by Matthew Austin January-19-2016 in Litigation & Dispute Resolution, Commercial & Business
The High Court recently granted an application to stay court proceedings pending arbitration despite the fact that the applicant defendant had engaged in the court proceedings, which had advanced beyond the initial stages. Matthew Austin reports.
The application was brought pursuant to Section 6 of the Arbitration Act 2010 which provides that the UNCITRAL model law applies in Ireland and applies to both international commercial arbitrations and domestic arbitrations. Article 8(1) of the UNCITRAL model law requires a court to stay proceedings pending arbitration “if a party so requests not later than when submitting his first statement on the substance of the dispute”.
In Go Code Limited v Capita Business Services Limited [2015] IEHC 673, the plaintiff argued that the proceedings should not be stayed because the defendant could not come within the model law requirement that the request that the matter be determined by arbitration be submitted prior to the applicant’s first statement on the substance of the dispute. In Go Code the plaintiff had issued a plenary summons, commencing court proceedings, on 9 June 2014. The defendant had filed a memorandum of appearance with the court on 15 August 2014. Subsequently, the solicitors for the defendant had called upon the plaintiff’s solicitors to deliver a statement of claim - this was delivered on 18 December 2014. The application to stay the court proceedings pending arbitration was brought by the defendant on 23 March 2015, almost two years after the initiation of the court proceedings.
Despite the initial engagement by the defendant with the court proceedings, McGovern J acceded to the application to stay the proceedings to allow arbitration to take place. Judge McGovern noted that there had been a number of cases previously where the courts have stayed proceedings to allow arbitration to take place despite the fact that a memorandum of appearance had been entered and a statement of claim had been delivered. He quoted extensively from the decision of Mr Justice Clarke’s Supreme Court judgment in Fury v Lurgan-ville Construction Company Limited [2012] 4 I.R. 655, which set out the circumstances in which a court could refuse an application to stay the court proceedings pending arbitration where an estoppel had arisen which would render the arbitration clause inoperable. Mr Justice Clarke held that it was necessary for the applicant to establish something that amounts to an unequivocal promise or representation to the effect that strict contractual rights will not be enforced as well as reliance by the plaintiff upon that representation.
On the facts of Go Code, Mr Justice McGovern held that nothing in the correspondence between the plaintiff and defendant’s solicitors amounted to a promise or representation to the effect that the arbitration clause would not be relied upon. The judge also rejected the plaintiff’s argument that it had acted to its detriment in preparing and delivering a statement of claim, ie that it had incurred legal costs in doing so. Mr Justice McGovern stayed the court proceedings pursuant to the provisions of Article 8(1) of the model law.
A full copy of the judgment can be accessed here.
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About the Author
Matthew Austin
Matthew is a partner in the Commercial & Business team and has considerable expertise in a range of practice areas, having acted for Irish and International clients in domestic and multi-jurisdictional issues. Matthew has advised in civil and administrative law disputes and in regulatory and advisory matters including insolvency/restructuring, IP, defamation and media law, competition and consumer protection and data protection.