Hickman v Kent [1915]
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Hickman v Kent or Romney Marsh Sheep-Breeders’ Association [1915] 1 Ch 881 is a notable UK company law case that revolves around the proper interpretation of a company's articles and the extent to which a company member could be obligated by its terms.
Article 49 of the company's articles stated that disputes between the association and a member should be subjected to arbitration before resorting to the court. Mr Hickman raised a complaint regarding the refusal to register his sheep in the published flock book, and he faced the threat of expulsion from the association. In response, he initiated legal proceedings in the High Court, and the association sought an injunction to enforce the arbitration clause.
The judgment, delivered by Astbury J, determined that the company's articles effectively prevented Mr. Hickman from pursuing his dispute in court. The court held that a contract existed, and Mr Hickman was bound by its terms. It was emphasised that the predecessor to the Companies Act 2006, specifically section 33, established a contractual relationship affecting members in their capacity as members, though not in any special or personal capacity (such as that of a director). As a member, Mr. Hickman was obligated to adhere to the company's prescribed procedure for arbitrating disputes and was consequently barred from seeking resolution in court.
Hickman v Kent or Romney Marsh Sheep-Breeders’ Association highlights the significance of company articles and the contractual nature of the relationship between a company and its members. The case underscores the principle that members are bound by the company's internal procedures, as stipulated in its articles, and must adhere to dispute resolution mechanisms before seeking recourse in a court of law.
Article 49 of the company's articles stated that disputes between the association and a member should be subjected to arbitration before resorting to the court. Mr Hickman raised a complaint regarding the refusal to register his sheep in the published flock book, and he faced the threat of expulsion from the association. In response, he initiated legal proceedings in the High Court, and the association sought an injunction to enforce the arbitration clause.
The judgment, delivered by Astbury J, determined that the company's articles effectively prevented Mr. Hickman from pursuing his dispute in court. The court held that a contract existed, and Mr Hickman was bound by its terms. It was emphasised that the predecessor to the Companies Act 2006, specifically section 33, established a contractual relationship affecting members in their capacity as members, though not in any special or personal capacity (such as that of a director). As a member, Mr. Hickman was obligated to adhere to the company's prescribed procedure for arbitrating disputes and was consequently barred from seeking resolution in court.
Hickman v Kent or Romney Marsh Sheep-Breeders’ Association highlights the significance of company articles and the contractual nature of the relationship between a company and its members. The case underscores the principle that members are bound by the company's internal procedures, as stipulated in its articles, and must adhere to dispute resolution mechanisms before seeking recourse in a court of law.
