Section 14 of the framework agreement included an arbitration agreement modelled on the DIS type arbitration clause (“arbitration agreement”), which provides for the place of arbitration in Frankfurt-on-Main and English as the language of arbitration. The part of the arbitration agreement relevant to the dispute1 is that in March 2011, a “framework agreement” was reached between the applicant (designated in the “financial party” and “seller”) contract and the company`s judicial administrator (known as “seller 2”) and a Chinese investor (named “buyer” in the contract). As part of the framework agreement, the parties entered into an asset agreement on part of the company`s assets as well as other ancillary contracts (together the “contract”). Normally, this would mean that Mr. Flanagan would have the right to resign because of the Liontrust violation. An orthodox analysis of contract law would then conclude that the agreement, such as that between Mr. Flanagan and Liontrust, would be abolished and that, therefore, Regulations 7 and 8 should apply in their place. Mr. Flanagan would thus be entitled to an equal share of Liontrust`s capital and profits.
The court interpreted the personal scope of the arbitration agreement under German law. The Tribunal found that, in the absence of a choice of law, the arbitration agreement was governed by German law, i.e. as a right at the place of arbitration. The Tribunal therefore did not rule on whether the law applicable to the arbitration agreement should be determined according to the conflict of law rules applicable to the contracts or according to specific contractual provisions. However, Mr. Justice Henderson did not accept this analysis. He noted that the case law had not previously examined in detail whether the doctrine of the offence applied to agreements governing a LLP, but it would appear that it does not apply to a traditional partnership, even though there are only two members. This was the view of the House of Lords, obiter, in v Bryk [2002] 1 AC 185, which was the subject of several prosecutions at trial. The judge accepted Liontrust`s arguments that, as with a traditional partnership agreement, the doctrine of the offence of refusal cannot have an LLP application, at least if there are more than two members. 1. Law applicable to the determination of subjective applicability Oberlandesgericht followed the applicant`s arguments and found that the application was admissible.