Member's petition for relief from unfair prejudice - company seeking compulsory stay of proceedings to pursue arbitration - court not compelled to order stay

Exeter City AFC Ltd v The Football Conference Ltd and another: ChD (Judge Weeks QC): 29 January 2004

The claimant, a club in the Nationwide Conference, brought a petition under section 459 of the Companies Act 1985 against the first defendant, the company running the Conference, of which the claimant, along with all the other clubs in the Conference, was a member.

Given the importance of the petition, the second defendant, another Conference club, was joined by an order of the court as representative of all the other Conference clubs.

The first defendant sought a stay of the petition, either under the court's inherent jurisdiction, or on the ground that the petition was brought in respect of a matter that the parties had agreed would be referred to arbitration, with the effect that the court was compelled by section 9 of the Arbitration Act 1996 to stay the proceedings.

Stephen Davies QC and Hugh Sims (instructed by Clarke Willmott Solicitors, Taunton) for the claimant; Adam Lewis (instructed by Hammonds) for the first defendant; the second defendant did not appear and was not represented.

Held, dismissing the application, that the right of a contributory to apply to the court for a winding up order could not be limited by agreement; that there was no difference in principle for that purpose between a winding up petition and a petition under section 459; and that, accordingly, section 9 did not apply; and that, on the facts, a stay under the court's inherent jurisdiction had to be refused (WLR).