Fulham Football Club (1897) Ltd v Richards & another

The court decided that a company's statutory remedy under section 994 of the Companies Act 2006 (the unfair prejudice petition) is not inalienable and may be the subject of an agreement to arbitrate. The arbitration provisions in the Football Association Rules and the Football Association Premier League (FAPL) Rules were held to cover the disputes alleged by Fulham, and the arbitral tribunals have powers capable of granting the relief sought under section 996 of the Companies Act 2006 (for example, orders to do or refrain from doing anything), read with section 48 of the Arbitration Act 1996.

The judge rejected the decision in Exeter City as wrongly extending authority about compulsory winding up to the unfair prejudice jurisdiction, and held that the earlier decision in Re Vocam was correctly decided. As a result, the court granted a mandatory stay under section 9 of the Arbitration Act 1996 to allow arbitration to proceed.

Background and parties. Fulham Football Club (1987) Limited presented an unfair prejudice petition under section 994 of the Companies Act 2006 against Sir David Richards and the Football Association Premier League Limited (FAPL). Fulham alleged that Sir David improperly intervened in transfer negotiations for the player Mr Peter Crouch, acting contrary to the FA Football Agents Regulations and to duties of fairness as between member clubs, and that the FAPL had failed to remedy that conduct.

Relief sought. Fulham sought relief under section 996 CA 2006 including injunctions restraining Sir David from participating in transfer negotiations and an order that he cease to be Chairman or a director of the FAPL.

Application before the court. The respondents applied for a stay of the unfair prejudice petition under section 9 of the Arbitration Act 1996, relying on wide arbitration clauses in the FA Rules and the FAPL Rules. The central legal issue was whether the statutory right to present an unfair prejudice petition can be removed or diminished by agreement.

Issues framed. (i) Whether the arbitration agreements in the FA Rules and the FAPL Rules cover the disputes alleged by Fulham; (ii) whether an unfair prejudice petition under section 994 CA 2006 is an inalienable statutory right that cannot be the subject of arbitration; and (iii) whether arbitrators have the remedial powers necessary to grant the relief sought.

Court’s reasoning and conclusion. The judge held that the arbitration clauses are widely drafted and do cover disputes of the kind raised by Fulham. The Arbitration Act 1996 recognises party autonomy and permits courts to stay proceedings where there is a valid arbitration agreement unless that agreement is null and void, inoperative or incapable of being performed. The judge accepted established limits to arbitration (for example, arbitrators cannot make orders that bind third parties in rem or orders barred by public policy), but found none of those limits to be engaged on the facts. Arbitrators under the FAPL and FA Rules have express powers to order a party to do or refrain from doing anything and therefore can grant the practical relief sought by Fulham. The court rejected Exeter City (which had held the unfair prejudice remedy inalienable) as wrongly extending authorities about winding up to the unfair prejudice jurisdiction, and upheld the approach of earlier authorities such as Re Vocam. The judge therefore granted a stay under section 9 AA 1996 and recommended consolidation of the arbitrations and joinder of any clubs wishing to be heard.

This first-instance court granted the respondents' applications for a stay under section 9 of the Arbitration Act 1996. The court held that the arbitration clauses in the FA Rules and the FAPL Rules cover Fulham’s unfair prejudice complaints, that the statutory right to present a section 994 petition is not inalienable, and that arbitrators have adequate powers to grant the relief sought; accordingly, the petition was stayed to allow arbitration to proceed. The court rejected the contrary decision in Exeter City as wrongly decided.