Ahmed v Uddin

Section 9 of the Arbitration Act 1996 does not permit a party to split an existing dispute by seeking arbitration of issues added to an amended pleading. The court must ask whether the amendment concerns matters already forming part of the dispute before it, or discrete matters within the arbitration agreement. Issues remain in the court proceedings where they are part of the same substantive dispute and their resolution overlaps with matters already pleaded and answered. A defendant who has taken a step to answer the substantive claim cannot obtain a stay under section 9(3) for such matters. The proper procedural opportunity to object to genuinely new arbitrable issues is ordinarily at the permission-to-amend stage.

The claimants and defendant operated a restaurant partnership under a written agreement containing an arbitration clause. The claimants commenced High Court proceedings alleging breaches, seeking injunctions, accounts, damages, and relief concerning expulsion and dissolution. The defendant filed a defence and took steps in the action without applying for a stay.

After each side purported to exercise partnership termination rights, the claimants amended their particulars to seek declarations about expulsion and dissolution. The High Court permitted the amendment and refused a stay under section 9 of the Arbitration Act 1996, holding that the new matters substantially overlapped the original claim. The issue on appeal was whether the amendments introduced discrete substantive claims that the defendant could insist be referred to arbitration.

The Court of Appeal dismissed the appeal unanimously. The defendant was not entitled to a stay of the amended claims, and the appeal was dismissed with costs summarily assessed at £3,600 plus VAT, payable within 28 days.

1. Procedural approach. The court held that the question under section 9 of the Arbitration Act 1996 was whether the matters introduced by amendment were part and parcel of the dispute already before the court, or discrete matters which the arbitration agreement entitled the defendant to have arbitrated.
2. Application of section 9(3). The original pleadings raised the alleged breaches, the validity of the defendant’s purported expulsion of the first claimant, and the parties’ competing rights to terminate or dissolve the partnership. The defendant had answered the substance of those issues and had taken further steps in the proceedings. The court-management directions for partnership accounts also required the competing termination contentions to be addressed. The amended claims therefore concerned the same dispute about the partnership accounts, assets and their use. They were not discrete matters for which a stay was available. Section 9(3) accordingly prevented the defendant from obtaining a stay.
3. Henderson v Henderson. As a cross-check, the court considered that, absent the arbitration clause, pursuing the amended issues in separate proceedings would have been vexatious and would have infringed the principle in Henderson v Henderson [1843] 3 Hare 100. The issues belonged in the existing action.
4. Amendment procedure. The court observed that where a defendant contends that an amendment will introduce new arbitrable issues, the appropriate course is to object when permission to amend is sought. Nothing turned on the procedural error here because permission had been granted without prejudice to the stay application.

• Court of Appeal (Civil Division): The defendant’s appeal was dismissed. The court held that the amended matters formed part of the existing dispute and that section 9(3) of the Arbitration Act 1996 did not permit a stay. Citation: [2005] EWCA Civ 883.
• High Court (Chancery Division, Birmingham District Registry): On 31 January 2005, the court permitted amendment of the particulars of claim and refused the defendant’s application for a stay under section 9 of the Arbitration Act 1996.