Chana v CC Properties (Yorkshire) Ltd

Where parties have agreed to arbitrate a dispute, the court should not determine that dispute within related court proceedings. The principle of party autonomy and limited judicial intervention applies both to the arbitral process and to a pending statutory appeal against an award. A court should determine any separable issues but adjourn its final decision if deciding the court claim would render the arbitration appeal nugatory. An arbitrator’s construction of a lease will not justify court intervention under section 69 of the Arbitration Act 1996 unless the statutory threshold is met, including that the decision is obviously wrong or raises a question of general public importance open to serious doubt.

The appellant tenant challenged the respondent landlord’s forfeiture of a restaurant and bar lease for alleged non-payment of rent. The County Court declared that the lease had been lawfully forfeited. The tenant had separately invoked the lease’s arbitration clause concerning whether rent remained suspended because of disrepair and had brought an Arbitration Appeal under sections 67–69 of the Arbitration Act 1996.

Permission to appeal was granted on whether the suspension of the tenant’s liability to pay rent remained operative on 1 February or 1 April 2017. The central issue was whether the County Court should have decided that issue while the arbitral challenge remained pending.

1. The appeal was allowed in principle. The tenant had invoked the arbitration provisions to determine whether the obligation to pay rent was suspended under the lease. Applying section 1 of the Arbitration Act 1996 and the principle identified in Cetelem v Roust [2005] 1 WLR 3555, the court’s role was limited to supporting the arbitral process and not usurping or interfering with it.

2. The County Court should not have determined the suspensive effect of the rent clause for itself. That issue had been removed from the issues which the parties could ask the court to decide. The same principle applied to the pending Arbitration Appeal against the award. By declaring the forfeiture valid, the County Court had effectively rendered that appeal nugatory.

3. The tenant had not objectively abandoned the arbitration point. Although his presentation at trial was confused and he appeared to accept that rent was payable, the surrounding circumstances showed a genuine misunderstanding rather than an intentional concession. The County Court should have determined the other issues properly before it and adjourned final judgment until the arbitration issue was resolved.

4. The tenant’s reliance on the earlier judgment of HHJ Cockcroft was rejected. That decision concerned a different issue, different parties and the state of repair proved in 2013. It could not determine whether rent became due in 2017. A later unopposed order involving neither the respondent nor the present appeal was likewise irrelevant.

5. The arbitrator’s approach to clause 10 was nevertheless a correct reading and application of the lease. The burden was on the tenant to show continuing inability to use some or all of the premises because of internal damage resulting from the earlier roof disrepair. The failure to prove that matter did not disclose an error of law, still less an error that was obviously wrong for the purposes of section 69(3)(c)(i) of the Arbitration Act 1996. The authorities including London Underground v Citylink Telecom [2007] EWHC 1749 (TCC), Pioneer Shipping v BTP Tioxode (The Nema) [1982] AC 724, Antaios Cia Naviera v Salen Rederierna (The Antaios) [1985] QC 191 and HMV UK Limited v Propinvest Friar LP [2011] EWCA Civ 1708 supported that conclusion.

6. Final disposal of the appeal from the County Court was adjourned pending an oral renewal of the tenant’s application for permission to appeal against the decision striking out the Arbitration Appeal. The matters were to be listed together, and a full appeal bundle including the decision of District Judge Pema was required.

• High Court (Chancery Division): final disposal of the appeal was adjourned pending the related application concerning the Arbitration Appeal.
• County Court in Leeds: HHJ Klein declared on 13 March 2019 that the respondent landlord had lawfully forfeited the lease.