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ARTICLE · 27 JUNE 2024

Winding-Up Versus Arbitration Agreements: A Victory For Petitioning Creditors

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The Privy Council's decision in Sian Participation Corp v Halimeda International Ltd makes it easier to wind up companies with debts subject to arbitration agreements or foreign court jurisdictions, overturning the restrictive precedent set by Salford Estates.

United KingdomLitigation, Mediation & Arbitration
Paul Keddie
Paul Keddie
Timothy Bromley-White
Timothy Bromley-White

Winding up companies where the underlying debt is subject to an arbitration agreement or the exclusive jurisdiction of a court outside England and Wales has now become easier. This is the result of the Privy Council's recent decision in Sian Participation Corp (in liquidation) v Halimeda International Ltd [2024] UKPC 16 (Sian).

When a creditor seeks to place a company into compulsory liquidation by presenting a winding up petition it will have to satisfy the court hearing the petition that the unpaid debt is not genuinely disputed on substantial grounds. When the debt forming the basis of the winding up petition is subject to an arbitration agreement the question arises as to whether the court hearing the petition or an arbitrator should decide whether that debt is genuinely disputed on substantial grounds.

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