Wedlake Bell (a firm) v Jones & Anor

Under Arbitration Act 1996, proceedings must be stayed to the extent that they concern a matter which the parties agreed to refer to arbitration, unless the arbitration agreement is invalid or incapable of operation.

The scope of an arbitration clause is determined by identifying the disputes raised and construing the parties’ agreement. A clause covering disputes touching or concerning a partnership and its affairs may extend to disputes with an outgoing partner, agreed variations to the partnership agreement, fiduciary and statutory partnership obligations, and claims for rescission based on misrepresentation or non-disclosure.

Wedlake Bell sought declarations, rescission, damages and injunctions against two former partners concerning alleged breaches of partnership, fiduciary and statutory duties, alleged non-disclosure and misrepresentation, and alleged misuse of firm documents.

The defendants applied under section 9 of the Arbitration Act 1996 for the proceedings to be stayed pursuant to an arbitration clause in the partnership agreement. The central issue was whether the claims, including the rescission claim concerning separate severance agreements, fell within that clause.

1. Application granted. The proceedings were stayed under section 9 of the Arbitration Act 1996 so that the Firm’s claims could be referred to arbitration.
2. Section 9(4) required a stay where proceedings concerned a matter covered by the arbitration agreement, unless the agreement was null and void, inoperative or incapable of being performed. None of those exceptions was suggested.
3. The court’s task was to identify the disputes raised in the proceedings and construe the arbitration agreement to determine whether the parties intended disputes of that kind to be arbitrated. Any inconvenience, duplication of evidence or risk of inconsistent findings arising because other matters might remain for the court was irrelevant to the statutory duty to stay.
4. The arbitration clause was not confined to disputes concerning construction of the partnership agreement or rights and liabilities strictly arising under it. The words referring to matters otherwise touching or concerning the Firm and its affairs widened the clause to inter-partner disputes arising from the partnership relationship. Its temporal scope also extended to disputes arising after a person had ceased to be a partner.
5. That scope included disputes concerning the enforceability of post-retirement restrictions, agreed variations to the retirement regime, fiduciary obligations, obligations arising under the Partnership Act 1890, and the severance agreements.
6. The rescission allegations concerned the defendants’ duties, alleged misrepresentations and non-disclosures, and the Firm’s reliance in entering the severance agreements. Those matters concerned partners’ rights and liabilities and otherwise touched or concerned the Firm and its affairs. All matters in dispute therefore fell within the arbitration clause.

This was a first-instance decision on the defendants’ application under section 9 of the Arbitration Act 1996. The court had already ordered a stay and gave written reasons in this judgment.