Guernsey Law Reports 2007–08 GLR Note 3
FERBRACHE and RICHARDSON v. KIRK and FOUR OTHERS
ROYAL COURT (Newman, Lieut. Bailiff): February 27th, 2007
Arbitration—stay of proceedings—dispute involving fraud
In an arbitration resulting from a breakdown in relations between the partners of a professional firm, the applicants made allegations (which were denied) that they had been subject to victimization and “equitable fraud” on the part of the respondents. The court had the power under the Arbitration (Guernsey) Law 1982, s.24(2) to stay an arbitration when a dispute arose involving a question of fraud, to allow it to be resolved by the court. The applicants gave no details of the alleged “equitable fraud” and offered no interpretation of the meaning of “fraud” in s.24(2), though they informed the court that they did not propose to allege deceit or impropriety. The parties then agreed that the partnership should be dissolved.
Held: (1) In the light of the agreement to dissolve the partnership, the applicants’ original action would be stayed and the arbitration allowed to continue. Neither party argued that arbitration was an inadequate way of dealing with the ordinary issues arising in the winding up of the firm.
(2) Had it been necessary to give an authoritative interpretation of “fraud” in s.24(2) of the Law, the court would have been inclined to hold that it should be interpreted strictly, i.e. it meant “deceit” and dishonesty was an essential ingredient (Watson v. Prager, [1991] 1 W.L.R. 726, observations of Scott, J. applied). Fraud had to be alleged and pleaded clearly and a prima facie case had to be shown (Russell v. Russell (1880), 14 Ch. D. 471, referred to). As fraud in this sense was not being alleged, it was not necessary to stay the arbitration under s.24(2).
2009
Law Report
None
Guernsey Law Reports 2007–08 GLR Note 3