The freedom of contracting parties to choose the competent forum to adjudicate disputes arising out of or in connection with their contracts has traditionally been exercised with some degree of levity, which has led to choice-of-forum provisions being termed “midnight clauses”, reflecting the fact that their inclusion is often a matter of last-minute technicality rather than the result of careful deliberation. Whilst there is a wealth of jurisprudence on the pitfalls of pathological jurisdiction clauses, the legal implications of opting for one dispute resolution mechanism instead of another remain less obvious. One factor which is often overlooked is how to enforce the outcome of the dispute resolution process, especially in a cross-border context. Conversely, failure to account for this may result in parties being saddled with a judgment, award or settlement which is devoid of any actual economic value because of barriers to enforcement. It is essential to ensure that parties obtain a meaningful remedy for their claims and effectively resolve their disputes. 

Arbitral Awards

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), of which Mauritius is a signatory, guarantees the free movement of arbitral awards from the State where the award is made (the seat) to other jurisdictions, subject to two potential caveats.

Article I (3) of the New York Convention allows contracting parties to make a reciprocity reservation and/or a commercial reservation. A reciprocity reservation implies that only awards made in a State party to the Convention will be eligible for automatic recognition and enforcement under the laws of the State making such reservation. States making a commercial reservation only apply the Convention to legal relationships which are considered as commercial under their domestic laws. Out of the 172 signatories to the New York Convention, roughly 75 have made either or both reservations.

Mauritius had initially made a reciprocity reservation which was subsequently withdrawn, with the result that all foreign awards, wherever made, are eligible for recognition and enforcement in Mauritius. In addition, awards made in Mauritius would qualify for streamlined recognition and enforcement in all 172 States party to the New York Convention.

As such, to benefit from the streamlined enforcement of an arbitral award under the New York Convention, contracting parties opting for arbitration as dispute resolution mechanism need to verify whether:

• the State where they wish to have their seat is a party to the New York Convention;
• if not, whether the jurisdictions where the award is likely to be enforced (that is, where the other party is established, domiciled or has assets) have made any reciprocity reservation;
• in either case, whether the subject-matter of the legal relationship is deemed to be commercial under the domestic law of the jurisdiction where enforcement may be sought if that jurisdiction has made a commercial reservation.

The New York Convention further allows a jurisdiction to refuse the automatic recognition and enforcement of a foreign award on grounds that the subject-matter of the difference is not capable of settlement by arbitration (i.e. is “inarbitrable”) under the law of the country where enforcement is being sought or where the recognition and enforcement of such an award would be contrary to the public policy of that country. Although the public policy exception has been interpreted narrowly in arbitration-friendly jurisdictions such as Mauritius, “inarbitrability” is an issue which varies across jurisdictions. It is therefore prudent that a due diligence exercise be conducted at the time of conclusion of an arbitration clause to ensure that any dispute arising under the substantive contract is arbitrable under the laws of any jurisdiction where enforcement may be sought and that any award is not likely to offend against public policy as interpreted in that jurisdiction, based on its subject-matter.

Another aspect to be considered is that the scope of the New York Convention is limited to foreign awards, with the result that it does not apply per se to awards made within the State where enforcement is sought. Consequently, where the parties elect as seat a jurisdiction where one of the contracting party may have assets which may be the target of enforcement measures, it is also important to consider whether an award made at the seat is also eligible for a streamlined recognition and enforcement process or will entail further onerous procedures. In Mauritius, domestic awards fall in two categories, namely purely domestic awards and international arbitration awards made in Mauritius. These are not enforced in the same way as foreign awards. In Mauritius, a purely domestic award is subject to exequatur proceedings, whilst an international arbitration award is enforced under the International Arbitration Act which then provides for enforcement under the New York Convention. The International Arbitration Act applicable in Mauritius allow parties to specifically elect that their arbitration be treated as an international arbitration, even if the parties and dispute are all linked only to Mauritius. Such election is most conveniently made at the time when parties are still expecting a smooth sail, at the time of drafting arbitration clause.

Opting for arbitration in the most effective way therefore requires several considerations, all of which are geared towards ensuring the enforceability of the resulting award. The favourable arbitration regime under Mauritian law certainly renders the jurisdiction attractive not only as a seat for arbitration but also as a jurisdiction for enforcement of any resulting arbitral award.

Foreign Judgments

Endeavours to conceive a framework for the recognition and enforcement of foreign judgments (the equivalent of the New York Convention for arbitral awards) have not gained much traction. In July 2019, the Hague Conference on Private International Law proposed a Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters. Five years down the line, the Convention has garnered support from only 28 States and the European Union. As matters stand, in the absence of bilateral or regional treaties, a judgment delivered by the Courts of one State is not automatically eligible for recognition and enforcement in another State. As a result, one of the primary considerations of contracting parties when including a choice of court clause in their contract is whether the resulting judgment is likely to be enforced in the jurisdiction where the other party is incorporated, domiciled or has assets. The procedure for enforcement and grounds for refusal to enforce a foreign judgment vary considerably across jurisdictions and remain ultimately a matter for the discretion of the enforcement court. For instance, it is well known that, until recently, the Dubai Supreme Court would refuse to enforce foreign judgments from English courts on grounds that the foreign court’s jurisdiction should be denied if UAE courts would have international jurisdiction over the dispute. The attractiveness of the courts of England and Wales as forum for adjudicating commercial disputes is therefore negated if the ensuing judgment is refused enforcement on grounds that the enforcement court should have exclusive jurisdiction over the dispute upon application of the private international law rules of the enforcement court.

The difficulties of enforcing a foreign judgment in the absence of a bilateral or regional treaty for the mutual recognition of judgments between States should therefore be an important consideration for parties opting for a choice of court clause and any such choice should be made on the strength of an enforcement opinion under the laws of any potential jurisdiction where enforcement may be sought.

Under Mauritian law, with the exception of money judgments from the courts of England and Wales, no other foreign judgment benefits from automatic recognition and enforcement. Instead, such judgments may be enforced under the Article 546 of the Code de Procedure Civile, provided that the judgment is valid and capable of execution in the country where it was delivered at the time of the application for exequatur; the defendant was regularly summoned to attend the foreign proceedings; the adjudicating court had jurisdiction to deal with the matter submitted to it; and the judgment is not be contrary to any principle affecting public order. If these four conditions are met, Mauritian courts would allow the foreign judgments to be enforced in the same manner as its judgments.

Mediation Agreements

Despite the allure of mediation as dispute resolution mechanism for parties wishing to further their commercial relationship beyond any dispute which may arise in their dealings, the absence of any unified mechanism for the enforcement of mediation settlement agreements has traditionally limited parties’ recourse to mediation. In many jurisdictions, mediation settlement agreements are treated simply as contracts, with the result that, should these agreements not be honored, enforcement would necessitate further litigation for breach of contract. Furthermore, the mediation agreement cannot simply be brought to a foreign court for enforcement, unless that court has jurisdiction over the dispute arising out of the mediation settlement agreement.

In addition, the integrity of the agreement may be challenged under ordinary principles of the contractual law applicable to the mediation settlement agreement, with the result that such agreements are deprived of the finality which is characteristic of judgments and arbitral awards.

In fine, mediation only guarantees final resolution of a dispute where the parties thereto proceed to honour any ensuing mediation settlement agreement.

This state of affairs is set to change with the Singapore Convention on Mediation which has already been signed by 57 parties, including Mauritius. The Singapore Convention on Mediation ensures the recognition and enforcement of mediation settlement agreements for commercial disputes, limiting the grounds on which such agreements may be refused recognition and enforcement.

Despite being a party to the Singapore Convention, Mauritius is yet to integrate the provisions thereof in its domestic laws. Notwithstanding this, there is an argument to be made that a mediation settlement agreement which is subject to Mauritian law may be a transaction having res judicata effect under Article 2052 of the Mauritian Code Civil, which may then open the way to certain limited measures of enforcement, such as insolvency proceedings against companies incorporated in Mauritius.

As such, parties opting to include mediation as a means of resolving their contractual disputes are advised to ensure that:

• any ensuing agreement would be recognized and enforced in any jurisdiction where the other party has asset either under a treaty such as the Singapore Convention, or otherwise under the domestic laws of that jurisdiction;
• alternatively, that that jurisdiction is competent to determine a dispute arising under the mediation settlement agreement in case of refusal of a party to honour its obligations under the said agreement to avoid the need to first resort to a competent jurisdiction to enforce the mediation settlement agreement before seeking actual enforcement measure where assets are located.

Concluding Remarks

In conclusion, parties are only able to derive actual benefit from their dispute resolution mechanism if any resulting award, judgment or agreement is enforceable and any issue affecting enforceability ought to be considered when opting for a dispute resolution mechanism and when drafting the dispute resolution clause. Mauritius has a favourable enforcement regime for arbitral awards and foreign judgments. Our courts have also shown a commendable willingness to embrace international jurisprudence on the enforcement of foreign arbitral awards. This alignment with global standards has played a pivotal role in establishing a favourable environment for international arbitration which can only serve as an appealing factor to international businesses and improve the position of the jurisdiction as a prime destination for cross-border trade and investment.