West London theatre venue Watermans, home to numerous Asian productions over past decades, has won a small legal battle over its funding row with the Arts Council.

Earlier this year the Arts Council made a decision to withdraw its funding from the venue, puttings its future into serious jeopardy.

Watermans complained that the Arts Council did not adequately explain why its funding was being cut and submitted a claim for judicial review of that decision.

Late last week it received a response on its claim. The Judge observed that Watermans, “was told (by the Arts Council) of the rationale for the proposed decision (to withdraw its funding) so it could comment on it, and arguably having answered this found that the final decision had been taken on different grounds which it had no proper opportunity to address.”

Watermans says it has always maintained that this was an unfair process and a clear breach of public law.

Following the court’s notification, Watermans says the Arts Council has now asked it to withdraw legal action in return for a new funding recommendation. That will be taken to the Arts Council’s next London Regional Council Meeting.

In a statement, the chair of Watermans, Karam Bhullar, said: “This decision is a very positive result for Watermans. The Arts Council has since offered to settle the matter out of court. We welcome this approach which will allow us to focus our time and resources on our arts programme.”

“At a time when Watermans is planning to play a significant role in the launch of the 2012 Cultural Olympiad, we would not want these proceedings to cast a shadow over the programme for West London. Given the Judge’s positive comments about our case, we hope that the Arts Council will now reinstate Watermans’ funding without further delay.”