Monday 8 December 2014

UK: England and Wales: winding-up petitions and arbitration agreements

The Court of Appeal gave judgment today in Salford Estates (No.2) Ltd v Altomart Ltd [2014) EWCA 1575 Civ. The court unanimously held that section 9(1) ("stay of legal proceedings") of the Arbitration Act 1996 did not apply to a winding-up petition where the ground of the petition was that the company was unable to pay its debts and what was in dispute was that issue generally or, more specifically, whether a particular debt mentioned in the petition was outstanding and due.

The Chancellor (Sir Terence Etherton), delivering the leading opinion, observed that it was "... highly improbable that Parliament, without any express provision to that effect, intended section 9 of the 1996 Act to confer on a debtor the right to a non-discretionary order striking at the heart of the jurisdiction and discretionary power of the court to wind up companies in the public interest where companies are not able to pay their debts" (para. [35]).

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