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Bilta (UK) Ltd (in liquidation) v Muhammad Nazir and others

[2010] EWHC 1086 (Ch).  Case No HC09C03502.

Chancery Division: The Hon Mr Justice Sales J.

Arbitration-stay of proceedings--- S9 Arbitration Act 1996 --- CPR Rule 11-step in the proceedings.

One of the Defendants applied for a stay of English High Court Proceedings pursuant to S 9 Arbitration Act 1996 in order that the claims against it should be arbitrated.  The Bilta (UK) Ltd, the Claimant, resisted the application on the grounds that:-

a) CPR 11 applied to applications for a stay under Arbitration Act 1996 and that since no application for a stay had been made within 14 days after filing an acknowledgment of service of the claim form the applicant was to be treated as having agreed that the Court had jurisdiction and the application for a stay should be refused.  The Claimant relied upon the Court of Appeal's judgment in Hoddinott v Persimmon Homes (Wessex) Ltd [2008] 1 W.L.R. 806 (Court of Appeal).

b) The applicant had taken a step in the action by seeking and obtaining an extension of time for the service of the defence.

The Judge ruled that CPR 11 has no application to applications for a stay under Arbitration Act 1996.  This is the first case to clarify the relationship between Arbitration Act 1996 and CPR 11.  It is now clear beyond doubt that the only time limits to apply to S9 Arbitration Act 1996 are those set out in S 9 itself.

The Judge ruled that in light of the correspondence between the parties' solicitors the application for an extension of time for service of the defence was not a "step in the proceedings to answer the substantive claim".  The applicant's solicitors had reserved their position in correspondence and the making of the application, when considered objectively in light of that correspondence, could not be construed as indicating an election by the applicant to waive any right it might have to seek a stay for the dispute to be referred to arbitration or an unequivocal representation by the applicant that it did not intend to contest the jurisdiction of the court. 

Cases considered in the judgment:-

Capital Trust Investments Ltd v Radio Design [2002] CLC 787 (Court of Appeal)

SMAY Investments Ltd v Sachdev (Patten J) [2003] EWHC 474

Patel v Patel [2000] Q.B. 551 (Court of Appeal)

Ahmad Al-Naimi v Islamic Press Agency Inc [2000] 1 Lloyd's Rep 522 Court of Appeal.

Fiona Trust v Privalov [2008] 1 Lloyd's Rep 254 (House of Lords)

Graham Charkham of 20 Essex Street appeared for the applicants for the stay.