Bilta (UK) Ltd (In Liquidation) v Nazir & Ors

Section 9 of the Arbitration Act 1996 provides a self-contained regime for applications to stay court proceedings in favour of arbitration. CPR Part 11 does not impose an additional 14-day limit. A party loses the right to seek a stay only when it has taken a step which objectively affirms submission to court determination of the substantive claim. A procedural application for more time to serve a defence may be consistent with preserving the arbitration right, particularly where the party has reserved that right and seeks time to understand the claim. A broadly worded arbitration clause may extend beyond contractual claims to disputes connected with the relevant transactions. Where the existence of the arbitration agreement is genuinely triable, the court will usually determine that issue as a preliminary issue.

The claimant company, in liquidation, brought equitable claims against Jetivia and its director arising from alleged diversion of monies in VAT-related trading transactions. Jetivia applied under section 9 of the Arbitration Act 1996 for a stay, relying on a Framework Agreement containing a wide arbitration clause.

The claimant disputed that the Framework Agreement had been agreed, contended that the clause did not cover the claims, and argued that Jetivia had lost any right to seek a stay by failing to apply under CPR Part 11 within 14 days and by applying for an extension of time to serve its defence. The court considered the scope of the arbitration clause, the interaction between section 9 and CPR Part 11, and the meaning of taking a step to answer the substantive claim.

1. Arbitration clause and scope. The evidence raised a triable issue whether the Framework Agreement, including clause 8.7, formed part of the contractual relationship. The clause covered disputes arising under, out of or in connection with the Jetivia sales. Applying the guidance in Fiona Trust & Holding Corporation v Privalov, [2007] 2 Lloyd’s Rep 267 and [2008] 1 Lloyd’s Rep 254, its wide wording was not to be artificially confined to contractual claims. The position concerning the non-Jetivia sale was less clear and required fuller submissions.
2. Interaction with CPR Part 11. Section 9 is a statutory code governing applications for stays. Read with section 9(3), section 9(1) defines the period during which an application may be made. CPR Part 11 therefore does not add a separate 14-day bar. This conclusion was supported by the policy of the Arbitration Act 1996, its relationship with article 8 of the UNCITRAL Model Law, and the structure of CPR Part 62.
3. Step in the proceedings. The relevant question is whether the defendant’s conduct objectively affirmed the correctness of the court proceedings and willingness to have the dispute determined by the courts. The binding approach in Capital Trust Investments Limited v Radio Design TJ AB required application of the earlier authorities, including Eagle Star Insurance Co. Ltd v Yuval Insurance Co. Ltd. Communications between the parties may form part of the objective context. Jetivia’s application for more time to serve a defence did not amount to such a step. Its correspondence expressly reserved its position and showed that the extension was sought to investigate the claim and decide whether to arbitrate.
4. Directions. The stay application was not finally determined. The parties were directed to seek directions for the court to decide as preliminary issues whether clause 8.7 was binding and, if so, whether it applied to the non-Jetivia sale. The approach accorded with Ahmad Al-Naimi v Islamic Press Agency Inc. and Azov Shipping Co v Baltic Shipping Co.

First-instance decision. The judgment itself does not state any prior appellate history.