March 2, 2022

In the recent decision of Inghams Enterprises Pty Ltd v Southern Cross Farms Australia Pty Ltd [2022] SASCA 7, the South Australian Supreme Court of Appeal considered whether a final and binding arbitral award could be the subject of an appeal based on matters of law. In determining this question, the Court of Appeal was required to determine whether the terms of the parties’ arbitration agreement demonstrated an objective intention that any arbitration award was subject to the appeal regime in s 34A(1) of the Commercial Arbitration Act 2011 (SA) (CAA).

Section 34A(1) of the CAA provides that a party may only appeal an arbitrator’s decision on a question of law if the parties in the dispute have already agreed that an appeal may be made under s 34A of the CAA. This is distinct from separate provisions of the CAA governing the ability to correct, interpret or set aside the award. The provision in s 34A is uniform across each Australian jurisdiction.

Inghams Enterprises and Southern Cross Farms Australia entered into a number of separate agreements in respect of the sale of chickens. A pricing dispute arose based upon Inghams’ interpretation of its payment obligations under the agreements. In August 2019, the pricing dispute was submitted to arbitration pursuant to the dispute resolution mechanism contained within the parties’ Growing Agreement. The arbitrator determined the dispute in favour of Southern Cross.

Inghams sought leave to appeal the arbitral decision on several questions of law. Because of s 34A(1) of the CAA, this first required consideration of whether the parties had “opted in” to the appeal regime in s 34A of the CAA. Inghams submitted that they had done so by reference to clause 23.9 of the Growing Agreement which provided that:

“The written determination of the arbitrator of any matter referred is final and binding on the parties (except for manifest error or fraud)”.

In its submissions, Inghams contended that the words “except for manifest error or fraud” show an objective intention between the parties that an arbitral decision which contains a manifest error or fraud will be subject to appeal.

The Court of Appeal refused Inghams’ application, finding that the parties did not agree that an appeal may be made under s 34A of the CAA. Doyle JA (with whom Livesey and Bleby JJA agreed) determined that the parties did no more than contemplate and allow for appeals in the case of manifest error or fraud. The right of appeal contemplated by the reference to “manifest error” in clause 23.9 of the Growing Agreement was not an appeal of the character contemplated by s 34A of the CAA which must be on a question of law. Generally, based on the authorities, an appeal on the grounds of manifest error is not limited to questions of law. Further, in the event that the clause did intend to confine manifest errors to only those involving questions of law, this would also produce a narrower right of appeal than s 34A of the CAA. In either situation the right of appeal under clause 23.9 did not align with the right of appeal contemplated under s 34A of the CAA.

Accordingly, the decision underscores the importance of the words used by the parties, and what they indicate about the precise nature of any objective intention the parties had to allow an appeal under the CAA.

The full decision can be found here.

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