The Interaction Between Arbitration Clauses And Applications Under Companies Acts And Related Legislation Offshore

Corporate applications ('CAs') are formal proceedings (such as winding-up petitions and unfair prejudice claims) filed pursuant to specific legislation in order to resolve corporate disputes or compel action involving or relating to a company. A respondent may apply to stay or strike out such CAs on the grounds that the action has been brought in a matter that is the subject of an arbitration agreement. ¹

The increased use of arbitration clauses, coupled with pro-arbitration public policy ²,  have broadened the circumstances in which CAs may be stayed in favour of arbitration.

Where a potentially relevant arbitration agreement exists, in order to avoid the unnecessary expenditure of resources, an applicant intending to file a CA will need to consider the risk of the CA being stayed and the parties compelled to arbitrate.