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When Arbitration and Liquidation Collide

Philpott and another (as joint liquidators of WGL Realisations 2010 Ltd) v Lycee Francais Charles de Gaulle School [2015] EWHC 1065 (Ch), [2015] All ER (D) 175 (Apr)

A company in voluntary creditors' liquidation was engaged in a construction dispute with a school. The school put in a proof of debt, which the company's liquidators had yet to approve. The school contended that an arbitration clause in the construction contract was binding and continued to apply despite the company being in liquidation. The liquidators of the company applied for directions, contending that the court had power, under the Insolvency Rules 1986, SI 1986/1925, r 4.90 in connection with the proof of debt process, to give directions as to the taking of an account of the balance due between the company and the school. The Chancery Division ruled, among other things, that the arbitration clause trumped the taking of an account under the court's directions as envisaged by the Insolvency Rules. The arbitration agreement had not become inoperative following liquidation of the company.

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