Byrne v Byrne

JurisdictionIreland
JudgeMacken J.
Judgment Date03 March 2005
Neutral Citation[2005] IEHC 55
Docket NumberNo. 1628 SS/2004
CourtHigh Court
Date03 March 2005
BYRNE v BYRNE
IN THE MATTER OF SECTION 35 (1) OF THE ARBITRATION ACTS, 1954–1980 AND ORDER 62 OF

BETWEEN

KEVIN BYRNE
CLAIMANT

AND

EDWARD BYRNE
RESPONDENT

[2005] IEHC 55

No. 1628 SS/2004

THE HIGH COURT

ARBITRATION

Contract

Arbitration clause - Interpretation - Provision for mediation and arbitration in same clause - Clause providing that in event of dispute "initial recourse" to be to arbitration or mediation - Whether arbitration award final and binding - Arbitration Act 1954 (No 26), ss 27 and 35 - Rules of the Superior Courts 1986 (SI 15/1986), O 62 - Keating v New Ireland Assurance [1990] 2 IR 383 considered - Arbitration award intended to be binding on parties (2004/1628SS - Macken J - 03/03/2005) [2005] IEHC 55 - Byrne v Byrne

ARBITRATION ACT 1954 S35(1)

RSC O.62ARBITRATION ACT 1954 S27

COMPANIES ACT 1963

VIA NET WORKS (IRL) LTD (FORMERLY MEDIANET (IRL) LTD), IN RE 2002 2 IR 47

ASHVILLE CONSTRUCTION v ELMER CONTRACTORS 1989 QB 488

KEATING v NEW IRELAND ASSURANCE CO PLC 1990 2 IR 383

ROHAN CONSTRUCTION v ICI 1988 ILRM 373

Macken J.
1

This 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.

2

The following are the relevant facts:

3

(1) An agreement dated 9th October, 1995 ("the agreement") was entered into between the claimant and the respondent.

4

(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%.

5

(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.

6

(4) Clause 7 of the agreement provides as follows:

7

a 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.

8

b 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."

9

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.

10

The Arbitrator held a preliminary meeting shortly after his appointment a which stage an issue arose as to whether any award made by him was binding on the parties.

11

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.

12

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?"

13

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".

14

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 respondent's solicitors indicated on the 2nd June, 2004 that they, on behalf of the respondent, accepted the respondent was obliged to participate in the arbitration process.

15

He states in his affidavit that the practical consequence of not being bound by Clause 7 a. is that the respondent might choose not to abide by any award made by the arbitrator, and therefore it might be necessary to institute proceedings after the award, to establish that the award was conclusive. He says that this is illogical and would defeat the entire purpose of having included an arbitration clause in the agreement in the first place.

16

The respondent did not swear any affidavit. His counsel confines his argument to an objective interpretation of the clause, and to legal argument to which I will return in due course.

17

Mr O'Donnell, SC, for the claimant, submits that the agreement was brought about so as to enable both parties regulate the public house business owned by their company, in so far as that might affect both of them and in particular that the agreement would be for the express purpose of regulating the manner of the disposal by them and each of them of their respective shareholding in the company.

18

He argues that the agreement is clearly one which falls within the ambit of the Arbitration Act,1954 and that the only issue is whether or not an award made pursuant to the agreement is binding on the parties. He says the phrase "initial recourse shall be to the services of an arbitrator or a mediator" in clause 7 means that an initial choice is to be made by the parties as to whether or not the dispute shall be referred either to one or the other, and nothing more. He suggests that this is a correct interpretation, and says the agreement was drawn up by a solicitor who knew what the parties wanted.

19

He contends that once the parties have accepted, as here, that there is to be arbitration, it is for the respondent to establish that the arbitration is other than binding. It is insufficient for the respondent to say that its non binding force is implied by reason of the fact that the agreement uses the words "initial recourse." He argues that that cannot be correct, since when an arbitration agreement is silent on its binding or non binding nature, the Arbitration Act,1954 itself makes it binding, citing S. 27 of that Act which reads as follows:

"Unless a contrary intention is expressed therein, every arbitration agreement shall, where such a provision is applicable to the reference, be deemed to contain a provision that the award to be made by the arbitrator or umpire shall be final and binding on the parties and the persons claiming under them respectively"

20

He says therefore that it is for the respondent to prove that the provisions of that Act have been expressly...

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