Alternative Dispute Resolution

Fulham Football Club (1987) Ltd. v. Richards

[2011] EWCA Civ 855; [2012] 1 All ER (Comm) 1148

Citation: [2011] EWCA Civ 855; [2012] 1 All ER (Comm) 1148
Court: Court of Appeal of England and Wales
Date: 21 July 2011
Bench: Mummery, Longmore and Patten, LJJ.

Facts

Fulham Football Club was a member of the Football Association Premier League.
The league rules contained broad arbitration provisions.
Fulham alleged that Sir David Richards, the Premier League chairman, had acted improperly in connection with the transfer of footballer Peter Crouch.
Fulham claimed that:
Richards acted as an unauthorised agent;
his conduct favoured another club;
the league’s affairs had been conducted unfairly; and
Fulham suffered unfair prejudice.
It filed a petition under Section 994 of the UK Companies Act 2006.
The respondents sought a stay in favour of arbitration.
Fulham argued that unfair-prejudice proceedings were non-arbitrable because:
the remedy was statutory;
the court possessed broad corporate powers;
some remedies could affect the company and third parties; and
only a court could regulate future corporate conduct.

Issue

Whether an unfair-prejudice claim is arbitrable.
Whether the statutory nature of the claim excludes arbitration.
Whether limitations on the tribunal’s remedies prevent referral.

Rule

A statutory claim is not automatically non-arbitrable.
The court must determine whether:
the substantive dispute concerns private rights between parties;
legislation reserves exclusive jurisdiction to the court; and
the tribunal can determine the central issues.
A tribunal may decide whether conduct was unfairly prejudicial even if some final corporate remedies require court assistance.
Proceedings become non-arbitrable where the requested relief:
affects the public;
binds non-parties;
alters corporate status against the world; or
invokes an exclusively judicial power such as winding up.

Application

Fulham’s central complaint concerned alleged misconduct within the contractual and regulatory relationship among league members and officials.
The parties had agreed through the league rules to arbitrate disputes arising from that relationship.
The allegations could be resolved by determining:
whether Richards breached duties;
whether league rules were violated;
whether Fulham suffered prejudice; and
what inter-party relief was appropriate.
Those questions were private and bilateral or multilateral among consenting members.
The fact that Fulham framed the claim under Section 994 did not change the underlying nature of the controversy.
Parties cannot necessarily avoid arbitration by choosing a statutory cause of action where the dispute itself is contractual and private.
The tribunal might not possess every power available to the Companies Court.
For example, it might not finally:
wind up the company;
alter rights of strangers;
make orders requiring public registration; or
regulate corporate affairs against non-parties.
That limitation did not prevent it from deciding liability and granting available relief.
If a later court order became necessary to implement a tribunal’s conclusions, the court could act at that stage.
The Court of Appeal therefore granted a stay.
The decision is important because it avoids treating all company-law claims as one category.
The correct inquiry focuses on:
the nature of the rights;
the effect of the remedy; and
statutory intention.
Indian law has generally been more cautious concerning oppression and mismanagement before the NCLT, but Fulham remains an influential comparative authority.

Conclusion

The Court of Appeal held that the unfair-prejudice dispute was arbitrable.
The statutory label and possible need for later judicial remedies did not prevent the tribunal from deciding the private controversy.
The court proceedings were stayed in favour of arbitration.
Use this case for: statutory corporate claims may be arbitrable where their substance concerns private inter-party rights and no exclusively public remedy is immediately required.