Lifestyle Equities CV & Anor v Hornby Street (MCR) Ltd & Ors

Under section 9 of the Arbitration Act 1996, a stay may be sought by a party to an arbitration agreement even where the claimant is not an original signatory. The governing law of an arbitration agreement determines its scope and effect, including whether it binds an assignee. Under Californian contract law, a burden attached to a trade mark by a coexistence agreement may pass to an assignee, including an obligation to arbitrate. The assignee’s lack of knowledge is immaterial. Separately, equitable estoppel may apply where the claimant’s claims are dependent upon, or inextricably intertwined with, the obligations in the agreement. A stay should follow where those requirements are met.

The claimants brought proceedings for trade mark infringement and passing off concerning the Beverly Hills Polo Club and Santa Barbara Polo & Racquet Club logos. The third, fourth and eighth defendants applied under section 9 of the Arbitration Act 1996 and CPR 62.8 for a stay, relying on a 1997 worldwide coexistence agreement containing a California-seated arbitration clause.

The claimants were assignees of trade marks owned by the original contracting party. They argued that they were not parties to the arbitration agreement, that the agreement was ineffective under section 25 of the Trade Marks Act 1994, and that equitable estoppel did not apply. The central issue was whether the arbitration provision bound the claimants and required the proceedings to be stayed.

1. Statutory requirements. Section 9(1) of the Arbitration Act 1996 requires the applicant to be a party to an arbitration agreement, proceedings against that party concerning a matter covered by the agreement, and notice to the other parties. It does not require the claimant who commenced the proceedings also to be a party to the agreement. Section 9(4) requires a stay unless the agreement is null and void, inoperative or incapable of being performed.
2. Formation and governing law. By correspondence and their reliance on the coexistence agreement before the Mexican Trade Mark Office, the claimants became parties to the 1997 Agreement by June 2015. The effect and interpretation of its arbitration provision were governed by Californian law under the agreement’s governing-law clause.
3. Trade mark legislation and separability. The 1997 Agreement was a coexistence agreement, not a licence, so section 25 of the Trade Marks Act 1994 did not apply. In any event, the arbitration agreement was separate from the underlying agreement and would remain unaffected by any invalidity affecting that agreement.
4. Assignment of burdens. Under Californian law, a burden attached to a trade mark by a settlement or coexistence agreement passes with an assignment and binds the assignee, whether or not the assignee knew of it. The general rule applied equally to an obligation to arbitrate. The arbitration provision therefore bound the claimants.
5. Equitable estoppel. Independently, the claimants’ reliance on the coexistence agreement before the Mexican Trade Mark Office supported estoppel. Their infringement and passing-off claims were, on the balance of probability, dependent upon or inextricably intertwined with obligations imposed by that agreement.
6. Order. The action was stayed pursuant to section 9 pending the outcome of any arbitration. By agreement, the stay applied to proceedings against all defendants.