UK: NAPF: Company articles and arbitration clauses

The UK's National Association of Pension Funds (NAPF) has updated Section D of its Corporate Governance Policy and Voting Guidelines 2007. Section D now includes a new section - D.1.6 - dealing with arbitration clauses and which reads as follows:
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D.1.6: Dispute Resolution
The introduction or maintenance of a provision in the Company's Articles of Association which prescribes arbitration as the sole mode for settlement of all or a significant class of disputes between shareholders (whether acting in their own right or in the name of the Company, as applicable) and any one or more of the Company, its directors, executive management, or its professional advisors, should be viewed in the first instance as a material reduction in shareholder rights.
Voting
Investors will normally wish to oppose any such provision in the absence of a clear demonstration by the Board that the inherent detriment of a reduction in shareholders rights represented by such provision is outweighed by the benefit the provision brings in the light of specific and extenuating circumstances to which the Company is subject.
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It is worth pointing out that even where such clauses are present in a company's articles of association, the right to petition under Section 994 of the Companies Act (2006) cannot be removed through contract. This point was made in Exeter City AFC Ltd v Football Conference Ltd [2004] EWHC 831 (Ch), [2004] 1 W.L.R. 2910, with regard to Section 459 of the Companies Act (1985) (the predecessor of Section 994). Such petitions are, however, unusual in public companies.