Australian Arbitration Cases in 2013: A Year in Review

2013 produced important developments in Australian arbitration case law, many of which have been hailed as confirming Australia as an arbitration-friendly jurisdiction.

The year saw a variety of interesting cases, including:

• the High Court upholding the constitutional validity of the court's power to enforce arbitral awards;
• an enforcing court's consideration of issue estoppel in circumstances where there has been a prior judgment of the court of a seat of arbitration;
• a resolution of conflicting case law on whether a foreign arbitration agreement in a charterparty is rendered ineffective by Australian statute; and
• judicial consideration of the meaning of an arbitration agreement concerning disputes "in connection with" a contract.

We review in this article a few of the significant arbitration cases of 2013.

TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the Federal Court of Australia – Constitutional validity of the court's power to enforce arbitral awards

The High Court unanimously upheld the constitutional validity of the Federal Court's power to enforce an arbitral award under the International Arbitration Act 1974 (Cth). Specifically, the High Court held that the Act did not have the effect of bestowing the arbitrator or arbitration with judicial power, which would be contrary to Chapter III of the Constitution.

Their Honours pointed to the differing powers involved in the enforcement of an arbitral award: the arbitrator's contractual power to identify the rights of the parties and award a remedy where those rights have been violated, and the Court's judicial power to enforce the arbitrator's decision.
 
The case is critically important to businesses involved in international trade, who require certainty that they can enforce arbitration awards in Australia.

Gujarat NRE Coke Limited v Coeclerici Asia (Pte) Ltd – Enforcement of a foreign award where a party had sought to set aside an award in the court of the seat of arbitration

This case concerned an attempt to resist enforcement of a foreign arbitral award (a London Maritime Arbitration Association award) on the basis that the arbitrators had denied procedural fairness.

Both Justice Foster and the Full Court of the Federal Court on appeal found that there was no breach of the rules of natural justice, as Gujarat had ample time to oppose the granting of the arbitral award before the arbitrators.

Justice Foster had also held that an issue estoppel prevented Gujarat from successfully making this argument, given that the issue had been determined in a prior judgment by the English High Court (London being the seat of arbitration) in proceedings brought by Gujarat to set aside the arbitral award. The Full Court considered it was unnecessary to deal with this issue.

However, the Full Court interestingly remarked that at the very least, Justice Foster was correct to hold that it will generally be inappropriate for the enforcement court of a New York Convention country to reach a different conclusion on the same question of asserted procedural defects as that reached by the court of the seat of arbitration.

Dampskibsselskabet Norden A/S v Gladstone Civil Pty Ltd – An agreement to London arbitration in a voyage charterparty is not rendered ineffective by s11 of Carriage of Goods by Sea Act 1991

The Full Court of the Federal Court held that section 11 of the Carriage of Goods by Sea Act 1991 (Cth) (COGSA) did not operate to preclude a foreign arbitration in respect of a dispute arising out of a voyage charterparty agreement. Specifically, section 11(2) of COGSA provides that an agreement to resolve a dispute in respect of a "sea carriage document" has no effect unless the agreement requires the resolution of the dispute by arbitration or litigation conducted in Australia. The Full Court held that a voyage charterparty agreement is not a "sea carriage document" for the purposes of COGSA.

The decision has been welcomed by the Australian shipping industry. It removed the legal uncertainty which had resulted from earlier conflicting case law.

Amcor Packaging (Aust) Pty Ltd v Baulderstone Pty Ltd – Staying court proceedings where broad arbitration agreement and split proceedings undesirable

The case concerned the ambit of a dispute resolution clause in a project delivery proposal agreement (PDPA), which defined a dispute as "a dispute arising out of or in connection with this Agreement". Under the PDPA, Amcor and Baulderstone agreed to a project for the design and construction of paper-machine building. The PDPA envisaged that the parties would enter into a guaranteed maximum price contract (GMP), but negotiations in relation to the GMP failed.

Amcor brought proceedings in the Federal Court against Baulderstone, claiming losses suffered in relation to Baulderstone's decision not to enter into the GMP. The proceedings were brought against Baulderstone, as well as three executives of Baulderstone who were not parties to the PDPA.

Justice Marshall held that the words "in connection with" a dispute should "exclude only claims entirely unrelated to the commercial transaction covered by the contract". As the GMP was related to the matters covered in the PDPA, the arbitration clause extended to the dispute. His Honour also stayed the court proceeding against the executives, on the basis that to permit two separate proceedings – one curial and one arbitral – to take place in different places with the risk of inconsistent findings on largely overlapping facts was undesirable.

Reflecting on 2013...

We have selected for this article just some of the significant arbitration cases in Australia in 2013, although there are no doubt many other cases which deserve mention. These cases have confirmed Australia's position as an arbitration-friendly jurisdiction, and contribute to providing certainty to businesses entering into arbitration agreements in the context of international trade.