Q&A - Can we be forced into Arbitration?


I would be most grateful if you could give me some advice/information.  

Currently I live in a converted house, there are four flats which are all owner occupied and we own the freehold between us.  


Two of the flat owners want to have a management company and two do not want a management company for a variety of reasons.  Despite a lot of discussion on the issue, we are now at an impasse and there is a feeling that one party will not rest until they get their way to having a Management Company.  This person has now mentioned Arbitration as the next step despite being well aware of the costs involved.  I understand Arbitration can cost thousands and I am very worried about this eventuality.  My question is 'can I and the other freeholder who is against the Management Company be 'forced' into Arbitration and liable for costs thereof and if so, roughly how much are the costs involved?'

I have read through my lease and Memorandum & Articles of Association and have also googled extensively about this but cannot find the answer to this question.  

Would you be able to email me the answer if at all possible?  Thanking you in advance.


Many thanks for your enquiry.

In it, you refer to a split decision between the four of you as to whether or not you should “have a management company”. I assume you mean the instruction of a managing agent, who will assist you in performing the management functions you are required to undertake as freeholder of the building. The terms of the leases set out the various services and it is not uncommon for freeholders to employ a professional managing agent to assist in the performance of these.

The decision whether or not to do so lies with the freeholder. I assume you own the freehold as a limited company? If so, it is the board of the company (i.e. the directors) that will decide. How this is done is governed by the Memorandum and Articles of Association. I have not read yours and cannot therefore comment on the mechanics of the decision-making process that they set out.

In order to move these matters forward, you may well be best served by obtaining legal advice from a firm with a strong track record in property management services. Your appointed lawyer will be able to consider your Memorandum and Articles of Association in some detail and provide you with specific advice. 


Cassandra Zanelli, Partner at PM Legal Services

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