33 ReSolution | Nov 2017
Trust dispute no bar to arbitration Cont...
Are the arbitration agreements incapable of being performed?
Finally, the Growers submitted that the nature of the issues raised in the proceedings with respect to the proper administration of the trust, the relief sought with respect to the removal of Emerald as trustee, and the appointment of another trustee in place of Emerald, were not arbitrable, and therefore the arbitration agreements were incapable of being performed (within the meaning of s 8(1) of the CAA). The Growers also submitted that the dispute was not arbitrable because all necessary and appropriate parties could not be joined to the dispute.
The Court noted that the doctrine of non-arbitrability is recognised by Australian law and has been described as:
resting on the notion that 'some matters so pervasively involve public rights, or interests of third parties, which are the subjects of the uniquely governmental authority, that agreements to resolve such disputes by "private" arbitration should not be given effect'
However, the Court confirmed that it is only in extremely limited circumstances that a dispute that the parties have agreed to refer to arbitration will not be arbitrable. The Court said that the equitable rights in issue in this case depended entirely on the construction of the relevant contracts and in those circumstances the possible characterisation of those rights as equitable did not mean the disputes were not arbitrable.
The Court also held that it is well established that the fact that:
• an arbitrator cannot grant all the relief a court is empowered to grant does not mean that the dispute is incapable of arbitration (and whether the arbitration agreement empowers the arbitrator to grant all the relief which a court might have granted is best determined by the arbitral tribunal); and
• the fact that a “matter” (the subject of proceedings falling within s 8 of the CAA) may affect the interests of others, who are not party to the arbitration agreement, does not result in the “matter” being non-arbitrable.
Accordingly, Martin CJ stayed the proceedings and referred the parties to arbitration.
Comment
This case is important for at least two reasons. First, it reinforces the Courts’ preparedness to hold parties to their arbitration agreements. Second, the Court made it clear that a broad, liberal and flexible approach should be adopted in construing arbitration agreements. This approach will help to ensure that parties to disputes who have agreed to arbitrate will be held to their agreement, thereby ensuring that Australia remains an attractive jurisdiction for arbitration.
End Notes
1- A pool contract is a contract between wheat growers on the one hand and the operator of a grain commodity pool on the other, whereby wheat growers pool their wheat with wheat grown by others in order to form large exportable parcels, which are then sold by the operator on behalf of the wheat growers.
2- The dispute resolution rules of Grain Trade Australia.
3- Relying on Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, 116 [46]-[47].
4- At [90], referring to Pipeline Services WA Pty Ltd v ATCO Gas Australia Pty Ltd [2014] WASC 10 at [80] and GB Born, International Commercial Arbitration (Kluwer Law International, 2009) 768.
5- Section 16 of the CAA and Article 16 of the UNCITRAL Model Law.
6- John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 at [72].
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