International arbitration in the Seychelles is primarily governed by the Commercial Code of Seychelles, Chapter 38 (1 January 1977) Title IX (the “Commercial Code Act”) and supplemented by the Seychelles Code of Civil Procedure, Chapter 213 (15 April 1920, as amended) (the “Code of Civil Procedure”).
The legal system of the Seychelles represents a peculiar mixture of the common law and civil law.[1] This is unsurprising considering the fairly turbulent history of this small island nation located off the eastern coast of Africa. During the colonial era, the Seychelles were first claimed by the French, then disputed between the French and English, with the British gaining control in 1814. The Seychelles remained under British control until 1976, when they gained their independence, becoming an independent republic within the Commonwealth – the Republic of Seychelles.
Arbitration legislation in the Seychelles is not based on the UNCITRAL Model Law on International Commercial Arbitration (the “UNCITRAL Model Law”) even though a number of provisions are compatible with it. Even though arbitration clauses are fairly common in the Seychelles, and local courts will typically stay court proceedings if a valid arbitration agreement is invoked by one of the parties, nevertheless, international arbitration is not yet in regular use in the Seychelles.
Arbitration Agreements and the Arbitrability of Disputes
Article 110(1) of the Commercial Code Act of Seychelles provides:
Any dispute which has arisen or may arise out of a specific legal relationship, and in respect of which it is permissible to resort to arbitration, may be subject to an arbitration agreement. Subject to articles 2044 to 2058 of the Civil Code relating to compromise.
Article 111 of the Commercial Code of Seychelles further stipulates that an arbitration agreement has to be in writing:
1. An arbitration agreement shall be constituted by an instrument in writing signed by the parties or by other documents binding on the parties and showing their intention to have recourse to arbitration.
2. If, in an arbitration agreement, the parties have referred to a particular arbitration procedure, that procedure shall be deemed to be included in the agreement.
For a dispute to be arbitrable under the law of the Seychelles, it therefore has to (1) arise out of a specific legal relationship and (2) its subject matter has to be permissible to be resolved by arbitration. In addition, the parties are bound by the rules set out in the Civil Code of Seychelles Act, Chapter 33 (1 January 1976) (the “Civil Code”), Title XV, on “Compromise”, which provides:
Article 2044
1. The compromise is a contract whereby the parties put an end to a dispute already begun or prevent a dispute from arising.
2. A person may compromise any rights of which he can freely dispose.
3. This contract must be in writing.
The Civil Code, Title XI, further lists the matters which may not be the subject of a “compromise” and are, accordingly, not arbitrable under the law of the Seychelles, which include, inter alia:[2]
- Public Bodies may not “compromise”, i.e., enter into an arbitration agreement, “except with the express consent of the Republic unless they are authorized by law.” (Civil Code, Article 2045-1);
- The “matters regarding the capacity of persons, the grounds of divorce and judicial separation and generally matters tending to contravene public policy may not be the subject of compromise” (Civil Code, Article 2045-2);
- A compromise with regards to civil liability arising from a criminal offence is permitted, however, it shall not bar any criminal proceedings by the Attorney General (Civil Code, Article 2046).
Other provisions relevant for the arbitrability of disputes under the law of Seychelles are contained in Section 205 of the Code of Civil Procedure (Arbitration), which refers to the French Code of Civil Procedure and provides that the courts, with the consent of both parties, have the power to refer a dispute to arbitration:
205. The court may, in any cases other than those mentioned in article 1004 of the French Code of Civil Procedure, with the consent of both parties to the suit, and also in any case in which the law permits arbitration independently of such consent, order such suit, with or without other matters within the jurisdiction of the court in dispute between such parties, to be referred to arbitration, to such person or persons, and in such manner and on such terms, as the court shall think reasonable and just, and if more than one arbitrator has been appointed, it may appoint an umpire if it thinks fit. Such reference shall not be revocable except with the consent of the court:
Provided that nothing in this section shall be deemed to prevent persons from submitting their dispute to arbitration in accordance with the provisions of Book Three of the French Code of Civil Procedure, without an order of the court.
Section 151 or the Code of Civil Procedure further provides that certain matters must be referred to the Attorney General, which include:
- matters relating to the guardianship of minors;
- matters in which one of the parties is represented by a curator;
- matters concerning presumed absentees or matters in which such absentees are interested;
- matters relating to the interdiction of persons or the appointment of advisers (conseils judiciaires).
Accordingly, these matters are also non-arbitrable, as they cannot be decided outside of a court.
Arbitration in The Seychelles: Arbitral Tribunals
Article 114 of the Commercial Code Act provides the parties with a freedom to choose the number of the arbitrators. The only requirement is for this number to be uneven:
1. The arbitral tribunal shall be composed of an uneven number of arbitrators. However, a sole arbitrator may be appointed. Arbitrators must formally accept the appointment. Aliens shall not be excluded from being arbitrators.
2. If the arbitration agreement provides for an even number of arbitrators, an additional arbitrator shall be appointed.
If the parties have failed to agree on a number of arbitrators in the arbitration agreement, the arbitral tribunal will be composed of three arbitrators, as provided in Article 114(3) of the Commercial Code Act (“If the parties have not settled the number of arbitrators in the arbitration agreement and do not agree on the number, the arbitral tribunal shall be composed of three arbitrators”).
Pursuant to Article 115(1) of the Commercial Code Act, the parties also may, either in the arbitration agreement, or subsequently, appoint the sole arbitrator or entrust the appointment thereof to a third party. If the parties have not appointed the arbitrators and have not agreed on a method of appointment each party shall, when a dispute arises, appoint an arbitrator, or an equal number of arbitrators, as the case may be (Article 115(2) of the Commercial Code Act).
Arbitrators may be challenged on the same grounds as judges. However, a party may not challenge an arbitrator appointed by him except on a ground of which the party has become aware after the appointment (Article 121 of the Commercial Code Act).
Arbitration in The Seychelles: Arbitral Awards
Under the law of the Seychelles, an arbitration award may be in the form of one final award, or separate awards (Commercial Code Act, Article 129). The award shall be made by an absolute majority of votes, unless the parties have agreed on another majority (Commercial Code Act, Article 131 (1)). An award shall be in writing and signed by the arbitrators. In the case where one or more arbitrators are unable or unwilling to sign it, this fact has to be recorded in the award. The award shall bear a number of signatures which is at least equal to a majority of the arbitrators (Commercial Code Act, Article 131(4)).
Arbitral awards shall, in addition to the operative part, contain the following particulars explicitly listed in Article 131 (5) of the Commercial Code Act:
- the names and permanent addresses of the arbitrators;
- the names and permanent addresses of the parties;
- the subject‑matter of the dispute;
- the date on which the award was made;
- the place of arbitration and the place where the award was made.
The award also must state the reasons for an award, unless the parties agreed otherwise (Article 131(6)).
Recognition and Enforcement of Foreign Arbitral Awards in the Seychelles
The Seychelles signed the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) on 3 February 2020, becoming the 162nd Contracting State. Pursuant to its Article XII(2), the New York Convention entered into force on 3 May 2020, i.e., 90 days after depositing the instrument. Accordingly, the Seychelles have also followed the path of several other African nations, which have been increasingly acceding to the New York Convention (see Near-Global Enforceability of Arbitration Awards: Sierra Leone Becomes the 166th State Party to the New York Convention).
The recognition and enforcement of foreign arbitral awards has an interesting legislative history in the Seychelles. Following its independence in 1976, and since the entrance into force of the Commercial Code Act in 1977, there has been an explicit reference to the New York Convention in Article 146 of the Commercial Code Act, which reads:
Article 146
On the basis of reciprocity, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, and the arbitral award within the meaning of the said Convention shall be binding. Such Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than Seychelles and arising out of differences between persons, whether physical or legal. It shall also apply to arbitral awards not considered as domestic awards in Seychelles.
The Commercial Code Act also introduced a new Article 227(2) to the Seychelles Code of Civil Procedure, explicitly making reference to the New York Convention as well, even though it was debatable if the Seychelles was considered a Contracting Party, or not, at the time:
Foreign judgments
227. Foreign judgments and deeds drawn up in foreign countries can only be enforced in the cases provided for by articles 2123 and 2128 of the Civil Code and agreeably with the provisions of the aforesaid articles.
Arbitral awards under the New York Convention, as provided under articles 146 and 148 of the Commercial Code of Seychelles, shall be enforceable in accordance with the provisions of Book 1, Title X of the said Code.
It took more than forty years for the Cabinet of the Office of the President of Seychelles to approve the Seychelles’ accession to the New York Convention, which happened in November 2019. This caused a number of controversies before the courts in Seychelles regarding the applicability of the New York Convention. In the most famous, highly controversial decision, Omisa Oil Management v. Seychelles Petroleum Company Ltd, the Supreme Court of Seychelles refused to recognize and enforce a Swiss arbitral award on the basis of the lack of reciprocity between the Seychelles and Switzerland for the purpose of Article 146 of the Commercial Code Act. The position of the Supreme Court of Seychelles was later confirmed in two other more recent decisions.[3] In Vijay Construction (Proprietary) Ltd v. Eastern European Engineering Ltd, the Supreme Court refused to recognize and enforce an ICC arbitration award seated in Paris, stating that the Seychelles stopped applying the New York Convention in 1979, on the basis of a note to the British Government, when it announced that several international treaties would no longer apply.[4] These findings were then reconfirmed in European Engineering Ltd v SJ (Seychelles) Ltd of 29 July 2019. These debates have now, fortunately, become moot, as the New York Convention has finally and officially entered into force in the Seychelles on 3 May 2020.
Investment Arbitration in the Seychelles
According to the UNCTAD Investment Policy Review: Seychelles, released in September 2020, the economic and social performance of the Seychelles has been exceptional over the past few years, as it is the only high-income country in Sub-Saharan Africa. The Seychelles is open to foreign direct investments, especially in sectors such as tourism and fisheries, in which foreign investments are considered to have significantly contributed to the countries’ economy.
The Seychelles have been a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the “ICSID Convention”) since 19 April 1978. The Seychelles have signed only five Bilateral Investment Treaties (“BITs”), however, and only two are currently in force – the France-Seychelles BIT (2007) and the Cyprus-Seychelles BIT (1998).[5]
The Seychelles is a party to a number of other international treaties with investment provisions, however, including, inter alia:
- COMESA – US TIFA : An agreement between the Common Market For Eastern And Southern Africa (COMESA) and the United States of America Concerning the Development of Trade and Investment Relations (in force as of 29 October 2001);
- Cotonou Agreement : Partnership Agreement between the Members of the African, Caribbean and Pacific Group of States and the European Community and Its Member States (2000) (in force as of 1 April 2004);
- AU Treaty : Treaty Establishing the African Economic Community (in force as of 12 May 1994);
- SADC Treaty : Treaty of the Southern African Development Community (in force as of 30 September 1993).
With the aim of attracting more foreign investments and giving investors more protection, the Seychelles also passed the Seychelles Investment Act 2010 (Act 31 of 2010, as amended in 2011 and in 2016),[6] including the Seychelles Investment (Economic Activities) Regulations 2014, both of which govern foreign direct investments in the Seychelles.
The only publicly-known investment arbitration against the Seychelles is CDR Group PLC v. The Republic of Seychelles (ICSID Case No. ARB/02/14), (“CDC v. Seychelles”) brought by a British investor, CDR Group PLC. The dispute concerned two loan agreements and sovereign guarantees provided by the government of Seychelles to CDC Group PLC. The Final Award was issued on 17 December 2003 in favour of the investor. Respondent, the Government of the Seychelles, made an application seeking annulment of the Award and requested stay of the enforcement pursuant to Article 52 of the ICSID Convention. In the Decision on Whether or Not to Continue Stay and Order of 14 July 2004, the Committee granted the stay, restating the criteria already in place, however, rejecting the argument invoked by Respondent and finding that the probability of success of an application for annulment is not a sufficient ground for granting a stay. Subsequent ad hoc committees have followed the position in CDC v. Seychelles, finding that the merits of the underlying annulment application are irrelevant when deciding whether to continue a stay of enforcement.[7]
[1] M. Twomey, “Legal Metissage in a Microjurisdiction: The Mixing of Common Law and Civil Law in Seychelles” (September 2015).
[2] Bar Association of Seychelles, Legal and Policy Considerations for Effective Alternative Dispute Resolution in Seychelles, December 2012, available at: https://sites.google.com/site/barassociationsc/law-journal-1/legalandpolicyconsiderationsforeffectivealternativedisputeresolutioninseychelles
[3] M. Wietzorek, C. Peter, “New York Convention Now In Force in the Republic of Seychelles Kluwer Arbitration Blog”, 3 May 2020.
[4] M. Wietzorek, C. Peter, “New York Convention Now In Force in the Republic of Seychelles Kluwer Arbitration Blog”, 3 May 2020.
[5] See https://investmentpolicy.unctad.org/international-investment-agreements/countries/188/seychelles
[6] SI 56 of 2011 and Seychelles Investment (Amendment) Act (Act 22 of 2016).
[7] Mitchell v. Democratic Republic of Congo, ICSID Case No. ARB/99/7, Decision on Stay of Enforcement of the Award, 30 November 2004, para. 26; MTD Equity Sdn. Bhd. & MTD Chile S.A. v. Republic of Chile, ICSID Case No. ARB/01/7, Decision on the Respondent’s Request for a Continued Stay of Execution, 1 June 2005, para. 28; CMS Gas Transmission Co. v. Argentine Republic, ICSID Case No. ARB/01/8, Decision on the Argentine Republic’s Request for a Continued Stay of Enforcement of the Award, 1 September 2006, para. 37; Compania de Aguas del Aconquika S.A. & Vivendi Universal S.A. v. Argentine Republic, ICSID Case No. ARB/97/3, Decision on the Stay of Enforcement of the Award, 4 November 2008.
