The starting point is to identify a statutory provision or a rule of public policy which has the effect of rendering the arbitration agreement either void or unenforceable insofar as it purports to submit unfair prejudice issues to binding arbitration. There is no express provision in either the AA 1996 nor the CA 2006 that excludes arbitration as a possible means of determining disputes of this kind. In Patten LJ's view, section 1(b) of the AA 1996 (which embodies the principle of party autonomy, subject only to the safeguards necessary in the public interest) simply affirms the right of parties to determine the method of dispute resolution of their arbitrable disputes. It was doubtful whether that provision is really concerned with the over-arching question of arbitrability.

Patten LJ considered that the wording of section 9(4) of the AA 1996 leaves open the possibility of a challenge to an application for a stay on the grounds of arbitrability, but does little to identify the basis of any challenge. Having considered academic commentary on arbitrability, Patten LJ concluded that the question of whether an issue is arbitrable is not necessarily determined by the limitations on the tribunal's powers to make orders affecting non-parties (which is derived from the contractual basis of arbitration). The fact that an arbitrator cannot make a winding-up order affecting third parties does not mean that it is impossible for the members and a company to agree to submit their disputes, inter se as shareholders, to arbitration.

The source of restrictions on arbitrabilty cannot be found in the AA 1996 or the "law of arbitration" itself. Commentators and academics simply recognise that the scope of even the most widely drafted arbitration agreement must yield to restrictions derived from other areas of the law. There are statutory provisions that preserve a right of access to the courts (for example certain areas of matrimonial and employment law). These provisions are inconsistent with an agreement to submit certain disputes to binding arbitration and would, therefore, defeat any application for a stay, either under section 9 of the AA 1996 or under the court's inherent jurisdiction.

However, there was no statutory restriction or rule of public policy in this case that prevented the parties agreeing to submit their disputes to arbitration. The combined effect of an arbitration agreement that covers the dispute in question and section 9(4) of the AA 1996, is that the agreement to refer the dispute to arbitration will exclude the parties' right to bring or continue legal proceedings covering the same subject matter, unless one of the exceptions in section 9(4) is established.

In view of Patten LJ's conclusion that there are no provisions in the CA 2006 that prevent an unfair prejudice claim from being arbitrated, Fulham would have to identify either an implied restriction in the statute or some equivalent rule of public policy to demonstrate that the matter was not arbitrable.

If a petitioner establishes unfair prejudice, the court has wide powers under section 996 to make the order it thinks fit. However, the types of disputes that are likely to occur in the conduct of the affairs of the FAPL and the scope of any relief sought are likely to be limited.

If an arbitrator considered that the proper solution to a dispute between a shareholder and the company was to give directions for the conduct of the company's affairs, he could authorise the shareholder to seek relief from the court under section 994.

In practice, these cases are likely to be rare. If the relief sought may affect other members who are not parties to the arbitration, the arbitrator could seek their views and the scope of the relief available could be limited by the extent of any third-party opposition. Similarly, if the order sought is one which cannot take effect without the consent of third parties, the arbitrators' hands will be tied.

Fulham had contended that a section 994 claim is not arbitrable because the petition

The questions that the court must resolve do not, therefore, turn on the nature of the company in the present case or the nature of this particular dispute. In the view of Patten LJ, if section 994 preserves a right of access to the court, it must do so for any petition brought under that provision.

Patten LJ considered the analogy that Fulham sought to draw between an unfair prejudice petition under section 994 and a winding-up petition on just and equitable grounds under section 122 of the Insolvency Act 1986, which Fulham contended provided a basis for a restriction on arbitrability. However, this analogy did not assist in providing a basis for a restriction on the arbitrability of section 994 claims. It was necessary to look at section 994 itself and also the cases in which the court has had to consider the grant of a stay under section 9 of the AA 1996 in the context of an unfair prejudice petition.

Patten LJ commented, obiter, that a dispute that forms the grounds of a petition under section 122(1)(g) is also probably capable of being arbitrated. In those cases, the arbitration agreement would operate as an agreement not to present a winding-up petition unless and until the underlying dispute had been determined in the arbitration. The question of whether the complaint of unfair prejudice was made out and a winding-up order should be made, would remain a matter for the court in any subsequent proceedings. Once the arbitrator had concluded that winding-up proceedings would be justified, a shareholder would then be entitled to present a petition under section 122(1)(g) and the court could be invited to lift any stay imposed under section 9(4).

Patten LJ concluded that Vos J had been right to refuse to follow Exeter City. He considered that much of the reasoning in Best Floor Sanding was uncontroversial and Warren J, in that case, had been right to regard the arbitration clause as unenforceable, insofar as it included within its scope the question of whether the company should be wound up. However, Patten LJ did not agree with the conclusion in Best Floor Sanding that there can be no resort to arbitration in respect of a dispute between the shareholders of the company which forms the grounds on which such relief may be sought. Weeks J (in Exeter City) was, therefore, wrong to extend the reasoning of Warren J (in Best Floor Sanding) to an unfair prejudice petition.

The determination of whether there has been unfair prejudice is plainly capable of being decided by an arbitrator and it was common ground that an arbitral tribunal constituted under the FAPL or the FA Rules would have the power to grant the specific relief sought by Fulham in its petition. The court was not, therefore, concerned with a case in which the arbitrator was being asked to grant relief of a kind that lies outside his powers or forms part of the exclusive jurisdiction of the court. Nor did the determination of issues of this kind call for some kind of state intervention in the affairs of the company, which only a court can sanction.

A dispute between members of a company, or between shareholders and the board about alleged breaches of the articles of association or a shareholders' agreement, is an essentially contractual dispute, which does not necessarily engage the rights of creditors or impinge on any statutory safeguards imposed for the benefit of third parties. In this case, the only issue between the parties was whether the chairman acted in breach of the FA and FAPL Rules in relation to the transfer of a Premier League player.

The argument about construction turned on the issues already considered about the effectiveness of any agreement to refer questions of unfair prejudice to arbitration. Given Patten LJ's conclusion that there is no statutory restriction or rule of public policy that prevents the parties from agreeing to submit such disputes to arbitration, it was not possible to read into the language of the arbitration agreement the limitations contended for by Fulham.