No agreement found for the purpose of the Commercial Arbitration Act
May 30, 2022
The New South Wales Supreme Court recently considered whether parties to an arbitration had reached an agreement to allow an appeal under section 34A of the Commercial Arbitration Act 2010 (NSW).
The Commercial Arbitration Act is uniform across all States and Territories in Australia. The New South Wales decision follows other recent authorities considering section 34A of the Act, such as the South Australian Supreme Court of Appeal’s decision in Inghams Enterprises Pty Ltd v Southern Cross Farms Australia Pty Ltd (see our update here).
The parties in Paul Rawson Investments Pty Ltd & Anor v James Boon Corporation Pty Ltd & Ors  NSWSC 613 were business partners and the terms of their business relationship were governed by a Finance Control Partnership Agreement. Following the dissolution of their business relationship, a dispute arose between the parties in respect of the division of their interests. The Agreement provided that any ‘differences’ between the parties would be referred to arbitration.
The dispute was referred to arbitration and resulted in three arbitral awards. The plaintiff subsequently sought leave to have two of the awards set aside. In determining whether to grant leave for an appeal, the NSWSC was required to determine whether the parties agreed to a right of appeal under s 34A(1)(a) of the Act.
Section 34A of the Act relevantly provides that parties to an arbitration can appeal “on a question of law” if:
- the parties agree that an appeal can be made under that provision, within 3 months of receiving the award; and
- the Court grants leave.
As section 34A requires that the parties agree to the appeal, it is considered an ‘opt in’ regime. The Court, referring to previous authorities, set out two potential ways parties may agree – an agreement can be set out in the parties’ arbitration agreement, or an ‘ad hoc’ agreement may be reached after the parties have fallen into dispute.
Here, the Court was required to consider evidence of an arbitral directions hearing and solicitors’ correspondence and whether this demonstrated or constituted an agreement to allow a right of appeal. In considering whether the parties intended to invoke an appeal right under s 34A of the Act, the Court held:
- an objective reading would not find the context of the statements in the directions hearing, or the questions asked by the arbitrator to which the solicitors responded, indicated the solicitors were confirming their clients’ respective instructions on allowing a right of appeal;
- there is no evidence that either party had instructed its solicitors to agree to any appeal for the purposes of the Act; and
- the language in the directions hearing and later correspondence was not precise enough to constitute an agreement.
The Court concluded that the parties did not make any agreement that an appeal on a question of law was in place between the parties with regards to the Act. The Court’s findings in this matter are consistent with authorities from earlier this year, such as Inghams, that if parties would like provision for an appeal regarding a point of law, it should be clearly expressed.
The full decision can be found here.