HIGH COURT OF AUSTRALIA RULES ON INTERPRETATION OF ARBITRATION CLAUSES
Leon Chung & Andrew Mason
In an important and clarifying decision, the High Court of Australia has handed down its decision in Rinehart & Anor v Hancock Prospecting Pty Ltd & Ors.1
The decision is significant for the conduct of international arbitration in Australia because:
- the High Court held that the phrase “any dispute under this deed” in an arbitration clause was sufficiently broad in the context of the deeds in question to encompass disputes about the validity of the arbitration agreement as well as substantive claims; and
- the High Court found that in this case, third parties who were not contractual parties to the deed in question, but who wished to rely on certain releases and clauses in the deed containing the arbitration agreement could be treated as a party to the arbitration under the Commercial Arbitration Act 2010 (NSW) (Commercial Arbitration Act).
The Facts and Proceedings Before the Federal Court and the Full Court
In a previous Legal Briefing, we outlined the background of the case before the Federal Court and Full Court. In short, the dispute concerned the actions of Gina Rinehart in her capacity as trustee of a trust (the HFMF Trust). The beneficiaries of that trust (the Plaintiffs) commenced Federal Court proceedings against Ms Rinehart and others (the Respondents) alleging a breach of equitable and contractual duties that she owed in her capacity as trustee of the HFMF Trust. The Plaintiffs also commenced court proceedings against a number of companies controlled by Gina Rinehart (the Third Party Companies), who were the recipients of commercial assets from the HFMF Trust.
The Respondents sought to have the court proceedings stayed and the matter referred for arbitration on the basis that the dispute was the subject of an arbitration agreement contained in deeds which had been entered into between the parties.
The Third Party Companies also made an application to have the claims against them referred for arbitration, on the basis that they were a party claiming “through or under” the Respondents, and therefore were parties within the meaning of section 2(1) of the Commercial Arbitration Act.
THE HIGH COURT’S DECISION
Was the dispute subject to an arbitration agreement?
The arbitration clause in the deeds stated that “any dispute under this deed” should be referred for arbitration. The High Court unanimously held that this clause was sufficiently broad to encompass claims relating to the validity of the deeds and the arbitration agreements themselves as well as other