Fulham Football Club (1987) Ltd v Richards

This appeal concerned whether a petition under section 994 of the Companies Act 2006 (unfair prejudice) could be stayed under section 9 of the Arbitration Act 1996 in favour of arbitration pursuant to broadly‑worded arbitration clauses in the Football Association Premier League Rules and the Football Association Rules. The Court of Appeal affirmed the judge's grant of a stay. It held that (i) there is no express provision in the Arbitration Act 1996 or the Companies Act 2006 that renders unfair prejudice petitions non‑arbitrable; (ii) limitations on the remedies an arbitrator can grant (for example the inability to make orders binding non‑parties or to wind up a company) do not, of themselves, render the subject‑matter non‑arbitrable; and (iii) the arbitration agreements in the FAPL and FA Rules were wide enough to cover disputes of the kind alleged and should be given effect subject to the statutory safeguards in s.9 AA 1996 (notably that a stay is refused only if the arbitration agreement is null and void, inoperative or incapable of being performed).

The appellant, Fulham Football Club (1987) Ltd, presented a petition under section 994 of the Companies Act 2006 alleging that Sir David Richards, chairman of the Football Association Premier League Limited (FAPL), had acted as an unauthorised agent in connection with the transfer of a player and that the FAPL had thereby acted in a manner unfairly prejudicial to some of its members. Fulham sought injunctive relief restraining Sir David from acting in such capacity or alternatively the removal of Sir David as chairman. The FAPL and Sir David relied on arbitration clauses in the FAPL Rules (Section S) and the FA Rules (Section K) and applied under section 9 of the Arbitration Act 1996 for a stay of the petition.

The Court of Appeal reviewed competing High Court decisions (Re Vocam Europe Ltd and Exeter City v Football Conference) and addressed two central issues:

• whether disputes of the kind raised in a s.994 petition are in principle arbitrable; and
• whether the particular arbitration clauses should be construed to exclude unfair prejudice claims.

The Court held there was no statutory bar in the AA 1996 or CA 2006 preventing arbitration of unfair prejudice disputes and that public policy did not require a prohibition. The court accepted that arbitrators cannot make certain remedies (for example, winding‑up orders or orders creating rights in rem binding non‑parties), but considered those limitations to be practical consequences of the chosen private forum rather than grounds for deeming such disputes non‑arbitrable. On construction, the arbitration clauses were broadly drafted and did not exclude s.994 claims. The Court therefore affirmed the stay granted by Vos J and dismissed Fulham's appeal.

Nature of the claim/application: petition under s.994 CA 2006 for relief for alleged unfairly prejudicial conduct; relief sought included injunctions and removal of chairman.

Issues framed by the court: (i) whether unfair prejudice petitions are in principle arbitrable; (ii) whether the arbitration agreements in the FAPL and FA Rules were properly to be construed as covering the dispute; and (iii) whether public policy or the statutory scheme required judicial exclusivity.

Reasoning in brief: the Arbitration Act's party autonomy and mandatory stay regime (s.9) were analysed; the Court concluded s.9 permits a stay unless the arbitration agreement is null, inoperative or incapable of performance; no express or implied prohibition in CA 2006 against arbitration of s.994 disputes was found; practical limits on arbitral remedies do not make the disputes non‑arbitrable; and the relevant arbitration clauses were sufficiently broad to cover the dispute.

Appeal dismissed. The Court held that (i) disputes under s.994 CA 2006 are not, as such, outside the scope of arbitration; (ii) limitations on an arbitrator's ability to grant certain forms of relief do not render such disputes non‑arbitrable; and (iii) the arbitration clauses in the FAPL and FA Rules were sufficiently wide to cover the dispute, so Vos J was correct to stay the petition under s.9 AA 1996 unless the arbitration agreement was shown to be null and void, inoperative or incapable of being performed.

Appeal from an order of Vos J (Companies Court, Chancery Division) dated 1 December 2010 staying a s.994 Companies Act 2006 petition; this Court ([2011] EWCA Civ 855) dismissed the appeal.