Arbitration Law Monthly

In NDK Ltd v HUO Holding Ltd [2022] EWHC 1682 (Comm) Foxton ruled that an arbitration clause in a shareholders' agreement applied to disputes under the articles of association, and also that shareholder disputes are arbitrable even though an award by the tribunal that affects third-party rights cannot to that extent be enforced. In the present sequel proceedings, NDK Ltd v HUO Holding Ltd (No 2) [2022] EWHC 2580 (Comm), the question was whether a person who had never become a shareholder was nevertheless bound by the arbitration clause in the shareholders' agreement. This raised an issue as to the severability of the arbitration clause from the shareholders' agreement.

Under section 9(3) of the Arbitration Act 1996 the right to seek a stay of judicial proceedings so that the dispute can be referred to arbitration in accordance with the parties' agreement is lost if the applicant for a stay has taken a step in the proceedings. In Fairpark Estates Ltd v Heals Property Developments Ltd [2022] EWHC 496 (Ch) HHJ Richard Williams, sitting as a High Court Judge, held that an agreement to extend time for the service of a defence and counterclaim constituted a step in the proceedings in that it amounted to an election not to go to arbitration and also invoked the jurisdiction of the court.

In his important and clearly reasoned judgment in UK P&I Club NV and Another v Republica Bolivariana de Venezuela (The RCGS Resolute) [2022] EWHC 1655 (Comm), Sir Ross Cranston has ruled that English law does not permit the grant of an anti-suit injunction against a state which has - in contravention of an arbitration agreement - sought relief in the courts. The case was one of third-party enforcement of a contract containing an arbitration clause, but the position would appear to be no different in a simple two-party case.

In NDK Ltd v HUO Holding Ltd [2022] EWHC 1682 (Comm) Foxton J discussed in detail the relationship between the articles of association of a private company and a separate shareholders' agreement regulating the rights of the participants. In an important decision, Foxton J has rejected overseas authority for the proposition that an arbitration clause in a shareholders' agreement has no application to disputes under the articles of association, and has also confirmed that shareholder disputes are arbitrable even though an award by the tribunal that affects third party rights will not to that extent be enforced.