Court refuses stay where defendant is appealing against earlier decision to refuse a stay of proceedings in favour of arbitration

The claimant and the defendants entered into guarantees which were subject to English law and exclusive jurisdiction. Subsequently, the parties entered into a further guarantee and agreed that any disputes under that guarantee would be determined by ICC arbitration in Florida. Broadly, the same dispute arose in respect of both sets of guarantees but the judge refused a stay under section 9(1) of the Arbitration Act 1996 on the basis that the English proceedings were "in respect of a matter" which it had been agreed would be referred to arbitration. He also refused a stay on case management grounds.

The defendant is now seeking permission to appeal that decision from the Court of Appeal. Section 9(3) of the Act provides that "An application [for a stay] may not be made by a person …. after he has taken any step in those proceedings to answer the substantive claim". The defendant argued that being required to serve a defence in the English proceedings would amount to a "step" in those proceedings, rendering its appeal futile, because the English court would no longer have a discretion to stay its proceedings.

That argument was rejected by Blair J. Reference was made to the case of Bilta v Nazir, in which it was held that a reservation of the right to apply for a stay under section 9 was all that was required to exclude the operation of section 9(3). That case concerned an application to extend time to put in a defence, but the same principle applied to the filing of a defence where an appeal is being brought.