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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Salford Estates (No.2) Ltd v Altomart Ltd  EWCA Civ 1575 (08 December 2014)
Cite as:  CH 589,  BPIR 399,  1 Ch 589,  3 WLR 491,  BCC 306,  WLR(D) 527,  WLR(D) 536,  EWCA Civ 1575,  1 CH 589
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
HIS HONOUR JUDGE BIRD (MANCHESTER DISTRICT REGISTRY)
2141 OF 2014
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE LONGMORE
LORD JUSTICE KITCHIN
| SALFORD ESTATES (NO.2) LIMITED
|- and -
Peter Knox QC (instructed by Vyman Solicitors) for the Respondent
Hearing dates : 11th November 2014
Crown Copyright ©
The Chancellor (Sir Terence Etherton) :
The 1996 Act
"1 General principles.
The provisions of this Part are founded on the following principles, and shall be construed accordingly—
(a) the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense;
(b) the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest;
(c) in matters governed by this Part the court should not intervene except as provided by this Part."
"9 Stay of legal proceedings.
(1) A party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter.
(4) On an application under this section the court shall grant a stay unless satisfied that the arbitration agreement is null and void, inoperative, or incapable of being performed."
"82 Minor definitions.
(1) In this Part—
"dispute" includes any difference;
"legal proceedings" means civil proceedings in the High Court or a county court; …"
"Any dispute or difference arising between the Lessor and the Lessee as to their respective rights duties or obligations or as to any other matter arising out of or in connection with this Underlease shall be referred to a single arbitrator provided the parties are able to agree on one or otherwise to two arbitrators one to be appointed by each party or their umpire in accordance with and subject to the provisions of the Arbitration Act 1950 or any statutory modification or re-enactment thereof for the time being in force"
The judgment of Judge Bird
"58. This kind of dispute, taking place as it must do in the context of a solvent company, will not therefore ordinarily involve the creditors and is intended to avoid causing damage to the value of the company which is not in the interests of any of its members. For that reason, advertisement of the petition is exceptional. The residual power of the court under s.122(1)(g) to order winding-up where no other remedy would be appropriate or available does not therefore support the characterisation of a petition for s.994 relief as a class remedy. It is designed to resolve issues of unfair prejudice without the winding-up of the company. These are essentially internal disputes about alleged breaches of the terms or understandings upon which the parties were intended to co-exist as members of the company."
"77. The determination of whether there has been unfair prejudice consisting of the breach of an agreement or some other unconscionable behaviour is plainly capable of being decided by an arbitrator and it is common ground that an arbitral tribunal constituted under the FAPL or the FA Rules would have the power to grant the specific relief sought by Fulham in its s.994 petition. We are not therefore concerned with a case in which the arbitrator is being asked to grant relief of a kind which lies outside his powers or forms part of the exclusive jurisdiction of the court. Nor does the determination of issues of this kind call for some kind of state intervention in the affairs of the company which only a court can sanction. A dispute between members of a company or between shareholders and the board about alleged breaches of the articles of association or a shareholders' agreement is an essentially contractual dispute which does not necessarily engage the rights of creditors or impinge on any statutory safeguards imposed for the benefit of third parties. The present case is a particularly good example of this where the only issue between the parties is whether Sir David has acted in breach of the FA and FAPL Rules in relation to the transfer of a Premier League player.
78. Judge Weeks was therefore wrong in my view to extend the reasoning of Warren J in A Best Floor Sanding Party Ltd to a petition under what was then s.459. The statutory provisions about unfair prejudice contained in s.994 give to a shareholder an optional right to invoke the assistance of the court in cases of unfair prejudice. The court is not concerned with the possible winding-up of the company and there is nothing in the scheme of these provisions which, in my view, makes the resolution of the underlying dispute inherently unsuitable for determination by arbitration on grounds of public policy. The only restriction placed upon the arbitrator is in respect of the kind of relief which can be granted."
The respondent's notice
Lord Justice Longmore
Lord Justice Kitchin