17th February 2020


Peepul Capital Fund II LLC And Anor v VSOFT Holdings LLC (2018 PRV 84) & (2018 PRV 89)

The case concerned an appeal made under the Mauritian International Arbitration Act 2008  by VSOFT Holdings LLC (“Vsoft”) to the Judicial Committee of the Privy Council (the “Privy Council”) to set aside an  international arbitration Award (the “Award”) for alleged breaches of natural justice and contravention public policy.  Peepul Capital Fund II LLC and Millenium Strategic Group Limited (together the “Investors”) lodged in parallel a cross appeal for the discharge of an anti-suit injunction delivered by the Supreme Court of Mauritius in favour of Vsoft.

In its judgment delivered on 19 December 2019, the Privy Council rejected Vsoft’s appeal and discharged the anti-suit injunction which was ordered against the Investors.

This judgment signaled an important victory for the Investors, who were represented before the Privy Council by Iqbal Rajahbalee SC and Mushtaq Namdarkhan, of BLC Robert & Associates and instructed by Fladgate LLP.

Prolonged history of litigation

The dispute arose from a major equity investment by the Investors in Vsoft, a company incorporated in Mauritius as the holding company of the Fintech multinational Vsoft Corporation. The investment was originally made under an Investment Agreement, which allows the Investors to exit from their shareholdings for the original purchase price plus returns. The parties agreed to terminate the Investment Agreement and entered into a Shareholders Agreement, pursuant to which the Investors would sell their equity shares in Vsoft for the sum of US$ 17 million payable in tranches together with interest. Vsoft however failed to make payments due to the Investors, despite the surrender of shares of the Investors and the termination of the Investment Agreement.


The parties subsequently referred the dispute to arbitration to determine whether liability arose under the Investment Agreement or under the Shareholders Agreement and the quantum thereof. The Arbitrator was further required to adjudicate on Vsoft’s counterclaim against the Investors for damages amounting to US$23.3 million for pursuing liquidation proceedings against Vsoft.  

In the arbitration, the Investors asserted their claims under the Shareholders Agreement only whereas the representative of VSoft suggested in cross examination that Vsoft should pay the Investors pursuant to the Investment Agreement, despite Vsoft having previously denied any liability towards the Investors in its written pleadings. Given the contradictory position adopted by Vsoft, the Arbitrator intervened during the closing submissions of Vsoft’s Counsel to explain his provisional view in the light of the pleadings and evidence on records and requested Counsel to seek instructions from his client to clarify the situation. Shortly thereafter, Counsel for Vsoft confirmed that the Investors’ claim was not in dispute, that the Arbitrator’s assistance was required on the quantification of that claim and that Vsoft’s counterclaim was dropped.

In the Award dated 08 January 2015, the Arbitrator concluded that since the claim was not in dispute considering the concession made by Counsel for Vsoft,  the Investors’ quantification of its claim was consistent with the Shareholders Agreement and ordered Vsoft to pay US$ 22,855,741 with interest until payment, together with damages and costs to the Investors.

Supreme Court of Mauritius

Vsoft subsequently applied to the Supreme Court to set aside the Award for (i) being unable to present its case during the Arbitration, (ii) beach of public policy of Mauritius and (iii) breach of natural justice.

In the meantime, the Investors obtained an interim freezing order restraining Vsoft to dispose of its assets and Vsoft also obtained an anti-suit injunction to restrain the Investors from acting as shareholders of Vsoft in relation to various complaints and proceedings in India.

The Supreme Court rejected Vsoft’s application to set aside the Award, but maintained the freezing injunction against Vsoft  in order to protect the enforcement of the Award and also maintained the anti-suit injunction pending the enforcement of the Award.   

Privy Council

Being dissatisfied with the decision of the Supreme Court of Mauritius, Vsoft appealed to the Privy Council as the highest appellate court of Mauritius. The Investors also appealed against the anti-suit injunction.

The  Privy Council found no merits to the argument that Vsoft’s was unable to properly present its case as the Arbitrator did not exercise any undue pressure on Vsoft to abandon its claim but rather invited  Vsoft’s Counsel to seek further instructions from his client in order to clarify its position.

Secondly, the Arbitrator’s interpretation of Vsoft’s position was in all aspects reasonable which therefore could not give rise to a breach of natural justice. It was not open to Vsoft to seek to overrule the decision of the Arbitrator merely because it disagreed with it.

The Privy Council further found the public policy argument as “hopeless” to the extent that the equity shares had already been surrendered by Vsoft and therefore it was wrong of Vsoft to contend that the Award afforded some form of double recovery to the Investors, the more so that Vsoft had failed to issue preference shares to the Investors in consideration for the surrender in breach of the Shareholders Agreement.

Lastly, the Privy Council discharged the anti-suit injunction for being “too vague” in its scope and questioned the rationale for preventing a winning party from taking steps to enforce an award granted in its favour.

Accordingly, the appeal of VSoft was dismissed and the Award upheld. The cross appeal of the Investors was allowed, hence quashing the anti-suit injunction. 

Appeal as “of right” to the Privy Council

As a postscript to the judgment, the Privy Council offered its views over appeals “as of right” to the Privy Council as provided under the Mauritian International Arbitration Act.

Unlike most jurisdictions with arbitration law based on the UNCITRAL Model Law, Mauritius offers a wide avenue of appeal to the Privy Council in the context of international arbitration.  This was viewed in the mind of the Mauritian legislator as a safeguard to the interest of international stakeholders and a reassurance that matters relating to their arbitrations will be heard and disposed by eminently qualified jurists.

That being said, one cannot overlook the extensive chronology of the present litigation, which took over five years to be resolved, while being devoid of merits and which would most probably fail to withstand a substantive requirement for leave to appeal (as it is the case in comparable jurisdictions).

The question remains how to balance swiftness in the resolution of an international arbitration dispute and the safeguard provided by the Privy Council as being the highest appellate court in such matters. It is to be seen whether the Mauritian legislator would review the automatic right of appeal provided under the Mauritian International Arbitration Act in the light of the observations made by the Privy Council.

BLC Robert & Associates