Tuesday, 21 August 2012

Law report - arbitration clause covering individuals

Buchanan v Lawrence [2012] Sc (Bda) 38 Civ (27 July 2012)

The plaintiff had paid membership fees to The Finest Golf Clubs of the World Limited. He subsequently met with the defendant, a director of the company, who allegedly agreed to personally refund the fees.

The plaintiff brought a claim against the defendant for the failure to refund. The defendant relied on an arbitration clause in the agreement with the company, which covered disputes between the club, its officers, directors, affiliates, and any club member, relating to the rules and regulations and transactions arising out of them.

Kawaley CJ held that the correct test is that proceedings should be stayed when there is a prima facie case that the dispute is caught by the arbitration clause [5]-[6].

In this type of case, there is no clear distinction between a claim against a director as a director and in his personal capacity, when the Defendant's involvement was due to his position as a director [8].

In terms of costs, Litigants were also warned that the court was likely to follow the judgment of Colman J in A v B (No 2) [2007] EWHC 54 (Comm), in that a party who has been found to have deliberately ignored an arbitration clause would have costs awarded against them on the indemnity basis [10]-[11].

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