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High Court Blocks Lebanese Arbitration as a Waste of Time and Money

Coinciding court and arbitration proceedings, dealing with similar or identical issues but in different jurisdictions, can often be oppressive and amount to a waste of time and money. The High Court found as much in a case concerning a family dispute in respect of a large Middle Eastern engineering and construction company.

After a wealthy founding shareholder of the company was incapacitated by a stroke, his daughter claimed that two of her brothers, and others, had misappropriated his assets. Since her father’s death they were also said to have conspired to deprive her of her entitlement to shares in the company.

She launched proceedings in London on the basis that one of those said to have been engaged in wrongdoing was domiciled in England. However, her brothers and two corporate entities later launched arbitration proceedings in Lebanon. The matters in point in both sets of proceedings were the same or very similar and, although the daughter had played no part in the arbitration, the Lebanese panel had accepted jurisdiction to consider the dispute.

In granting the daughter an interim injunction, effectively stalling the arbitration, the Court noted that it had already been established in English proceedings that, as the daughter was not a shareholder, she was not bound by an arbitration clause in the company’s articles of association.

In those circumstances, the continuation of the arbitration proceedings would be vexatious and oppressive. They were also likely to produce uncertainty, delay and substantial wasted resources. The injunction forbade the claimants in the arbitration from further prosecuting those proceedings, or taking any steps to seek recognition or enforcement of any award made by the Lebanese panel. The Court found that such an order did not involve any undue assertion of jurisdiction by the courts of England and Wales.

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