Section 994 of the Companies Act 2006 and the Primacy of Contract
| DOI | http://doi.org/10.1111/j.1468-2230.2012.00938.x |
| Author | Harry McVea |
| Date | 01 November 2012 |
| Published date | 01 November 2012 |
CASES
Section 994 of the Companies Act 2006 and the Primacy
of Contract
Harry McVea*
The Court of Appeal’s decision in Fulham Football Club (1987) Ltd vRichards & Anor is both of
interest and significance. By embracing the idea of the parties’ ability to ‘contract out’ of their
statutory right to petition the court for relief under section 994 of the Companies Act 2006 (the
so-called ‘unfair prejudice’ remedy), their Lordships have not only contrived to stunt the future
development of unfair prejudice as a minority shareholder remedy but,and more importantly for
the purposes of this case note, their decision has reasserted and extended the contractual analogy
in modern UK company law.
INTRODUCTION
The Court of Appeal’s decision in Fulham Football Club (1987) Ltd vRichards &
Anor1(Fulham), which dealt with the issue of whether a party can contract out of
his statutory right to petition the court for relief under section 994 of the
vides an interesting lens through which to view important aspects of modern UK
company law. In adopting an explicitly contractual, pro-arbitration, approach to
the dispute at hand, the Court of Appeal’s ruling raises important issues which
extend beyond the narrow rights and liabilities of the parties in the case. In
particular, the decision has impor tant implications with regard to the future
development of section 994 as a minority shareholder remedy and,more signifi-
cantly for the purposes of this case note, touches on issues that are emblematic of
a fundamental and long-running debate amongst company law scholars about the
nature of company law and how it is, and should be, properly characterised. Set
within this broader context, the Fulham decision resonates with an increasing
judicial willingness to acknowledge contract as the animating force within
company law,and suppor ts a characterisation of the judicial role in company law
disputes as primarily that of enforcing the agreements that the parties have freely
made. It is submitted that by basing their decision firmly on ‘party autonomy’,
their Lordships have not only contrived to stunt the development of section 994
as a minority shareholder remedy, but have also firmly reasserted and extended
the contractual analogy in modern UK company law.
*Reader in Law, University of Bristol; Associate Research Fellow,IALS, London. I would like to thank
Nigel Furey,Marc Moore, and an anonymous reviewer for helpful comments on earlier drafts.The note
has also benefited from correspondence with James Potts of Erskine Chambers.The usual caveats apply.
1 [2011] EWCA Civ 855.On 22 Februar y 2012 the SupremeCour t refusedper mission to appeal the
CA’s decision.
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© 2012The Author.The Modern Law Review © 2012The Moder n LawReview Limited. (2012) 75(6) MLR 1123–1149
Published by BlackwellPublishing, 9600 Garsington Road, Oxford OX42DQ, UK and 350 Main Street, Malden,MA 02148, USA
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