30 March 2025
9 min read
#Arbitration, #Dispute Resolution & Litigation
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In 2024, the High Court of Australia handed down judgments in 3 cases concerning arbitration:
An in-depth analysis of the principle of minimal curial intervention in arbitration, the above cases and what they reveal about arbitration in Australia is contained here. The purpose of this article is to provide a briefer analysis of these cases.
The High Court of Australia’s decisions in Carmichael, Tesseract and Chevron show that the principle of minimal curial intervention in arbitration in Australia remains contentious. In Carmichael, the High Court recognised its obligation to enforce binding arbitration agreements despite any purported burden or inconvenience for the parties under section 7 of the International Arbitration Act 1974 (Cth) (similar to Article 8 of the UNCITRAL Model Law on International Commercial Arbitration (Model Law) and section 8 of the state Commercial Arbitration Acts). Whereas Tesseract and Chevron show that there is no uniform practice in curial intervention under Article 34 of the Model Law.
Minimal court intervention in arbitration is critical to modern arbitration practice and law because:
There are various provisions within the Model Law that create a framework of minimal curial intervention, including:
Carmichael is a joint judgment of the High Court of Australia. It concerns a challenge to the validity of an arbitration clause in a bill of lading because there was a risk that arbitration might relieve the carrier of liability under the Australian Hague-Visby Rules. Further it was alleged that arbitration in London (instead of court proceedings in Australia) would create burden, expense and practical difficulty for the parties.
In its joint decision, the High Court found that Carmichael did not establish that the arbitration would lessen BBC’s liability under the Australian Hague-Visby Rules. As a result, the arbitration agreement was not void and the Court was required to enforce it under section 7 of the International Arbitration Act (similar in effect to Article 8 of the Model Law). In its decision, the Court recognised that it has no discretionary power to continue court proceedings where there is a binding arbitration agreement. The Court also found that the costs of arbitration, or the risk of a ‘rogue’ arbitral tribunal, were not grounds for voiding an arbitration agreement. The Court expressly rejected the 'insular distrust' against arbitration, asserting that the Court is not quick to set aside arbitration agreements and will enforce those agreements despite the costs or 'practical burden' of an arbitration. Read the full judgement here.
In Tesseract, the High Court had to determine whether Tesseract International was able to rely on the contributory negligence and the proportionate liability regimes in Part 3 of the Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA) and/or Part VIA of the Competition and Consumer Act 2010 (Cth), in an arbitration commenced by Pascale Construction, to argue that a third party was partially responsible for Pascale’s losses.
With a 5:2 plurality (involving three separate judgments in the majority), the High Court found that the proportionate liability regimes could be relied on in an arbitration.
First, all judgments (except Jagot and Beech-Jones JJ’s joint judgment) consider whether the regimes can be applied by an arbitral tribunal in the same manner that the provision can be applied by a court. Gageler CJ separately and Gordon and Gleeson JJ jointly found that they could. Edelman J and Steward J in separate judgments found that they could not. The judgments show that there is no agreed test regarding adaptability of provisions to fit the arbitration context. Gageler CJ proposed the test differently than Gordon and Gleeson JJ. Edelman J’s judgment and Steward J’s judgment suggest that their Honours consider other factors such as finality of decision, satisfying the object of the statute or satisfying the intention of the drafters of the statute as relevant enquiries falling within the test.
Next, the majority found that the regimes did not contravene Article 34. The judgments in Tesseract show that there is no clear unified approach in the High Court regarding the application of Article 34. For Jagot and Beech-Jones JJ, the primary enquiry before the Court was framed in terms of Article 34(2)(b) and whether the law makes the subject matter non-arbitrable or is against public policy. In contrast, the separate dissenting judgments of Edelman J and Steward J did not frame their enquiry by reference to Article 34. Instead, Edelman J departs from the Article 34 enquiry by focusing on the arbitral award being 'final' while Steward J found that Article 34 was not relevant. Read the full judgement here.
Chevron concerned an arbitration between the appellants (collectively 'CKJV') and Chevron where the Tribunal had made an award (Second Interim Award) that appeared to deal the issue of liability between CKJV and Chevron – an issue that had previously been decided by the Tribunal in a First Interim Award. So, Chevron argued that the Tribunal could not make the Second Interim Award because, primarily, the Tribunal was functus officio (meaning the Tribunal no longer had authority to decide an issue which had already been decided).
The High Court in a 5:2 majority upheld a decision to set aside the Second Interim Award. The majority judgment first found that, upon rendering the First Interim Award on liability, the Tribunal was functus officio in relation to that subject matter. So, at the time of making the Second Interim Award, the Tribunal did not have authority to make that award. Given the Second Interim Award was a decision not made within jurisdiction, the order could be set aside under Article 34(2)(a)(iii) given that the Tribunal had exceeded its authority. The majority also found that this was a decision where Article 16 did not apply and the Court had the jurisdiction under Article 34 to determine the issue.
The dissenting joint judgment by Jagot and Beech-Jones JJ found that there had not been a final award and so the Tribunal was not functus officio. For their Honours, Article 34(2)(a)(iii) cannot be used to circumvent the limited grounds for curial intervention, even in circumstances where there are “erroneous answers to questions of law arising in the course of arbitral proceedings”, i.e an error of law does not justify intervention under Article 34. Whether the Tribunal was functus officio was a conclusion derived from a claim of issue estoppel. The claim of issue estoppel is a matter the Tribunal can determine for itself under Article 16. Issue estoppel (or res judicata or Anshun estoppel) do not 'justify curial intervention' under Article 34 – even if they deal with the 'finality' of an award.
The majority and dissent judgments in Chevron show there is no uniform view about at least 2 matters:
While the High Court took a unanimous approach in Carmichael, the decisions in Tesseract and Chevron reflect a diversity of opinion on the High Court in relation to modern arbitration practice and the approach to the rules governing curial intervention in arbitration. The judgments highlight several outstanding issues in relation to modern arbitration law, including:
For a deeper analysis on these judgements, click here to read the full review.
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The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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