Has the dust really Settled? Issues for arbitrators in determining jurisdiction
Karen Ingram & Alan Parnell
Eastern Goldfields Ltd v GR Engineering Services Ltd [2018] WASC 224
How does the interaction between contractual arrangements and settlement agreements affect an arbitrator's jurisdiction? A recent Western Australian Supreme Court decision has highlighted some of the issues. Where a dispute concerns several different agreements, including settlement agreements, arbitrators should consider how the dispute arises and under which agreement arbitration is prescribed, as it may impact the arbitrator's jurisdiction. In Eastern Goldfields Ltd v GR Engineering Services Ltd [2018] WASC 224, the Western Australian Supreme Court applied the principles relevant to the jurisdiction of arbitrators where a settlement agreement exists. What agreements existed? Eastern Goldfields Ltd (Goldfields) and GR Engineering Services Ltd (GRE) entered into a contract for GRE to design and refurbish Goldfields' Davyhurst Gold Plant (Design Contract). Clause 41 of the Design Contract provided that a difference or dispute between the parties "arising in connection with the subject matter of the [Design Contract]" shall be referred to arbitration. A dispute arose concerning unpaid amounts due to GRE under the Design Contract. GRE issued a statutory demand (Demand) and Goldfields sought an order from the Court to set it aside. GRE consented to an order setting the Demand aside in return for, amongst other things, Goldfields paying GRE a specified sum by way of settlement (Settlement Amount). The settlement was recorded in a written settlement agreement titled 'Partial Accord and Satisfaction Agreement'. To give effect to some of the agreed terms of settlement, other entities were also parties to the settlement agreement. However, there was further dispute between Goldfields and GRE as to whether that settlement agreement obliged Goldfields to pay to GRE the Settlement Amount. Goldfields refused to pay the Settlement Amount, and GRE commenced proceedings. We want arbitration! Wait… we submit the arbitrator has no jurisdiction! Goldfields applied for an order that the dispute be referred to arbitration. The Court made that order (First Application). Goldfields later asserted that the arbitrator lacked jurisdiction, contrary to its submissions in the First Application. The arbitrator determined he had jurisdiction. Goldfields applied to the Court for an order that the arbitrator lacked jurisdiction (Second Application). The Court dismissed the Second Application. Notably, the Second Application did not stay the arbitration. The arbitration hearing was scheduled for 13 August 2018, and the Second Application was only determined on 27 July 2018.