Faith and Proportionality

• Parties must act promptly and reasonably when seeking interim relief.
• Excessive or unnecessary litigation conduct will be scrutinised.

Uniform Interpretation of the IAA

• Courts must interpret the IAA in line with the Amended Model Law and international materials.
• Domestic arbitration jurisprudence is not applicable.

Contribution to this article: Jenisha Dewkurun, pupil to Sharmilla Bhima.