Byrne v Byrne, [2005] IEHC 55 (2005)

Docket Number:2004 1628SS
Judge:Macken J.

Neutral Citation Number: [2005] IEHC 55THE HIGH COURT 2004 No. 1628 SSIN THE MATTER OF SECTION 35 (1) OF THE ARBITRATION ACTS, 1954-1980 AND ORDER 62 OF THE RULES OF THE SUPERIOR COURTS, 1986, AS AMENDEDBETWEEN KEVIN BYRNE CLAIMANTANDEDWARD BYRNE RESPONDENTJUDGMENT delivered by Macken J. on the 3rd day of March 2005This is a case stated pursuant to section 35 (1) of the Arbitration Act, 1954 and Order 62 of the Rules of the Superior Courts 1986, as amended.The following are the relevant facts:(1) An agreement dated 9th October, 1995 ("the agreement") was entered into between the claimant and the respondent.(2) Both parties were shareholders in a private limited company called Byrne's (Temple Bar) Limited ("the Company"), in which the claimant held 49% of the shares and the respondent 51%.(3) The agreement recited that the parties were desirous of entering into it for the purpose of agreeing between them their respective input into the establishment of the proposed business, both in terms of labour and capital, and "for the purpose of regulating the manner of the disposal by them and each of them of their respective shareholdings" in the Company.(4) Clause 7 of the agreement provides as follows:a. "The parties agree that in the event of any dispute arising between them in the carrying out of their respective duties as Directors of the Company or in the exercise of their rights as Shareholders in the Company, their initial recourse shall be to the services of an Arbitrator or Mediator (and in default of agreement on which, then an Arbitrator) and in default of agreement between them on the nomination of an Arbitrator or Mediator, then such nomination shall be made by the President for the time being of the Incorporated Law Society of Ireland.b. The costs of a Mediator shall be borne by the Company. The costs of an Arbitrator shall be borne by the Company or by either or both of the parties as deemed appropriate by the said Arbitrator."The Arbitrator was appointed by letter of appointment on 19th April, 2004, on the nomination of the President of The Law Society, pursuant to Clause 7 a. of the Agree-ment, and according to the case stated, the arbitration forms were completed by each of the parties on 30th April and 23rd August 2004 respectively. The Arbitrator held a preliminary meeting shortly after his appointment awhich stage an issue arose as to whether any award made by him was binding on the parties.According to the case stated, the Arbitrator invited the parties to agree that the arbitration process, as well as any award made pursuant to it, would be binding on the parties. The parties were not in accord as to the meaning of Clause 7 of the agreement, and in particular as to the binding nature of the process itself or of any award made by the Arbitrator. In the circumstances, the Arbitrator has stated a case for the opinion of the Court on the correct interpretation of the clause in issue.The question posed to the High Court by the Arbitrator is in the following terms:"In light of Clause 7 of the agreement dated 9th October, 1995 and in light of the Arbitration Acts, 1954 - 1988 and particularly s. 27 of the Arbitration Act, 1954 is an award made by me pursuant to the above reference binding upon the parties?"According to the affidavit filed on behalf of the claimant and sworn on 4th November, 2004, the claimant says that his understanding of Clause 7 a. of the agreement is that this clause is a binding arbitration and mediation clause, and he avers "I have always understood that the intention of this provision of the shareholders' agreement was to force the parties to refer any dispute to mediation or arbitration, thereby avoiding expensive and time-consuming High Court proceedings".He also says in his affidavit that, on the basis that there was a binding arbitration clause in existence, he did not institute High Court proceedings pursuant to the provisions of the Companies Act, 1963 which he says he could have done were it not for the existence of Clause 7. He avers that he acted at all times in full reliance on the shareholders' agreement and says that the...

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