ReSolution Issue 19, November 2018 | Page 39

Did the dispute arise under the Design Contract or the settlement agreement?
In support of its assertion that the arbitrator lacked jurisdiction to determine the dispute, Goldfields asserted that the dispute arose under the settlement agreement and, accordingly, the Design Contract's arbitration clause was inoperative.
Goldfields argued that a settlement agreement in respect of the arbitrable dispute rendered the arbitration agreement inoperative, and that the Court should determine questions of whether the arbitrable dispute had been settled as a preliminary question, because the arbitrator would lack jurisdiction if the dispute was in fact settled.
The Court disagreed with Goldfields' argument because the settlement agreement was not a settlement of the dispute under the Design Contract. Rather, it was a compromise to set aside the Demand. The Court held that Goldfields had not identified the Design Contract dispute that was resolved under the settlement agreement in respect of which the arbitration clause was purportedly inoperative.
The Court placed particular emphasis on the fact that the Design Contract's arbitration clause was expressed to apply to disputes arising "in connection with the subject matter of the [Design Contract]". The Court held that this broad drafting resulted in a factual connection between the Design Contract and the settlement agreement and, therefore, the arbitration clause applied to the dispute concerning the Settlement Amount.
Goldfields also argued that the arbitrator lacked jurisdiction because of the existence of other parties to the settlement agreement beyond the parties to the Design Contract. In other words, parties that would be bound by the arbitration award never agreed to the arbitration clause in the Design Contract. The Court disagreed, finding that this did not disprove the Settlement Amount dispute still being a dispute between Goldfields and GRE that arose in connection with the Design Contract's subject matter.
Implications
Although the jurisdictional issue came before the Court in an unusual way, the case highlights the importance of understanding how jurisdiction can be affected by a dispute's history and the collection of relevant