Jun 2014
BRITISH VIRGIN ISLANDS
COURT OF APPEAL
INTERLOCUTORY APPEAL – ARBITRATION – OPTION TO ARBITRATE – CONSTRUCTION OF ARBITRATION CLAUSE IN SHAREHOLDERS’ AGREEMENT – APPLICATION BY APPELLANT IN COURT BELOW UNDER SECTION 6(2) OF ARBITRATION ORDINANCE FOR STAY OF PROCEEDINGS COMMENCED BY RESPONDENT – WHETHER LEARNED JUDGE ERRED IN REFUSING TO STAY PROCEEDINGS – WHETHER PARTIES OBLIGED TO REFER TO DISPUTES FALLING UNDER SHAREHOLDERS AGREEMENT TO ARBITRATION
A shareholders agreement (“the SHA”) contained an arbitration clause which stated that: “If a dispute arises out of or relates to this Agreement or its breach … any party may submit the dispute to binding arbitration”. Following a dispute, the claimant commenced proceedings without referring the dispute to arbitration. This case concerned an application for a stay of proceedings pursuant to Section 6(2) of the Arbitration Act which states that: “If any party to an arbitration agreement … commences any legal proceedings in any court against any other party to the agreement … any party to the proceedings may at any time after appearance … apply to court to stay the proceedings”. The Learned Judge dismissed the application on the grounds that neither party was obliged to refer a dispute falling under the SHA to arbitration and the failure to exercise such an option was fatal.