Chaim Saul Grosskopf v Yechiel Grosskopf & Anor

Under section 9 of the Arbitration Act 1996, the court must identify the substantial matters legally relevant to the claim and determine whether they fall within the arbitration agreement on its true construction. The fact that an arbitral tribunal cannot grant the precise remedy sought does not generally make the underlying dispute inarbitrable. Disputes about trustee misconduct, breakdown in trust administration and whether a trustee should stand down may be resolved by arbitration where the tribunal can determine the underlying issues and give directions with comparable practical effect. The parties are held to their arbitration agreement even if arbitration offers narrower remedies than court proceedings.

The claimant, a beneficiary of a family trust, sought the appointment of a judicial trustee in place of the defendant trustees. He alleged undervalue disposals, disadvantageous lending and excessive remuneration, relying on those matters to justify an independent investigation into the trust’s administration.

The defendants applied for a stay under section 9 of the Arbitration Act 1996, alternatively strike-out for abuse of process. Earlier proceedings and the parties’ arbitration had addressed the scope of the arbitration agreement. The central issues were whether the present complaints fell within that scope and whether the unavailability of a judicial-trustee appointment from the arbitral tribunal made the dispute inarbitrable.

1. Stay under section 9. The court applied the two-stage approach identified in Republic of Mozambique v Privinvest Shipbuilding SAL (Holding) [2023] UKSC 32: identify the matters in dispute, then construe the arbitration agreement to determine whether those matters fall within its scope. The court must examine the substance of the dispute rather than artificial pleading formulations.
2. The complaints concerned the administration of the trust and were relied upon to justify a full financial investigation. Master Price had already determined that the arbitration agreement covered those matters, and the Tribunal had agreed with that analysis. The claimant was therefore bound by that determination and estopped from reopening the jurisdictional issue. It was unnecessary to decide the scope question afresh.
3. The inability of the Tribunal to appoint a judicial trustee did not make the dispute inarbitrable. The underlying questions—whether the complaints were made out, whether there had been a breakdown in trust administration, and whether the trustees should stand down—were suitable for arbitration. There was no statutory prohibition or public-policy rule requiring such disputes to be determined by the court.
4. The Tribunal could make directions requiring the defendants to stand down and seek the appointment of replacement trustees. If necessary, an application could then be made to the court under section 41(1) of the Trustee Act 1925 or for a judicial trustee. The interests of non-party beneficiaries did not create a principled bar to arbitration.
5. The court adopted the analogous reasoning in Rhinehart v Welker [2012] NSWCA 95 and FamilyMart China Holding Co Ltd v Ting Chaun (Cayman Islands) Holding Corporation [2023] UKPC 33. It also applied the principle in Société Commerciale de Reassurance v Eras (International) [1992] 1 Ll Rep 570 that narrower arbitral remedies do not justify refusing a stay.
6. The arbitration agreement remained operative. The claimant was not entitled to relitigate disputes already determined by the Tribunal. The defendants’ application for a stay was therefore granted; it was unnecessary to decide the alternative abuse-of-process application.

First-instance decision. The judgment refers to an earlier decision of Master Price concerning the first claim, which was subsequently stayed by consent, but this judgment was not an appeal from that decision.