Nov 2016
Author: Nigel Cook
This case involved an application by the plaintiff law firm for an administration order against its former client in respect of fees under a Conditional Fee Agreement (CFA). The CFA contained provisions for arbitration in event of dispute and it seems that the client challenged at least some of fees claimed.
The Court accepted that the claimant had locus standi to bring the application as there was a substantial undisputed element.
However the Court held that the compulsory arbitration provisions created uncertainty as to whether, under s 11 (a) Insolvency Act 1986 Sch A1, the company was or was likely to become unable to pay its debts.
The Court applied the reasoning of the Court of Appeal in Salford Estates No 2 Ltd v Altimart Ltd [2014] ewca civ 1575, confirming that unless the circumstances were wholly exceptional, the parties should be required to arbitrate before the application could be heard.
This is an exercise of the Court’s discretion to apply the statutory policy of the Arbitration Act 1996, encouraging arbitration, and not to allow the claimant to by-pass this step
For further information contact Nigel Cook on 01306 502294 or [email protected].
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