Assaubayev & Ors v Michael Wilson & Partners Ltd

The Court’s inherent supervisory jurisdiction over solicitors arises from their status as officers of the court. It is principally punitive and disciplinary, and does not extend to every person conducting litigation or to a corporate body merely because it is, or purports to be, a recognised body. The court provisionally considered that the jurisdiction might extend to a non-solicitor who acts as, or pretends to be, a solicitor by assuming that office’s privileges, but left that issue undecided. Allegations that fees are irrecoverable because of illegality, champerty or unauthorised legal activity remain arbitrable. Under section 9(4) of the Arbitration Act 1996, a stay was required because no public-policy or statutory ground made the arbitration agreement ineffective.

The appellants, members of a Kazakhstani family and an associated company, challenged substantial fees charged by Michael Wilson & Partners Ltd under two retainers. They sought to set aside the retainers and obtain delivery and assessment of bills under Part III of the Solicitors Act 1974. The respondent sought stays under section 9 of the Arbitration Act 1996.

The claims under Part III were struck out because the respondent was not a solicitor. Walker J then stayed the remaining claims pending arbitration, while leaving the extent of the court’s supervisory jurisdiction unresolved: [2014] EWHC 821 (QB). The appeal concerned the arbitrability of the ordinary claims and whether the court should exercise its supervisory jurisdiction before arbitration.

Christopher Clarke LJ delivered the judgment, with Black LJ and Aikens LJ agreeing. The appeal was dismissed, save that paragraph 5 of the order was varied so that the remaining claim was stayed under section 9(4) of the Arbitration Act 1996.

1. Supervisory jurisdiction. The jurisdiction over solicitors is founded on their status as officers of the court. It is a residual, domestic jurisdiction, principally punitive and disciplinary, although it may have a compensatory aspect. The court controls whether and how it is exercised. It does not extend to persons who are neither solicitors nor purport to be solicitors, such as barristers. A recognised body providing legal services lawfully does not thereby become an officer of the court, and the jurisdiction does not extend to a corporate body merely pretending to be a recognised body.
2. Unqualified actors. Christopher Clarke LJ was inclined to the view that the jurisdiction may extend to a person or body which acts as, or pretends to be, a solicitor and obtains or seeks to obtain property or fees by assuming the privileges of that office. He considered that there was no sound reason to confine the jurisdiction to orders for the return of money. The point was not necessary to the appeal and was left undecided. Black LJ preferred not to express an opinion on it.
3. Arbitrability. The arbitration clause was separate from the other terms of the retainers. Allegations of illegality, champerty, unauthorised legal activity, recoverability of fees and reasonableness of costs fell within the arbitration agreements and could be determined by the arbitrator. The arbitrator’s inability to exercise the court’s supervisory jurisdiction or grant every available remedy did not make the agreements ineffective.
4. Stay and case management. The possibility of overlapping factual issues did not bifurcate or transfer the court’s jurisdiction. The court could await the arbitration before deciding whether and how to exercise any supervisory jurisdiction. Section 9(4) required a stay unless the agreement was null and void, inoperative or incapable of performance. No such ground or public-policy objection was established.
5. The respondent established concluded retainers with all appellants on the balance of probabilities. The family and Hawkinson could not resile on appeal from the basis on which they had obtained permission to serve out and advanced their claims. The stay was therefore maintained.

• Court of Appeal (Civil Division). Dismissed the appeal, varying the stay so that it operated under section 9(4) of the Arbitration Act 1996.
• Queen’s Bench Division. Walker J, in [2014] EWHC 821 (QB), struck out the Part III claims under the Solicitors Act 1974, held that supervisory claims were not arbitrable, and stayed the remaining claims pending arbitration.