Jurisdiction(s):
United Kingdom

Arbitration stay refused—solicitor not party or beneficiary; proprietary injunction over client account funds: Hunt v IPS Law LLP [2024] EWHC 3395 (Ch)

Published on: 21 February 2025

Published by a LexisNexis Arbitration expert

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Article summary

Hunt v IPS Law LLP and Others (transcript) [2024] EWHC 3395 (Ch) What are the practical implications of this case?

This judgment is a pointed reminder of the limits of AA 1996, s 9. That provision permits a party to an arbitration agreement, when sued in court on a matter agreed to be referred to arbitration, to seek a stay of the proceedings. In this dispute, however, the correct interpretation of the Investment Agreement meant the defendants were not parties to the arbitration clause at all, so a stay was unavailable. IPS Law, although described in the agreement as the ‘Investment Escrow Party’, did not fall within the clause’s references to the ‘Parties’. Nor could IPS Law invoke the clause via C(RTP)A 1999, because the Investment Agreement did not confer any benefit on it. Accordingly, the statutory route to a stay could not assist those defendants.

As regards Mr Hunt’s investment, the decision shows what can occur when funds are transferred under a poorly drafted agreement, and it therefore underlines the importance of robust controls, including:

due diligence
proper bookkeeping
compliance with the SRA Accounts Rules

Close attention to these requirements, as illustrated here, remains essential to avoid similar issues arising...

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