Regie National Des Usines Renault SA and Anor v Zhang S192/2000

Regie National Des Usines Renault SA and Anor (the applicants) sought special leave to appeal to the High Court of Australia from a decision of the Full Court of the Federal Court of Australia. The dispute concerned the enforceability of an arbitration agreement contained within a contract for the sale of goods between the applicants and Mr Zhang (the respondent). The applicants sought to rely on the arbitration agreement to stay proceedings commenced by the respondent in the Federal Court.

The primary legal issue before the High Court was whether the arbitration agreement, which stipulated that disputes be resolved by arbitration in France, was valid and enforceable under Australian law, specifically in light of the *International Arbitration Act 1974* (Cth) (the Act). The question was whether the arbitration agreement was rendered invalid by the respondent's claim that the contract itself was void for misrepresentation, and if so, whether the Act nevertheless mandated that the Federal Court stay its proceedings in favour of arbitration.

Gummow J considered the principles of separability of the arbitration clause from the main contract, a principle recognised at common law and by international convention. His Honour noted that under the Act, an arbitration agreement is to be treated as independent of the other terms of the contract. Therefore, an allegation that the main contract is void does not automatically invalidate the arbitration clause. His Honour also examined the application of Article II(3) of the New York Convention, incorporated into the Act, which requires a court to refer parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed. His Honour found that the respondent had not demonstrated that the arbitration agreement itself was null and void, inoperative or incapable of performance.

Special leave to appeal was granted, and the appeal was allowed. The High Court ordered that the proceedings in the Federal Court be stayed in favour of arbitration in France, pursuant to the arbitration agreement.