Best Beat Ltd v Rossall

Section 9 of the Arbitration Act 1996 does not stay winding-up proceedings merely because a lease contains arbitration provisions. The applicant must be a party against whom proceedings are brought by way of claim or counterclaim, and the proceedings must concern a matter which the agreement requires to be arbitrated.

A clause providing for the machinery of arbitration if the parties agree to refer a dispute does not itself impose a general arbitration agreement. Statutory compensation payable under the Landlord and Tenant Act 1954 is not a dispute arising under lease provisions dealing specifically with rent abatement or rent review.

Best Beat Ltd appealed against the decision of Registrar Derrett dated 5 January 2006. The Registrar had refused Best Beat’s application to stay Michael Joseph Rossall’s winding-up petition under section 9 of the Arbitration Act 1996.

Rossall claimed statutory compensation of £36,500 after the termination of his business tenancy. Best Beat did not identify any substantive dispute about the sum, but relied on arbitration provisions in the lease. The central questions were whether the winding-up petition was proceedings within section 9(1), whether the compensation dispute was a matter to be referred to arbitration under the lease, and whether clause 4(9)(B) created a general arbitration agreement.

1. The appeal was dismissed. The Registrar’s decision was correct.

2. Section 9(1) of the Arbitration Act 1996 requires the applicant to be a person against whom legal proceedings have been brought by way of claim or counterclaim. A winding-up petition is a species of legal proceedings, but it is not a claim or counterclaim. Best Beat therefore had no standing to invoke section 9.

3. In any event, section 9 requires the proceedings to concern a matter which, under the arbitration agreement, is to be referred to arbitration. The lease contained specific provisions concerning rent abatement or cesser following damage to the premises and rent review. Rossall’s entitlement to statutory compensation under the Landlord and Tenant Act 1954 concerned neither subject.

4. Clause 4(9)(B) did not provide that every dispute arising under the lease was automatically arbitrable. Its opening condition was that the landlord and tenant should agree to refer the dispute to arbitration. Only after that condition was satisfied did the clause prescribe the arbitration machinery, subject to contrary agreement. That condition was not satisfied.

5. Any dispute concerned the effect of the statutory compensation provisions, rather than a matter arising under the lease. The existence of a former landlord-and-tenant relationship did not convert the statutory dispute into a dispute arising under the lease.

The appeal was brought from the decision of Registrar Derrett dated 5 January 2006, which refused a stay of the winding-up petition. The High Court dismissed the appeal and directed that the Registrar’s decision stand.