Stay of proceedings: effect of a winding-up petition

An arbitrator cannot wind up a company. Winding up affects the interests of all creditors and not just the creditor involved in the dispute with the company. Given that only the court can wind up a company, a question then arises as to how the court’s discretion is to be exercised where the winding-up petition alleges the existence of an unadmitted debt arising under a contract containing an arbitration clause.

The Court of Appeal’s view in Salford Estates (No 2) Ltd v Altomart Ltd [2014] EWCA Civ 1575 is that the solution is to be found not in the arbitration legislation but in the insolvency legislation: the court is not required to stay the winding-up petition under the Arbitration Act 1996, section 9, but has a discretion to do so under section 122 of the Insolvency Act 1986.