The Commercial Court has granted a stay of proceedings against guarantors, despite the guarantees containing an exclusive jurisdiction clause in favour of the English court, pending the resolution of related arbitration proceedings regarding the debts underlying those guarantees: Stemcor UK Ltd v Global Steel Holdings Ltd and Pramod Mittal [2015] EWHC 363 (Comm).

The decision is of interest as an example of the English court exercising its case management powers to stay proceedings despite an exclusive English jurisdiction clause. The judge was satisfied that the circumstances of this case were sufficiently “rare and compelling” to justify the grant of a stay on this ground, as required by Reichold Norway SA v Goldman Sachs International [1999] 1 All ER (Comm) 40.

A persuasive factor in the court’s decision was that the guarantors had agreed to be bound by the result of the arbitration, and that they would be liable to pay the claimant any amount for which the principal debtor was found liable.

Please click here to read more about the case on our Arbitration Notes blog.