Montague v Cth Development Corp (UK)

[2001] HCATrans 130

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B55 of 2000

B e t w e e n -

AUSTIN JOHN MONTAGUE

Applicant

and

COMMONWEALTH DEVELOPMENT CORPORATION (UNITED KINGDOM)

Respondent

Application for special leave to appeal

KIRBY J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 4 MAY 2001, AT 11.31 AM

Copyright in the High Court of Australia

MR J.A. GRIFFIN, QC:   If the Court pleases, I appear with my learned friend, MR A.J. MOON, for the appellant.  (instructed by Wilson Ryan and Grose)

MR S.G. DURWARD, SC:   If the Court pleases, I appear for the respondent.  (instructed by Blake Dawson Waldron)

KIRBY J:   Yes, Mr Griffin.

MR GRIFFIN:    …..is whether the terms of reference which were required to be prepared by virtue of a rule in the applicable arbitral rules themselves constituted an arbitration agreement within the meaning of that term in the International Arbitration Act.  That Act adopts the definition of “arbitration agreement” in the New York Convention which is in substance the same as the definition in the Queensland Commercial Arbitration Act.

The New York Convention defines “arbitration agreement” as

an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or may arise between them –

That is in substance the same as the definition in the State Arbitration Acts such as the Commercial Arbitration Act which defines an “arbitration agreement” as:

an agreement in writing to refer present and future disputes to arbitration.

Before coming to the facts of the present case could I take your Honours to what we say is the most apposite ‑ ‑ ‑

KIRBY J:   I think you had better pass quickly over the facts, Mr Griffin.  The facts are not terribly dripping with merit so far as your client is concerned.  You had better come quickly to the law.

MR GRIFFIN:    I understand that, your Honour, but we say that it was because of the fact that the facts were considered to demonstrate an unmeritorious position on the part of our client that led the Court of Appeal into error in the case.

KIRBY J:   No, but the fact is that your client, as it were, engineered what happened; would have been content to take the benefit of what happened but is not prepared to take the necessary consequences in terms of costs. 

MR GRIFFIN:    That is true, although he did ‑ ‑ ‑

KIRBY J:   That may be his right, and that is the issue you present, but I was just saying that the law may be your strength rather than the facts.

MR GRIFFIN:    Of course, our client did not like what happened either, your Honour.  The case to which I wish to refer is PMT Partners v Australian National Parks and Wildlife Service.  At page 309 in the decision of Chief Justice Brennan and Justices Gaudron and McHugh, this is said, and it is said in relation to the Victorian case of Hammond v Wolt which was one of those cases that dealt with the issue whether an agreement that provided for an election to go to arbitration was, itself, an arbitration agreement or whether it only became an arbitration agreement when the election occurred.  In PMT Partners, of course, it was held that the former was the position; it was an arbitration agreement right from the start.  Their Honours said this at page 309:

Criticism of the approach taken in Hammond v Wolt has tended to focus on the textual consideration that “arbitration agreement” is defined as an “agreement to refer present or future disputes to arbitration”, not as “an agreement referring disputes to arbitration”.

Those Justices also said at page 310:

It is of fundamental importance that statutory definitions are construed according to their natural and ordinary meaning unless some other course is clearly required.  It is also of fundamental importance that limitations and qualifications are not read into a statutory definition unless clearly required by its terms or its context, as for example if it is necessary to give effect to the evident purpose of the Act.

HAYNE J:   Mr Griffin, bearing all that in mind, is the position in this case that the parties made an agreement in writing by which they agreed that a nominated arbitrator should resolve, amongst other things, what decision should be made about the costs of the arbitration?

MR GRIFFIN:   Yes, they did that, your Honour, but they did it in a context ‑ ‑ ‑

HAYNE J:   That being so, why is there not a relevant agreement?  Leave aside everything else.

MR GRIFFIN:   Because those matters were before the Arbitration Tribunal.  It is necessary to appreciate the point in time at which these terms of reference came into existence.

HAYNE J:   Why is it necessary to appreciate the point in time?  Why is not enough that there is a written agreement between these parties submitting this question to an arbitrator?  What more is relevant?

MR GRIFFIN:   This is relevant, that all those terms of reference were was an agreement to recite or delineate the issues that were already before the arbitration.  That is what the rule relating to terms of reference says.  It says terms of reference shall be drawn up which set out the submissions that the parties are making based on the pleadings.  Why it is relevant to see at what point these terms of reference came into existence is this, that by the time they came into existence you had the reference, which was in itself a volume, you had preliminary objections and other objections filed by the various defendants.  In fact, the pleadings extended to about four volumes.  Then you have the coming into effect of Article 13 of the ICC rules which require that the arbitrator draw up a document called “Terms of Reference” based on the documents and submissions of the parties.  The rules also require that those terms must then be signed by the parties and the arbitrator.  The parties then did that, and all that the terms of reference do is to recite matters that are already before the arbitrator.

HAYNE J:   Mr Griffin, either the parties were bound to sign the terms of reference because they were subject to a valid arbitration agreement or they were not.  If they were not, why is the set of terms of reference not itself the relevant arbitration agreement?

MR GRIFFIN:   Your Honour, the rules of the ICC enable the ICC to proceed to deal with the question of the validity or the existence of an agreement.  That is precisely what they did in this case.  There was a ruling that prima facie Mr Montague was a party to the agreement and the matter proceeded under Rule 8-3 which enabled the arbitration to proceed accordingly on the basis that ultimately the arbitrator would then rule as to whether or not Mr Montague was a party, as well as ruling of course on all the many other issues.

HAYNE J:   Mr Griffin, no doubt the fault is mine, but I do not understand that answer as grappling in any way with the question that I have presented to you.

MR GRIFFIN:   Your Honour, it is true that they did reach an agreement but they reached only the sort of agreement that parties reach when in a commercial matter a judge makes as a directions order a direction that the parties agree as to the issues that are before the court.  It is a procedural agreement.  It is an agreement, in our submission, which is not intended to create legal relations and, if it is an agreement of any kind, it is not an agreement to refer the matter.  It is at most a part of the actual reference.  As the PMT Case shows, the touchstone of an arbitration agreement is the agreement to refer the matter to arbitration.  The reference itself is not an arbitration agreement.

KIRBY J:   I have read carefully your submissions and I understand the propositions you are advancing but if, as I am presently minded to think, the opinion of the Court of Appeal and the District Court of Queensland are available and if they appear to be a sensible conclusion of the matter, the only thing that would incline me to shift that opinion would be if you can point to some international determinations because we are talking about international arbitrations which cast doubt on the correctness of the local decisions.  Are there any?  I did not see any that you have referred to.

MR GRIFFIN:   Your Honour, we have been unable to find any cases in Australia or elsewhere.

KIRBY J:   So it has to be determined solely within our own jurisprudence.

MR GRIFFIN:   Yes.

KIRBY J:   On that footing, the outcome that has been held to be available in the courts of Queensland seems to be a sensible and available one, because otherwise you can have it, having agreed to the terms of the reference, and you can take the benefit but not the burden.  That is the bottom line.

MR GRIFFIN:   But that is a separate question from whether we are a party to an arbitration agreement as defined.

KIRBY J:   I realise that but, if it is available to take the view that you are a party because you are a party to the terms of reference and if that produces the result which is arguably available and just, then you really bear a pretty heavy burden to seek special leave in this Court.  That is why I said if there is any international principles of arbitration or decisions of other countries in like circumstances that you can point to, now is your chance.

MR GRIFFIN:   Yes.  Your Honour, we cannot point to any international determinations that are relevant to the issue.  All we can say is that as part of these terms of reference the parties said:

What decision should be taken with regard to the costs of the arbitration. 

That is said in comprehensive terms of reference that deal with all of the issues in the arbitration.  It relates to all of the parties, whether named in the arbitration agreement or not, and simply recites a matter which is obvious to

anyone who reads the pleadings that have been put before the arbitrator and the rules.

KIRBY J:   Yes, we are familiar with the facts.

MR GRIFFIN:   All that the parties have done is this, that in compliance with a procedural rule which is designed to aid the efficiency of the arbitration, they have summarised the matters that are before the arbitrator so that the arbitrator and the parties can subsequently have reference to that document as opposed to going into the four volumes.  In our submission, that plainly does not constitute itself an arbitration agreement.  We submit that the finding that it does has wide‑ranging implications because of the fact that the definition of “arbitration agreement” is used extensively in Australia, and indeed internationally, and the term “arbitration” as defined in provisions of this kind triggers wide‑ranging consequences as an examination of the Commercial Arbitration Acts of the various States shows.  For example, it triggers a jurisdiction to stay proceedings; it triggers court control of the dealings between the parties in relation to the matter; it triggers the right to make interlocutory orders.  There is no warrant for the extension of the meaning of “arbitration agreement” to what has occurred here.  They are our submissions, if the Court pleases.

KIRBY J:   Yes, thank you very much, Mr Griffin.  The Court does not need your assistance, Mr Durward.

By written instrument entitled “Terms of Reference” the parties agreed that a nominated arbitrator should resolve, amongst other things, what decision should be made about the costs of an arbitration.  The arbitrator did this.  The Court of Appeal of Queensland was right to hold that the District Court of Queensland was correct in the particular circumstances of this case in granting leave to enforce the arbitrator’s award.

The application for special leave to appeal is dismissed.  The applicant must pay the respondent’s costs.

AT 11.45 AM THE MATTER WAS CONCLUDED