Exeter City AFC Ltd v The Football Conference Ltd & Anor

A statutory petition for relief from unfairly prejudicial conduct under Companies Act section 459 cannot be removed or diminished by an arbitration agreement. Section 9 of the Arbitration Act 1996 therefore does not compel a stay where the dispute concerns the court’s statutory supervisory jurisdiction. Rules providing for internal resolution of disputes are not arbitration agreements merely because a limited appeal exists. Where the petition presents one overall dispute and the alleged arbitrable matters are only sub-issues, the court should ordinarily determine the petition and its related issues together. A stay may be refused where dividing the dispute would create parallel or unsatisfactory procedures.

Exeter City AFC Limited presented a petition under section 459 of the Companies Act, alleging that the affairs of The Football Conference Limited were conducted in a manner unfairly prejudicial to Exeter’s interests. The petition arose from Conference rules concerning clubs entering creditors’ voluntary arrangements and the preferential treatment of football creditors.

Conference applied for a stay under section 9 of the Arbitration Act 1996, relying on the Football Association’s Rule K and Conference Rule 15. The central issues were whether those provisions constituted arbitration agreements, whether the section 459 dispute was capable of arbitration, and whether the court should stay the petition under its inherent jurisdiction.

1. The application was dismissed. The court refused both a compulsory stay under section 9 of the Arbitration Act 1996 and a discretionary stay.
2. Association Rule K was an arbitration agreement and, construed broadly, covered disputes concerning Conference’s Articles of Association. Conference Rule 15 was not an arbitration agreement. It provided for internal determination by Conference’s directors, with a limited appeal to the Football Association, rather than determination by an independent arbitral tribunal.
3. Disputes concerning Conference’s rules fell within Rule 15 and were therefore excluded from Rule K by Rule K(1)(b). That construction would produce different procedures for different aspects of the petition.
4. The statutory right of a shareholder to petition for relief under section 459 was an inalienable right which could not be diminished or removed by contract. The court’s reasoning was supported by A Best Floor Sanding Party Limited v Skyer Australia Party Limited [1999] VSC 170, which treated a statutory winding-up right as incapable of being limited by agreement, and by the statutory-supervisory nature of the Companies Court’s jurisdiction.
5. Re Vocam (Europe) Limited [1998] BCC 396 was not followed because the principal objection now raised had not apparently been argued in that case. Re Magi Capital Partners LLP [2003] EWHC 2790 (Ch) was distinguished as an exceptional case-management decision involving proceedings already on foot. The court applied the approach in Ashville Investments IT v Elmer [1989] 1 QB 488 that reasonable parties should not readily be taken to intend two sets of proceedings.
6. The petition concerned one overall dispute: whether Conference’s affairs were unfairly prejudicial to Exeter. The matters relied on as arbitrable were sub-issues arising in deciding that dispute. The court was the appropriate tribunal to determine the petition and all related issues together.

First-instance decision. No prior appellate decision is stated in the judgment.