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BRIEF NOTE ON THE CASE OF


Fulham Football Club (1987) Ltd v Richards and another [2011] EWCA Civ 855

Brief Facts of the Case
A dispute in this case arose when Fulham Football Club (FFC) was competing with Tottenham
Hotspur Football Club (THFC) to sign Peter Crouch from Portsmouth Football Club. FFC
alleged the Chairman of the Football Association Premier League (FAPL), Sir David Richards,
interfered in the transfer negotiations and facilitated the players move to THFC, thereby
breaching the FAPLs Articles of Association and FA Rules.

FFC sought to bring an unfair prejudice petition before the courts under section 994 of the
Companies Act 2006. This section provides members of a company with a right to petition the
court on grounds that the companys affairs are, or may be, conducted in a manner that is
unfairly prejudicial to the interests of all or some of its members.

FFC argued that as Sir David Richards had facilitated the move of the player to another premier
league club, he had acted unfairly between the members of the premier league by promoting one
clubs interests over another. An injunction was sought by FFC to restrain Sir David Richards
from participating in future transfer negotiations, together with an order to cease acting as
Chairman or director of the FAPL.

Sir David Richards and the FAPL argued that section 9(1) of the Arbitration Act 1996 applied,
which provides that a party to legal proceedings can apply to the court for a stay of the
proceedings on the ground that it relates to a matter which is subject to an arbitration agreement.
As FFC and FAPL were parties to the FAPL Rules which contained arbitration agreements, Sir
David Richards and the FAPL argued the dispute should follow the arbitration procedure as laid
down in the agreement.

Issue
The key question for the court to answer was identified as whether the statutory right of a
member of a company to present an unfair prejudice petition under section 994 of the Companies
Act 2006 can be removed or diminished by contract, or whether it is an inalienable right.

Decision
The High Court, at first instance, granted the stay of proceedings. FFC appealed and the Court of
Appeal dismissed the appeal.

The Court of Appeal concluded that in the following situations, a stay in proceedings should be
granted in favour of arbitration where:

A party has brought unfair prejudice proceedings under section 994 Companies act 2006,
and
The issues in question fall within the scope of the arbitration agreement, provided that the
relief sought by the party is not of a type that would bind third parties or one that an
arbitrator could not grant due to public policy considerations which should render the
agreement null and void.
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In this case the Court of Appeal held the disputes raised in the petition fell within the terms of
the arbitration agreement and the remedy sought by FFC could also be granted by an arbitrator.
Although the decision would affect the other premier league clubs, it would not bind them as the
petition was sought against Sir David Richards and the FAPL and did not require the other
premier league clubs to take, or refrain from taking, any action.

Further, the Court of Appeal commented in passing that in situations where a third party may be
bound, or where the remedy sought cannot be provided by an arbitrator, the arbitrator could
potentially decide whether the underlying complaint of unfair prejudice was made out and then
authorise the complainant to seek remedy from the courts.

Comment

The courts suggestion of a two-stage process in situations whereby the remedy is outside the
arbitrators jurisdiction is likely to pose practical issues of duplication of proceedings. Moreover,
there could be differences of opinions between the arbitrator and the court if the court disagreed
with the arbitrators approach. If this two-stage process were to be introduced, further
clarification on these practical issues would be necessary.