Emmott v Michael Wilson & Partners Ltd

Under Arbitration Act 1996, the court should support, rather than review, a tribunal’s properly made peremptory order. Section 42 does not make the court a rubber stamp, but ordinarily excludes rehearing the tribunal’s decision or reassessing the merits, necessity or balance of convenience. Refusal may be justified where enforcement is not required in the interests of justice, including material changed circumstances, unfairness or lack of jurisdiction.

Arbitration clauses should generally be construed to cover disputes arising out of the parties’ relationship unless their language clearly excludes the dispute. Shares constitute property for the purposes of section 38(4), and an order securing their custody or preservation may be enforced under section 42.

Mr Emmott and Michael Wilson & Partners Ltd were parties to a London arbitration arising from their business relationship and agreements concerning shares in the company and in Steppe Cement. The tribunal made a peremptory order requiring MWP to procure that 27% of the Steppe shares were held to the tribunal’s order.

Mr Emmott applied under sections 42 and 44 of the Arbitration Act 1996 for enforcement of that order and a freezing order. MWP challenged the tribunal’s substantive jurisdiction under section 67 in relation to an alleged 2005 agreement concerning the shares. The central issues were whether the tribunal had jurisdiction, the proper scope of the court’s role under section 42, and whether a freezing order was justified.

1. Jurisdiction. The arbitration clause in the 2001 agreement covered the dispute concerning the alleged 2005 agreement. Applying the approach in Fiona Trust v Privalov [2008] 1 Lloyd’s Rep. 254, commercial parties are presumed to intend disputes arising out of their relationship to be determined by the same tribunal unless the language clearly excludes them. The alleged entitlement to Steppe shares arose substantively from the parties’ 2001 relationship and profit-sharing arrangements. MWP’s section 67 challenge was dismissed.
2. Section 42 enforcement. Sections 1, 33 and 40 of the Arbitration Act 1996 establish the legislative policy of fair and efficient arbitration, tribunal responsibility for resolving the dispute, party compliance with tribunal orders and limited judicial intervention. Section 42 gives the court a discretion, so it is not a rubber stamp. However, the court should ordinarily support a tribunal’s peremptory order and should not rehear or review the tribunal’s decision, reassess the merits or decide whether it would have made the order.
3. The court may refuse enforcement where an order is not required in the interests of justice, for example after a material change of circumstances, a failure by the tribunal to act fairly and impartially, or an order made without power. None of those circumstances existed. The tribunal had considered the relevant evidence and had concluded that the shares were within MWP’s influence or control. The statutory conditions that the arbitral process had been exhausted and that MWP had failed to comply were satisfied.
4. Shares were property within section 38(4) of the Arbitration Act 1996, and the tribunal’s order was for their preservation or custody. The court therefore ordered MWP to comply with the peremptory order, extending the time for compliance until 4 pm on 13 January 2009.
5. Freezing order. The evidence established a clear risk that the Steppe shares might be dissipated. A freezing order was therefore granted under section 44, limited to 27% of the shares. The undertaking in damages did not require fortification by a bank guarantee. The order was amended to preserve the tribunal’s power to vary or discharge it and to permit MWP to apply for such relief.