defence which vested in and was exercisable by the parties to the Deed.7 THE IMPORTANCE OF THE DECISION The Importance of Context in Construing the Words of an Arbitration Agreement The High Court’s decision emphasises the importance of construing the words of an arbitration clause, like any clause in an agreement, in its context. Specifically, the context of the substantive agreement will be important to construing the words of the arbitration agreement. While on one level the Court’s decision conforms with the pro-arbitration approach adopted in recent years by various Australian courts and legislatures, the Court’s decision falls short of providing a general endorsement because it was not necessary for the Court to consider broader issues such as the separability principle which treats an arbitration agreement as distinct and limits attacks upon its validity or the related kompetenz-kompetenz principle by which an arbitral tribunal is competent to rule on its jurisdiction. Nor was it necessary for the Court to consider the correctness of Fiona Trust & Holding Corporation v Privalov,8 a decision by the House of Lords as to the construction of arbitral clauses, or previous authorities which had given a more restrictive meaning to clauses featuring the words “under this agreement”. In this case, the Court was able to resolve the issues by reference to orthodox principles of interpretation. Who is a Party to the Arbitration Agreement? The majority decision has provided some additional clarity as to the circumstances when a third party will be able to bring an action under an arbitration agreement. However, the majority expressly limited its opinion on the scope of who is a “party” for the purposes of the Commercial Arbitration Act to the discrete controversy raised by this case.9 The Court observed that it was not necessary to consider cases involving multiple contracts where a defendant’s purported reliance on an arbitral clause in a contract to which the defendant is not a party is precluded by the absence of an arbitral clause from the contract to which it is a party. In addition, the Court noted that it did not receive submissions about the wider and complex issues of arbitral consent and privity and third party claims more generally. Accordingly, while there will be some cases where third parties who are not a party to a contract may be able to rely on an arbitration clause in that contract, that is not a principle of general application. The most prudent course is for parties to expressly contract for arbitration, if they wish to have their disputes resolved by arbitration.
end notes
1. Rinehart & Anor v Hancock Prospecting Pty Ltd & Ors [2019] HCA 13. 2. [2019] HCA 13 [44]-[48] (Kiefel CJ, Gageler, Nettle and Gordon JJ). 3. [2019] HCA 13 [48] (Kiefel CJ, Gageler, Nettle and Gordon JJ) and [83] (Edelman J). 4. [2019] HCA 13 [74] (Kiefel CJ, Gageler, Nettle and Gordon JJ). 5. [2019] HCA 13 [73] (Kiefel CJ, Gageler, Nettle and Gordon JJ). 6. [2019] HCA 13 [73] (Kiefel CJ, Gageler, Nettle and Gordon JJ). 7. [2019] HCA 13 [79] (Kiefel CJ, Gageler, Nettle and Gordon JJ). 8. [2007] 4 All ER 951. 9. [2019] HCA 13 [78] (Kiefel CJ, Gageler, Nettle and Gordon JJ).