Rizhao Steel Holding Group Co Ltd v Koolan Iron Ore Pty Ltd
[2012] WASCA 50
•9 MARCH 2012
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: RIZHAO STEEL HOLDING GROUP CO LTD -v- KOOLAN IRON ORE PTY LTD [2012] WASCA 50
CORAM: MARTIN CJ
BUSS JA
MURPHY JA
HEARD: 12 AUGUST 2011
DELIVERED : 9 MARCH 2012
FILE NO/S: CACV 126 of 2010
BETWEEN: RIZHAO STEEL HOLDING GROUP CO LTD
Appellant
AND
KOOLAN IRON ORE PTY LTD
Respondent
FILE NO/S :CACV 127 of 2010
BETWEEN :RIZHAO STEEL HOLDING GROUP CO LTD
Appellant
AND
MOUNT GIBSON MINING LTD
Respondent
ON APPEAL FROM:
For File No : CACV 126 of 2010
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :KENNETH MARTIN J
Citation :KOOLAN IRON ORE PTY LTD v RIZHAO STEEL HOLDING GROUP CO LTD [2010] WASC 384
File No :ARB 18 of 2010
For File No : CACV 127 of 2010
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :KENNETH MARTIN J
Citation :KOOLAN IRON ORE PTY LTD v RIZHAO STEEL HOLDING GROUP CO LTD [2010] WASC 384
File No :ARB 19 of 2010
Catchwords:
International Commercial Arbitration - Appeal from application to enforce an award as a judgment - Whether leave to appeal required - Whether primary judge's decision final or interlocutory - Whether appropriate Act the International Arbitration Act 1974 (Cth) or Commercial Arbitration Act 1985 (WA) - Where primary judge purported to grant enforcement of award under the State Act - Whether appellant should be permitted to raise new point on appeal challenging jurisdiction of primary judge - Whether in the interests of justice or prejudicial - Whether parties can exclude the Model Law from an international commercial arbitration agreement - Whether there is an inconsistency of laws between the State and Federal Acts
Legislation:
Acts Interpretation Act 1901 (Cth), s 8 (repealed)
Arbitration Act (NSW)
Arbitration Act 1950 (UK)
Civil Judgments Enforcement Act 2004 (WA), s 3, s 5
Commercial Arbitration Act 1985 (WA)
Commercial Arbitration Act 1990 (Qld)
International Arbitration Act 1974 (Cth)
International Arbitration Amendment Act 2010 (Cth)
Judiciary Act 1903 (Cth), s 78B
Rules of the Supreme Court, O 42 r 1
Result:
Appeals dismissed
Category: A
Representation:
CACV 126 of 2010
Counsel:
Appellant: Mr F M Douglas QC, Mr S K Dharmananda SC & Mr M Feutrill
Respondent: Mr B A J Coles QC & Mr S Murphy
Solicitors:
Appellant: Holman Fenwick Willan
Respondent: Freehills
CACV 127 of 2010
Counsel:
Appellant: Mr F M Douglas QC, Mr S K Dharmananda SC & Mr M Feutrill
Respondent: Mr B A J Coles QC & Mr S Murphy
Solicitors:
Appellant: Holman Fenwick Willan
Respondent: Freehills
Case(s) referred to in judgment(s):
Aerospatiale Holdings Australia Pty Ltd v Elspan International Ltd (1992) 28 NSWLR 321
Agtrack (NT) Pty Ltd v Hatfield [2005] HCA 38; (2005) 223 CLR 251
American Diagnostica Inc v Gradipore Ltd (1998) 44 NSWLR 312
Attorney‑General (NSW) v Brewery Employees Union (NSW) [1908] HCA 94; (1908) 6 CLR 469
Australian Granites Ltd v Eisenwerk Hensel Bayreuth Dipl.‑ing Burkhardt GmbH [2001] 1 Qd R 461
Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485
Berowra Holdings Pty Ltd v Gordon [2006] HCA 32; (2006) 225 CLR 364
Black Clawson International Ltd v Papierwerke Waldhof‑Aschaffenburg AG [1981] 2 Lloyd's Rep 446
Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corp Ltd [1981] 2 WLR 141
Brown v West [1990] HCA 7; (1990) 169 CLR 195
C v D [2007] EWCA (Comm) 1541
Cameron v Cole [1944] HCA 5; (1944) 68 CLR 571
Cargill International SA v Peabody Australia Mining Ltd [2010] NSWSC 887
Carr v Finance Corporation of Australia Ltd (No 1) [1981] HCA 20; (1981) 147 CLR 246
Carr v Finance Corporation of Australia Ltd [No 2] [1982] HCA 43; (1982) 150 CLR 139
Castel Electronics Pty Ltd v TCL Air Conditioner (Zhongshan) Co Ltd [2012] FCA 21
Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] 1 AC 334
Chicago & Grand Trunk Railway Co v Wellman 143 US 339 (1892)
Cockatoo Dockyard Pty Ltd v Commonwealth of Australia (No 3) (1995) 35 NSWLR 689
Commonwealth Development Corporation v Montague [2000] QCA 252
Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1
Craig v Kanssen [1943] 1 KB 256
Esso Australia Resources Ltd v Plowman [1995] HCA 19; (1995) 183 CLR 10
Ferris v Plaister (1994) 34 NSWLR 474
Green v Sommerville [1979] HCA 60; (1979) 141 CLR 594
Hall v The Nominal Defendant [1966] HCA 36; (1966) 117 CLR 423
Harbour Assurance Co (UK) Ltd v Kansa General International Insurance Co Ltd (1993) 3 WLR 42
Harris v Great Barrier Reef Marine Park Authority [1999] FCA 437; (1999) 162 ALR 651
Heyman v Darwins Ltd [1942] AC 356
Hip Hing Timber Co Ltd v Tang Man Kit [2004] HKCFA 41
ICM Agriculture Pty Ltd v The Commonwealth [2009] HCA 51; (2009) 240 CLR 140
John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503
Licul v Corney [1976] HCA 6; (1976) 180 CLR 213
Liftronic Pty Ltd v Unver [2001] HCA 24; (2001) 179 ALR 321
Lockwood v Commonwealth [1954] HCA 31; (1954) 90 CLR 177
Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261
Mercantile Mutual Life Insurance Co Ltd v Australian Securities Commission (1993) 40 FCR 409
Minister for Aboriginal Affairs v Peko‑Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24
Minister for Home & Territories v Smith [1924] HCA 41; (1924) 35 CLR 120
Minister for Home & Territories v Teesdale Smith [1920] HCA 48; (1920) 28 CLR 584
Naviera Amazonica Peruana SA v Compania Internacional de Seguros del Peru [1988] 1 Lloyd's Rep 116
O'Brien v Komesaroff [1982] HCA 33; (1982) 150 CLR 310
PMT Partners Pty Ltd (in liq) v Australian National Parks and Wildlife Service [1995] HCA 36; (1995) 184 CLR 301
Police (SA) v Grozev [2006] SASC 353; 47 MVR 193
Prisoners Review Board v Freeman [2010] WASCA 166
R v Chandra Dharma [1905] 2 KB 335
Raguz v Sullivan (2000) 50 NSWLR 236; [2000] NSWCA 240
Re a Bankruptcy Notice [1907] 1 KB 478
Re JJT; Ex Parte Victoria Legal Aid [1998] HCA 44; (1998) 195 CLR 184
Re Stanton Hayek [1957] 19 ABC 1
Rodway v The Queen [1990] HCA 19; (1990) 169 CLR 515
Strachan v The Gleaner Co Ltd [2005] UKPC 33; [2005] 1 WLR 3204
Sumitomo Heavy Industries Ltd v Oil and Natural Gas Commission [1994] 1 Lloyd's Rep 45
Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418
The Australian Coal and Shale Employees Federation v Aberfield Coal Mining Co Ltd [1942] HCA 23; (1942) 66 CLR 161
The Colonial Sugar Refining Co Ltd v Irving [1905] AC 369
Tridon Australia Pty Ltd v ACD Tridon Inc (Incorporated in Ontario) [2004] NSWCA 146
Union of India v McDonnell Douglas Corporation [1993] 2 Lloyd's Rep 48
United Kingdom Mutual Steamship Assurance Association v Houston & Co [1896] 1 QB 567
Universal Film Manufacturing Co (Australasia) Ltd v New South Wales [1927] HCA 50; (1927) 40 CLR 333
University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 60 ALR 68
VAW (Kurri Kurri) Pty Ltd v Scientific Committee [2003] NSWCA 297; (2003) 58 NSWLR 631
Wagners Nouvelle Caledonie Sarl v Vale Inco Nouvelle Caledonie SAS [2010] QCA 219
Waller v Waller [2009] WASCA 61
Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491
Westport Insurance Corporation v Gordian Runoff Ltd [2011] HCA 37
Worrall v The Commercial Banking Co of Sydney Ltd [1917] HCA 67; (1917) 24 CLR 28
XL Insurance Ltd v Owens Corning [2000] 2 Lloyd's Rep 500
MARTIN CJ:
Introduction
The appellant, Rizhao Steel Holding Group Co Ltd (Rizhao) appeals from decisions of the primary judge in which he granted leave to enforce in the same manner as a judgment or order of the court an award made by an arbitrator in arbitration proceedings between Rizhao and Koolan Iron Ore Pty Ltd (the respondent in appeal CACV 126) and between Rizhao and Mount Gibson Mining Ltd (the respondent in appeal CACV 127). The issues in each appeal are identical, and arise from awards made in arbitration proceedings which were heard simultaneously before the same arbitrator. It is convenient to treat the appeals, and the arbitration proceedings which gave rise to the appeals, as if they were a single proceeding, in which I will refer to the respondent as Mount Gibson.
Although there are two grounds of appeal, they both embody the same basic proposition, which is that the primary judge erred by dealing with the application for enforcement of the awards under the Commercial Arbitration Act 1985 (WA) (the CAA), when the only source of jurisdiction for enforcement of the awards was the International Arbitration Act 1974 (Cth) (the IAA). As will be seen, however, that basic proposition has given rise to a number of discrete issues and contentions. It is appropriate to relate the course taken by the proceedings to date before endeavouring to identify those issues and contentions.
The proceedings to date
In June 2007, Rizhao entered into contracts for the sale and purchase of iron ore with each of the respondents that I am referring to as Mount Gibson. Each contract contained a clause dealing with dispute resolution. That clause relevantly provided that if the parties were unable to resolve a dispute within 14 days of it first arising, the dispute was to 'be referred to arbitration in accordance with the Commercial Arbitration Act 1985 (WA)'. Rizhao accepts that this provision is an agreement that any dispute between the parties is to be settled otherwise than in accordance with the Model Law referred to in the IAA.
At the time the contracts were entered into, Rizhao's place of business was within the People's Republic of China, and the place of business of each of the Mount Gibson parties was within Australia.
In the latter half of 2008, a dispute arose between Rizhao and Mount Gibson in relation to the sale and purchase of iron ore under the contracts. On 6 November 2008, Mount Gibson purported to terminate the sale contracts, and on 15 December 2008 gave notices of dispute. On 16 February 2009, the Honourable Murray Gleeson AC QC was appointed to arbitrate the disputes.
Hearings in the arbitrations were conducted in March and July 2010, concluding on 8 July 2010. As the arbitrator noted in his award, it was common ground between the parties to the arbitrations that each arbitration was subject to the CAA and was an international arbitration within the meaning of the IAA (award, cl 19). The UNCITRAL Model Law on International Commercial Arbitration (the Model Law), which is given the force of law by s 16 of the IAA, provides that an arbitration is an international arbitration if the parties to the arbitration agreement have their places of business in different states at the time of the conclusion of that agreement (Article 1(3)).
The International Arbitration Amendment Act 2010 (Cth) relevantly commenced operation on 6 July 2010, when the arbitration hearings were approaching their conclusion. On 16 August 2010, the arbitrator delivered awards upholding Mount Gibson's claims and dismissing Rizhao's claims, and awarding the Mount Gibson parties approximately US$114 million in damages plus interest and costs.
On 30 August 2010, without notice to Rizhao, Mount Gibson applied to the Supreme Court of Western Australia for leave to serve out of the jurisdiction notices of two originating summonses for leave to enforce the awards of the arbitrator as judgments of the Supreme Court pursuant to s 33 of the CAA. Leave to serve out of the jurisdiction was granted that day.
On 31 August 2010, Mount Gibson commenced proceedings by way of two originating summonses against Rizhao in which it sought an order:
1.Pursuant to s 33 of the Commercial Arbitration Act 1985 (WA), the plaintiff have leave to enter and enforce as a judgment of the court the award made on 16 August 2010 by the arbitrator the Honourable Mr Murray Gleeson AC QC in the arbitration between the plaintiff and the defendant.
and additional orders to the following effect:
2.Judgment in terms of the award.
3.Interest.
4.Costs.
5.Such other orders as the court deems fit.
On 3 September 2010, Rizhao commenced proceedings in the Supreme Court of Western Australia seeking leave to appeal from the decision of the arbitrator pursuant to s 38 of the CAA. Also on 3 September 2010, Mount Gibson endeavoured to serve notices of the two originating summonses which it had brought for leave to enforce the awards as judgments on Rizhao.
On 28 September 2010, Rizhao filed applications in the Supreme Court of Western Australia for orders setting aside service of the notices of the originating summonses which had been issued by Mount Gibson. Those applications were first heard by the primary judge on 1 October 2010, and adjourned to 3 November 2010. However, on 22 October 2010, the primary judge ordered that Mount Gibson be permitted to serve notices of the two originating summonses for leave to enforce the awards as judgments on Rizhao through its New York agent.
On 3 November 2010, Mount Gibson's applications for leave to enforce the awards as judgments came on for hearing. Rizhao appeared at the hearing. It did not adduce any evidence, and largely confined its submissions to the proposition that leave to enforce the awards as judgments should not be granted while its applications for leave to appeal from the awards were pending.
No submission was put before the primary judge by Rizhao to the effect that the applications for leave to enforce the judgments as awards were not properly brought pursuant to the CAA, or to the effect that the court lacked jurisdiction to grant the orders sought pursuant to the powers conferred upon the court by the CAA, or to the effect that the IAA was the only source of jurisdiction to enforce the awards as judgments. It is to be remembered that the basis for Rizhao's opposition to the applications for leave to enforce the awards as judgments was its own applications for leave to appeal from the awards, brought pursuant to s 38 of the CAA.
Counsel for Rizhao advised us that the legal issue which underpins this appeal concerning the precise source of the court's jurisdiction to enforce the awards as judgments had been identified by Rizhao's legal advisors, but not fully researched at the time Mount Gibson's applications for leave to enforce the awards as judgments were heard and determined by the primary judge. However, as I have noted, no reference was made to the issue in either written or oral submissions presented by Rizhao to the primary judge. Indeed, Rizhao relied upon avenues of challenge to the awards provided by the CAA as the basis for its opposition to the orders sought. Given the terms of the award, which recorded that it was common ground between the parties to the effect that the arbitral proceedings were governed by the CAA, and the submissions put by each of Mount Gibson and Rizhao which referred only to the CAA, there was no reason for the primary judge to suppose that it was not common ground between the parties that the CAA provided the source of the court's jurisdiction to enforce the awards as judgments of the court.
In each application, the primary judge made orders in the following terms:
Pursuant to section 33 of the Commercial Arbitration Act 1985 (WA), the plaintiff have leave to enforce in the same manner as a judgment or order of the court the award made on 16 August 2010 by the arbitrator, the Honourable Mr Murray Gleeson AC QC in the arbitration between the plaintiff and the defendant
He also made orders dealing with costs.
On 16 November 2010, Rizhao's applications for leave to appeal from the awards were heard by the primary judge. In the course of that hearing, counsel for Rizhao advised the court that:
I have to tell your Honour that there could be a question as to whether in fact such a right to seek leave exists in this case, it being an international arbitration as defined under the International Arbitration Act as recently amended and as prior to its recent amendments in July (ts 41).
Counsel further advised that there may be a constitutional question arising, and noted that no notices had been given under the provisions of s 78B of the Judiciary Act 1903 (Cth). Counsel indicated that it was unnecessary for his Honour to deal with the point at that stage, and that the point would likely only arise if leave to appeal were granted.
At the conclusion of the hearing, the primary judge dismissed Rizhao's applications for leave to appeal from the awards. On 24 November 2010, Rizhao lodged notices of appeal to this court from the primary judge's decision to refuse its applications for leave to appeal from the awards. It also commenced these appeals from the orders which he had made on 3 November 2010 granting Mount Gibson leave to enforce the arbitral awards as judgments of the court. On 15 December 2010, Rizhao discontinued its applications for leave to appeal from the primary judge's decision to refuse leave to appeal from the arbitral awards.
An overview of the issues
As I have noted, the basic proposition which underpins these appeals is Rizhao's assertion that this court's only source of jurisdiction to enforce the awards of the arbitrator is the IAA, and as the primary judge purported to exercise jurisdiction conferred upon the court under the CAA, his orders should be set aside as being outside the jurisdiction invoked.
Rizhao relies on two alternative lines of reasoning to support that proposition. First, it asserts that the IAA has never permitted parties to an agreement providing for international arbitration to opt out of the provisions of the Model Law relating to the recognition and enforcement of awards which are made applicable to international arbitrations by the IAA. Second, it asserts that the amendments to the IAA which came into effect on 6 July 2010 prevent parties to an agreement providing for international arbitration from opting out of the provisions of the Model Law relating to recognition and enforcement of awards, and the IAA as amended applied to the proceedings before the primary judge. This latter assertion is said to arise as a result of three alternative arguments. First, because the relevant amendments related to matters of procedure, not substantive law, and should therefore be construed as applying to all international arbitration agreements, whenever they were entered into. Secondly, because the amended Act, properly construed, manifests an intention that the amended law should apply to all international arbitration agreements whenever entered into. Thirdly, because the amended law applies to all proceedings for recognition and enforcement commenced after the amendments came into operation on 6 July 2010.
Rizhao asserts that if either or both these lines of reasoning sustain the conclusion that the provisions of the Model Law relating to recognition and enforcement of awards applied to the enforcement of these awards, it follows that the provisions of the CAA relating to the enforcement of awards must be read down so as to prevent them applying to these awards, so as to avoid the invalidity of the CAA pursuant to the operation of s 109 of the Constitution of the Commonwealth of Australia. Because of that aspect of Rizhao's submissions, notice was given to the Attorneys‑General of the States, Territories and Commonwealth pursuant to s 78B of the Judiciary Act. The court was notified that none proposed to intervene in these proceedings at this stage.
It will thus be seen that Rizhao's basic proposition turns critically upon the construction and effect of the relevant provisions of the IAA before and after the 2010 amendments. For reasons which I will develop, once the issues relating to the construction and effect of the IAA (before and after amendment) are resolved, the impact of the IAA upon the operation of state laws such as the CAA is quite straightforward and does not appear to be contentious.
However, because of the course which these proceedings have taken, Mount Gibson raises two procedural issues in opposition to these appeals. First, it asserts that the decision of the primary judge granting leave to enforce the awards as judgments is an interlocutory decision, with the result that leave to appeal is required, and with the further result that an application for leave to appeal had to be brought within 14 days of the decision of the primary judge. Accordingly, Mount Gibson submits that Rizhao needs an extension of time within which to apply for leave to appeal, and the grant of leave before its appeals can be entertained.
The second procedural issue raised by Mount Gibson is its assertion that Rizhao should not be permitted to raise on appeal an issue which it did not raise before the primary judge.
In addition, Mount Gibson contends that if Rizhao is correct in asserting that the court did not have jurisdiction to enforce the awards under the CAA, the decision of the primary judge should in any event be upheld, as the orders which he made were within the jurisdiction conferred upon the court by the IAA and should be upheld on that basis.
It will be convenient to deal with the procedural issues and contention raised by Mount Gibson before addressing Rizhao's substantive propositions, not least because in my view they provide an answer to these appeals.
Were the orders made by the primary judge interlocutory?
If the orders made by the primary judge are characterised as interlocutory, two consequences flow. First, leave to appeal is required: Supreme Court Act 1935 (WA), s 60(1)(f). Second, the appeals had to be commenced within 14 days (ie, by 17 November 2010): Supreme Court (Court of Appeal) Rules 2005 (WA), r 26. As these appeals were not lodged until seven days later, in addition to the grant of leave, an extension of time within which to commence these appeals would be required.
There are many cases dealing with the question of whether particular orders should be characterised as interlocutory or final for these purposes. A number of them are reviewed in Waller v Waller [2009] WASCA 61. The cases are not entirely consistent, and the principles enunciated in them do not provide a clear and certain basis for characterising any particular order as either interlocutory or final, with the result that differing views may be reasonably held as to the application of the principles in any particular case (as occurred in Waller). The cases most often cited are the High Court decisions of Hall v The Nominal Defendant [1966] HCA 36; (1966) 117 CLR 423; Licul v Corney [1976] HCA 6; (1976) 180 CLR 213 and Carr v Finance Corporation of Australia Ltd (No 1) [1981] HCA 20; (1981) 147 CLR 246.
Two general propositions may be extracted from those cases. First, the test is whether the judgment or order, as made, finally disposes of the rights of the parties. Second, the test is applied by reference to the legal rather than the practical effect of the judgment or order. At least part of the uncertainty in the application of these principles arises from the need to characterise 'the rights of the parties' for the purposes of determining whether the particular judgment or order finally disposed of those rights. If the 'rights' are characterised narrowly, the relevant judgment or order will more readily be characterised as final. On the other hand, if the 'rights' are characterised more broadly, the particular judgment or order will more readily be characterised as interlocutory. This was the reason for the disagreement between the members of the court in Waller.
In the present case these difficulties are compounded by a degree of tension between the legal effect of the orders made by the trial judge, and the reasons which he gave for making them.
Mount Gibson purported to apply pursuant to s 33 of the CAA, and the primary judge purported to make orders pursuant to that section. It provides:
An award made under an arbitration agreement may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect, and where leave is so given, judgment may be entered in terms of the award.
As I noted earlier, Mount Gibson applied for the grant of leave, and for the entry of judgment in terms of the award. The primary judge granted leave, but did not direct the entry of judgment. As a matter of fact, judgments in the form required by O 42 r 1 of the Rules of the Supreme Court have still not been entered. Entry of judgment in that form would be a pre‑requisite to any action by way of enforcement against property in Western Australia: see Civil Judgments Enforcement Act 2004 (WA), s 3 and s 5.
In order to ascertain the legal effect of the orders made by the primary judge, it is necessary to ascertain whether some further step was required before Mount Gibson could enter judgment (in the form required by O 42) in terms of the award. That question is answered by a consideration of O 41 of the Rules and s 33 of the CAA. Order 41 r 1 provides that:
Except where by any Act, or by these Rules it is provided that judgment may be obtained in any other manner, the judgment of the court must be obtained by motion for judgment.
Section 33 of the CAA expressly provides that where leave of the court has been granted, judgment may be entered in terms of the award. It follows that no motion for judgment is required pursuant to O 41, and following the grant of leave, the Principal Registrar was authorised to enter judgment in the records of the court, and to issue judgments in the form prescribed by the Rules, in terms of the awards made by the arbitrator. Judgments issued in those terms would take effect as any other judgment of the court, and would remain enforceable on the same terms as any other judgment of the court until set aside. The only way in which such judgments could be set aside is by way of appeal from the order granting leave.
However, this does not appear to be the view taken by the primary judge as to the effect of the orders which he made. As I have noted, Rizhao opposed those orders on the basis that it had made applications for leave to appeal from the awards which were pending. The primary judge did not attempt to evaluate the strength of Rizhao's applications for leave to appeal, but noted that even if leave to appeal were granted, some part of the awards made by the arbitrator would remain intact. In that context, the primary judge observed:
But another consideration influencing my conclusion today, and bearing in mind the Rizhao pending challenge is to only part of the total amount of the awards, is that nothing I have said today prevents or locks out a potential application on behalf of Rizhao to seek a stay of the enforcement of the awards as entered and registered under s 33. That would be on a basis of an application for a stay by Rizhao properly made. Such a stay application has not yet been made by Rizhao, but may occur. It would, at that time, need to be determined in accordance with the orthodox principles governing stay applications. That path towards a stay, or partial stay, seems to me to be a potential remedy open and available, in appropriate circumstances, to Rizhao to pursue, notwithstanding my decision today to give leave to the plaintiffs to enforce and register their awards under s 33.
I am satisfied by reference to the plaintiffs' fulfilment of requirements under s 33 and O 81D of the Rules of the Supreme Court 1971 (WA), in terms of the material required to support registration of the awards, that it is an appropriate case to grant leave under s 33 in each application [35] ‑ [36].
From this passage it seems that the primary judge may not have considered that the orders he was making would finally dispose of the rights of the parties with respect to the enforcement of the awards made by the arbitrator. However, upon the grant of leave, Mount Gibson was (and remains) entitled to require the Principal Registrar to enter judgments in the records of the court in terms of those awards and to extract forms issued by the court proving those judgments. It follows that the orders made by the primary judge finally disposed of the rights of the parties with respect to the enforcement of the awards made by the arbitrator. Because the characterisation of the orders made by the primary judge is to be undertaken by reference to their legal effect, rather than by reference to the subjective views of the judge making the orders, they must be characterised as final, not interlocutory.
Mount Gibson relies on two previous cases for the proposition that an order granting leave to enforce an arbitral award is interlocutory in character. In Re Stanton Hayek [1957] 19 ABC 1, the question was whether an order granting leave to enforce an arbitral award was a 'final judgment' for the purposes of a bankruptcy notice which had been issued against a party to the award. The relevant provision of the Arbitration Act (NSW) provided that:
[A]n award on a submission may by leave of the court or a judge be enforced in the same manner as a judgment or order to the same effect.
Clyne J, sitting in the Federal Court of Bankruptcy, relied upon observations made by Fletcher‑Moulton LJ in Re a Bankruptcy Notice [1907] 1 KB 478 in relation to an equivalent provision of the previous English legislation to the effect that:
[I]t gives no power to turn such an award into a judgment. It gives to the award the same status as a judgment for the purpose of enforcement, but it leaves it what it was before, viz, an award (482).
Clyne J relied on that observation to conclude that the grant of leave was not a 'final judgment' for the purposes of the bankruptcy notice. However, he also observed:
I might add that it is not without significance that s 26 of the English Arbitration Act 1950, which provides for leave being given to enforce an award further provides that where leave is so given, judgment may be entered in terms of the award(s).
Section 33 of the CAA corresponds with s 26 of the Arbitration Act 1950 (UK), and specifically provides that following the grant of leave, judgment may be entered in terms of the award. It is implicit in the reasons given by Clyne J that if the New South Wales legislation with which he had been dealing had been in the same terms, he would have arrived at a different conclusion. Accordingly, this case provides no support for Mount Gibson's argument.
In Commonwealth Development Corporation v Montague [2000] QCA 252, an appeal and/or application for leave to appeal was brought in the Queensland Court of Appeal against a decision of the District Court of Queensland granting leave to enforce in Queensland an award made in an international arbitration outside Australia. At that time, s 8(2) of the IAA provided:
Subject to this part, a foreign award may be enforced in a court of a State or Territory as if the award had been made in that State or Territory in accordance with the law of that State or Territory.
Accordingly, the application was brought pursuant to s 33 of the Commercial Arbitration Act 1990 (Qld) which is relevantly identical to s 33 of the CAA.
In the Court of Appeal, the respondent conceded that if leave to appeal was necessary, it should be granted. A majority of the court (Ambrose and Fryberg JJ) proceeded on that basis and therefore did not determine whether leave to appeal was necessary, and in particular did not determine whether the orders made by the District Court were interlocutory. It follows that the decision is not a decision of an intermediate Court of Appeal dealing with uniform Australian legislation which this court should follow unless satisfied it is wrong (see Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485).
The only member of the court to deal with the question of whether leave to appeal was required was Thomas JA. He did so in the following terms:
Leave to appeal is necessary in the present matter because the judgment against which the applicant wishes to appeal is in form interlocutory. It was an order granting leave to enforce a 'foreign arbitration award sentence' as to costs. No objection was raised by counsel for the respondent against the grant of the necessary leave to appeal. I would be disposed to grant leave, not simply on absence of objection, but also in recognition that in substance the effect of the judgment below is to determine finally the rights of the parties, and that a legal question of some substance is raised [2] (citations omitted).
With respect, if the legal effect of the judgment below was to determine finally the rights of the parties, it follows that the judgment below was final, not interlocutory. His Honour does not appear to have given any consideration to that part of s 33 which authorises the entry of judgment following the grant of leave. Accordingly, I respectfully differ from his Honour's conclusion that an order granting leave to enforce an judgment under s 33 of the CAA is interlocutory.
For these reasons, the orders made by the primary judge are not interlocutory. Leave to appeal is not required, and the appeals have been brought within time.
Should Rizhao be permitted to raise a new point on appeal?
Absent an express provision to the contrary, appeals to this court are by way of a rehearing: see Court of Appeal Rules, r 25. However, as Gibbs CJ, Wilson, Brennan and Dawson JJ noted in Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1:
To say that an appeal is by way of rehearing does not mean that the issues and the evidence to be considered are at large. It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish (7).
Similarly, in University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 60 ALR 68, the High Court observed:
It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so (71).
Similar observations were made by the Court of Appeal of New South Wales in the case under appeal in Coulton v Holcombe. Their Honours observations as to:
… the finality of litigation; the difficulty of inducing an appeal court to consider new facts; the undesirability of encouraging tactical decisions not to present an issue at first instance: keeping it in reserve for appeal; and the need for vigilance to avoid injustice to a party having to meet new facts and new issues of law for the first time at the appeal court
were endorsed by the plurality in Coulton v Holcombe (8) as important principles underpinning the public interest in the finality of litigation: see also Liftronic Pty Ltd v Unver [2001] HCA 24; (2001) 179 ALR 321, 330 ‑ 331 (Gummow and Callinan JJ).
However, this is not to say that a new point can never be raised on appeal. In Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491, the plurality (Mason CJ, Wilson, Brennan and Dawson JJ) observed:
It is true that in Maloney v Commissioner for Railways (1978) 18 ALR 147, 152 it was recognised that in 'very exceptional cases' a plaintiff's omission to put at trial a case formulated on appeal may not be conclusive against him. But it was pointed out that the opportunity to assert the new case at another trial should only be granted where the interests of justice require it and such a course can be taken without prejudice to the defendant. No exceptional circumstances arise in this case where the parties adopted the course which they took of their own choice (498).
It is significant to note that the High Court has twice described the circumstances in which a party will be allowed to raise a new point on appeal as 'very exceptional'. Such a course will only be permitted if two requirements are met. First, the interests of justice must require determination of the new point. Second, there must be no prejudice to the party against whom the new point is taken.
There are a number of cases which establish that these exceptional circumstances will not exist where the point, if taken below, might have resulted in additional or different evidence being led - see Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418, 438 ‑ 439; Green v Sommerville [1979] HCA 60; (1979) 141 CLR 594, 608; O'Brien v Komesaroff [1982] HCA 33; (1982) 150 CLR 310, 319. However, this does not mean that the mere fact that the new point does not involve any factual issue will result in the conclusion that it should be allowed to be raised for the first time on appeal. To the contrary, the requirements that the determination of the point must be required by the interests of justice, and that there be no prejudice to the party against whom the point is raised, must both be satisfied, even if the point would not, if taken below, have necessitated more or different evidence - see for example, University of Wollongong v Metwally (No 2).
The question therefore is whether this is one of those 'very exceptional cases' in which Rizhao should be permitted to raise a new point on appeal. In order to answer that question it is necessary to consider whether the interests of justice require that Rizhao be permitted to take that course, and also whether that course can be taken without prejudice to Mount Gibson.
The interests of justice
Since the delivery of the arbitral awards, Rizhao has adopted a forensic strategy which has been disingenuous and opportunistic. In order to explain my reasons for arriving at that conclusion, it is necessary to briefly analyse the differences between the regimes for judicial review and enforcement of arbitral awards under the CAA and IAA respectively.
Under the CAA, enforcement of awards is covered by s 33, which I have set out above. Judicial review of awards is covered by pt V of the CAA. Under s 38(2), an appeal lies to the Supreme Court on any question of law arising out of an award. However, unless all parties consent, an appeal is subject to the grant of leave of the court which can only be granted if the court considers that the question of law could substantially affect the rights of one or more parties to the arbitration agreement, and there is a manifest error of law on the face of the award or strong evidence that the arbitrator made an error of law and the determination of the question may add, or be likely to add, substantially to the certainty of commercial law. Leave cannot be granted if the parties to the arbitration agreement have agreed to exclude the right of appeal (s 40). Further, the court has power to set aside an award, either wholly or in part, if there has been misconduct on the part of the arbitrator or the arbitration or award has been improperly procured (s 42).
Order 81D of the Rules of the Supreme Court deals with applications to the court under the CAA. Order 81D r 2 requires that documents filed in connection with such proceedings are to be in accordance with a form prescribed by the Rules. That form requires that reference be made to the CAA in the heading to the proceedings. Rule 2A specifies the procedure to be followed in relation to appeals and applications for leave to appeal brought pursuant to s 38 of the CAA. Rule 11 sets out the procedures to be followed in relation to applications for enforcement of awards brought pursuant to s 33 of the CAA. It specifies that such applications are to be made by summons supported by an affidavit exhibiting the arbitration agreement and award, and stating the name and address of the parties to the award and the extent to which the award has been complied with as at the date of the application.
Under the IAA, judicial review and recognition and enforcement of awards (other than foreign awards - that is, awards made outside Australia) are dealt with by the Model Law which is given the force of law by s 16 of the IAA. Article 35 of the Model Law deals with recognition and enforcement of arbitral awards. Recognition can be characterised as a defensive process such as might arise when a party seeks to litigate a dispute that has been the subject of an arbitral award. Enforcement goes further than recognition and enables the powers of the court to be applied to ensure compliance with the terms of the award: see generally on these issues Blackaby N, Partasides C, Redfern A and Hunter M: Redfern and Hunter on International Arbitration, (5th ed, 2009) 627 ‑ 628.
Article 35 of the Model Law provides that an award shall be recognised as binding, and upon application in writing to the competent court, shall be enforced (subject to Article 36). Article 35 requires that a party applying for enforcement of an award is to supply the arbitration agreement and the award, or certified copies thereof (as does O 81D r 11 of the Rules of the Supreme Court).
Article 36 of the Model Law provides that recognition or enforcement of an arbitral award may only be refused on specified grounds which may be broadly summarised as:
(a)incapacity of a party or invalidity of the arbitration agreement;
(b)lack of notice of the arbitral proceedings to a party or inability of a party to present his case;
(c)the award deals with matters outside the arbitration agreement;
(d)the composition of the arbitral tribunal or the arbitral procedure did not accord with the arbitration agreement or the law of the country where the arbitration took place;
(e)the award is not binding or has been set aside or suspended by a court of the country in which, or under the law of which, the award was made;
(f)the subject matter of the dispute is not capable of settlement by arbitration under the law of the state in which the award is to be enforced; or
(g)the recognition or enforcement of the award will be contrary to the public policy of the state in which the award is to be recognised or enforced.
Article 34 of the Model Law provides that recourse to a court against an arbitral award may be made only by an application to set aside the award, which can only be made on the grounds specified for refusing recognition or enforcement of an award under Article 36, and which must be made within three months of the applicant receiving the arbitral award.
Aside from the provisions of Article 35 which require an application for enforcement to be in writing supported by the arbitration agreement and award, neither the Model Law, nor the IAA make further provision for the procedure to be followed in enforcement proceedings. No specific provision is made for enforcement of awards governed by the IAA by the Rules of this court. Applications for enforcement are therefore covered by the Rules of court generally applicable to all proceedings. Order 59 r 1(1)(d) provides that any application that may be made to the court or a judge under a written law of the Commonwealth may be brought in chambers (with some exceptions). Proceedings for enforcement of an award under the IAA would be initiated by an originating summons in accordance with a form specified by the Rules (see O 58 r 14). The summons is required to include within its heading a reference to the Act and section under which the application is made (O 58 r 14).
From this analysis it can be seen that in this court there is no material difference between the procedure to be followed for the enforcement of an award under the CAA, as compared to the enforcement of an award under the IAA. In fact, the only difference is the reference to the legislation in the heading to the proceedings. On the other hand, the grounds upon which an award may be set aside under the CAA are quite different to the grounds upon which an award may be set aside under the IAA. Generally speaking, the grounds of judicial review available under the CAA are significantly wider than the more limited and specific grounds available under the IAA, and extend to any error of law which might satisfy the requirements for the grant of leave (as to the ambit of appeal from an award under the CAA, see Westport Insurance Corporation v Gordian Runoff Ltd [2011] HCA 37).
As I have noted, counsel for Rizhao advised this court that the proposition that this court's only source of jurisdiction to enforce the arbitral awards was the IAA had been identified by Rizhao's legal advisors, although not fully researched, at the time Mount Gibson's applications for leave to enforce the awards were heard by the primary judge. However, Rizhao made no reference to the point in its written or oral submissions, nor did it seek an adjournment for the purpose of further researching the issue and considering its position. On the contrary, Rizhao opposed Mount Gibson's applications on the basis that they were properly brought pursuant to s 33 of the CAA, and relied upon authorities to the effect that the court had a discretion under that section with respect to the grant of leave. Rizhao sought the exercise of the court's discretion on the basis of the applications for leave to appeal from the awards which it had earlier brought pursuant to s 38 of the CAA.
Counsel for Rizhao conceded to us that if the point had been taken before the primary judge, in all probability Mount Gibson would have moved to address the point by amending its summons to claim relief in the alternative under the IAA. Procedurally speaking, such a step would have been simple and straightforward, and would have required nothing more than an amendment to the heading to the summons to include a reference to the IAA. There is no conceivable basis upon which Rizhao could have objected to such an amendment.
Counsel for Rizhao properly conceded that if Mount Gibson's applications for enforcement had been brought under the IAA, at the time the applications were brought before the primary judge, Rizhao would have had no defence to the applications. That is because Rizhao's only opposition to the applications brought under the CAA was based upon its applications for leave to appeal under s 38 of the CAA. As I have noted, there is no equivalent capacity to appeal from arbitral awards under the terms of the Model Law, and it is not suggested that any of the grounds of opposition to the enforcement of an arbitral award specified in Article 36 of the Model Law could have been relied upon by Rizhao at the time of the proceedings before the primary judge.
It follows from this analysis that Rizhao gained a significant forensic advantage by not taking the point which it now seeks to raise on appeal in the course of the proceedings before the primary judge, and of which it was then aware. Indeed, had Rizhao taken the point and if it had been upheld, it is accepted that Rizhao would have had no defence whatever to the applications for enforcement of the awards under the IAA.
In the course of argument before us, counsel for Rizhao suggested that if these appeals were successful, and Mount Gibson were required to apply afresh for enforcement of the awards under the IAA, Rizhao might have some basis for opposition to their enforcement. However, no specific basis of opposition was identified in argument, nor was any evidence proffered to this court which would provide any arguable basis of opposition to enforcement of the award. The matter was put no higher than reference to applications for pre‑action discovery which had been brought by Rizhao which it was hoped might produce documentary evidence that might provide some basis for opposition to the enforcement of the awards.
The proposition that Rizhao might have some basis of opposition to a fresh application for Mount Gibson to enforce the arbitral awards under the IAA is entirely speculative. It provides no basis for concluding that it would be in the interests of justice to require Mount Gibson to apply afresh in order that Rizhao might be given an opportunity to oppose enforcement. To the contrary, it reinforces the conclusion that Rizhao is endeavouring to obtain unfair forensic advantage by obtaining an opportunity to put arguments which it would not have been able to put if it had been candid with the court and raised before the primary judge the point which it now seeks to raise on appeal.
Rizhao continued its attempts to derive forensic advantage from reliance upon the CAA when it pursued its applications for leave to appeal from the arbitral awards under s 38 of the CAA. In the course of argument in support of those applications, counsel for Rizhao did advert to the possibility of the point now taken, but did not develop the argument to any material extent. Acceptance of the proposition would, of course, have deprived the court of jurisdiction to entertain Rizhao's applications for leave to appeal from the awards, as the Model Law makes no equivalent provision for appeals from arbitral awards.
Rizhao continued its endeavours to obtain forensic advantage by reliance upon the CAA when on 24 November 2010 it appealed to this court from the decision to refuse its applications for leave to appeal from the awards. It is clear that Rizhao was by then well aware of the point which it agitates in this appeal, and of its ramifications, because it commenced these appeals on the same day. It can thus be seen that Rizhao was endeavouring to approbate and reprobate at one and the same time, relying upon the CAA for the purposes of its appeals against the refusal of its applications for leave to appeal, while at the same time asserting in these appeals that the decisions of the primary judge to grant leave to enforce the awards should be set aside because the CAA had no application. It was not until 15 December 2010 that Rizhao decided which of its inconsistent contentions it would maintain, by discontinuing its applications for leave to appeal from the decision to refuse its applications for leave to appeal from the arbitral awards.
It would be entirely antithetical to the interests of justice for this court to condone Rizhao's conduct by now entertaining a point which it withheld from the primary judge for the purpose of gaining forensic advantage. The public interest in the finality of litigation, endorsed many times by the decisions of the High Court to which I have referred, would be seriously undermined if parties were permitted to conduct litigation in the way in which Rizhao has endeavoured to conduct this case.
Rizhao asserts that it is in the interests of justice for the court to determine the proposition which underpins its appeals because, if that proposition is correct, it is entitled as of right to have the orders made by the trial judge set aside because they are a nullity. (For the general proposition that a party is entitled to have orders of the court that are null and void set aside: see Craig v Kanssen [1943] 1 KB 256, 262 and Cameron v Cole [1944] HCA 5; (1944) 68 CLR 571.) However, Rizhao does not assert that the court lacks jurisdiction to enforce the arbitral awards. To the contrary, Rizhao submits that the court has jurisdiction to enforce the awards under the IAA. Essentially, Rizhao's argument comes down to the proposition that because each summons contains a reference to the CAA in its heading, and because the primary judge referred to the CAA in the prefatory words of the orders which he made, orders of the court giving leave to enforce the awards as judgments of the court are somehow beyond the jurisdiction of the court, and therefore nullities.
No authority was cited by Rizhao in support of these dubious propositions. Rizhao instead relied upon a line of cases which depend upon it being first established that an order of the court was made outside jurisdiction and then provide that in such a circumstance, parties cannot, by consent, confer a jurisdiction on the court which it does not possess - see Strachan v The Gleaner Co Ltd [2005] UKPC 33; [2005] 1 WLR 3204 [27]; Hip Hing Timber Co Ltd v Tang Man Kit [2004] HKCFA 41 [34] ‑ [35]. With respect, these cases are not to the point because in these cases the circumstance under consideration was a circumstance in which the court lacked jurisdiction to make the orders which were made. In this case there is no doubt that the court had jurisdiction to make orders enforcing the arbitral awards as judgments of the court. The only question is whether the source of that jurisdiction was the CAA or the IAA. In this case, the question of jurisdiction, if raised before the primary judge, would have made no material difference to the course of the proceedings, save that if it were held that the IAA was applicable, Rizhao would not have opposed the application for enforcement on the ground which it did, and had no other basis for opposing enforcement.
Rizhao also relies on a passage from the judgment of the plurality in Berowra Holdings Pty Ltd v Gordon [2006] HCA 32; (2006) 225 CLR 364, where their Honours observed:
In the adversarial system of justice, choice rests primarily with the parties and it is generally the case that the court's power of decision or order is exercised upon the application of a party. Generally there is in law no restriction upon a person's right to start an action and to carry it to the point at which a choice is cast upon the defendant to make some response in order to avoid judgment in default. Once the procedural law has been engaged, all parties to the litigation are subject to it.
None of the above denies the possibility of a defendant denying the plaintiff's right to invoke the jurisdiction of the court, for example where the plaintiff's right is conditional upon there being an action cognisable within that jurisdiction. However, the material point is that that denial must be made within the structure of the relevantly engaged procedural law, and not outside it [15] ‑ [16] (citations omitted).
Rizhao seeks to extract from that passage the proposition that by referring to the CAA in its applications, Mount Gibson is bound by their choice and cannot seek to uphold the validity of the orders made by reference to some other source of jurisdiction. That proposition is, with respect, a misreading of the passage which I have set out. It is a proposition which is directly contrary to the conclusion of the plurality in Berowra, which was to the effect that proceedings commenced in contravention of a particular statutory provision under consideration in that case were not invalid for want of jurisdiction, nor did the court lack jurisdiction to make orders. Berowra provides no support for Rizhao's contentions.
Rizhao endeavoured to find further support for its contention that the orders made by the primary judge were a nullity by reference to the obvious fact that if the source of the court's jurisdiction is the IAA, federal jurisdiction is engaged, whereas if the court's source of jurisdiction is the CAA, state jurisdiction is engaged. The argument seems to be put on the basis that unless the parties knowingly and wilfully engage federal jurisdiction, it cannot be engaged. The decision of the High Court in Agtrack (NT) Pty Ltd v Hatfield [2005] HCA 38; (2005) 223 CLR 251 was referred to in this context. However, the judgment of the plurality in that case establishes precisely the opposite proposition - namely, that the question of whether or not federal jurisdiction is engaged depends upon an objective assessment of the issues raised by the justiciable controversy placed before the court. As their Honours observed:
It is not a question of establishing the intention to engage federal jurisdiction or an awareness that this has occurred [32].
In the present case, Mount Gibson placed before the court arbitral awards made following an international arbitration. If it is the case that the court's jurisdiction to enforce those awards arises under federal law, then federal jurisdiction is engaged, irrespective of whether or not the parties or even the court were aware that it has occurred. In any event, as I have already noted, a determination as to whether the court was exercising state or federal jurisdiction is immaterial in this case.
This is because Rizhao's submissions are contrary to the 'settled principle that an act purporting to be done under one statutory power may be supported under another statutory power': see Lockwood v Commonwealth [1954] HCA 31; (1954) 90 CLR 177, 184 (Fullagar J).
There are many decisions in which this principle has been applied to administrative decisions. For example, in Brown v West [1990] HCA 7; (1990) 169 CLR 195, the High Court was concerned with the validity of a determination with respect to allowances payable to members of Parliament. In the course of the determination, the relevant Tribunal identified a number of statutory provisions as the source of the power for the determination. It was argued that the Tribunal was in error, as the source of power was to be found in another statutory provision. In joint reasons, the court observed:
However, the validity of the Tribunal's determinations is unaffected by mistaking the source of the power to make them: Moore v The Attorney-General (Irish Free State) [1935] AC 484; R v Bevan; Ex parte Elias and Gordon (1942) 66 CLR 452, 487 (203).
There are, of course, limits to this principle, as the full court of the Federal Court noted in Mercantile Mutual Life Insurance Co Ltd v Australian Securities Commission (1993) 40 FCR 409. For example, if the matters which the decision‑maker must take into account, or which can permissibly be taken into account, vary as between the different statutory provisions, error by the decision‑maker as to the source of authority may lead to error in the form of failing to take account of considerations that are required to be taken into account, or by taking account of considerations that are irrelevant to the exercise of the power: see Mercantile Mutual (412) (Black CJ). Or, as Gummow J pointed out, if the statutory power is construed so as to require written specification of the source of authority as a condition of a valid exercise of the power, misdescription of the authority will exceed the jurisdiction conferred upon the decision‑maker: see Mercantile Mutual (437). In the result in Mercantile Mutual, the court concluded that the authorisation in question could be supported under a particular provision of the Australian Securities Commission Act 1989 (Cth), even though that source of power had not been invoked or referred to.
The principles applicable in cases of this kind have been analysed and expressed in similar terms by Kiefel J in Harris v Great Barrier Reef Marine Park Authority [1999] FCA 437; (1999) 162 ALR 651 [14] ‑ [18], by Spigelman CJ in VAW (Kurri Kurri) Pty Ltd v Scientific Committee [2003] NSWCA 297; (2003) 58 NSWLR 631 [21] ‑ [54], by Doyle CJ in Police (SA) v Grozev [2006] SASC 353; 47 MVR 193, [59], and by Murphy JA (Pullin and Newnes JJA concurring) in Prisoners Review Board v Freeman [2010] WASCA 166 [134] ‑ [138].
Rizhao submits that these principles only apply with respect to the validity of administrative decisions, and do not apply to the decisions of a court. However, it provides no reasoning to support the proposition that the validity of the exercise of a statutory jurisdiction conferred upon a court should be assessed differently to the validity of the exercise of statutory authority conferred upon an administrative decision‑maker in this respect. There is no authority to support such a distinction, and there is authority to the contrary. In Re JJT; Ex Parte Victoria Legal Aid [1998] HCA 44; (1998) 195 CLR 184, the High Court was considering a challenge to an order made under the Family Law Act 1975 (Cth). In the course of his reasons, Kirby J observed:
The fact that Faulks J considered that s 117 of the Act was the legal foundation of this order would not deprive that order of validity if, on examination, it was supported by another provision, such as s 68L [40].
Kirby J was in dissent in that case, although as Doyle CJ observed in Grozev, there is no reason to suppose that the majority took the view that s 68L was not available to support the orders made by the court, if its terms authorised those orders.
Applying these principles to this case, Rizhao does not dispute, indeed it positively asserts, that the IAA provides this court with jurisdiction to enforce the arbitral awards. As I have noted, there are no material procedural differences between the procedure to be followed by an applicant for enforcement of an award under the CAA as compared to an applicant for enforcement of an award under the IAA. However, there are significant differences in the substantive grounds upon which an application for enforcement may be opposed, depending upon whether the application is made under the CAA or the IAA. Accordingly, if a mistaken view as to the court's jurisdiction had caused the primary judge to err as to the grounds upon which Rizhao could resist the application for enforcement, and that error materially affected the outcome, appellate error would be established (although not, I think, nullity).
If, as Rizhao contend, the primary judge was mistaken as to the source of his jurisdiction to enforce the arbitral awards, the consequence of that mistake was to cause him to take an expanded view of the grounds upon which Rizhao could oppose the applications for enforcement, and to entertain a submission from Rizhao that would not have been available to it if the primary judge had taken the view that the source of his jurisdiction was the IAA. Rizhao has conceded that if the primary judge had taken that view, it would not have been in a position to advance any argument or contention falling within Article 36 of the Model Law in opposition to Mount Gibson's applications for enforcement. It follows that in the circumstances of these cases, even if the primary judge was mistaken as to the source of his jurisdiction, any such error did not materially affect the outcome of the applications before him, and would not establish appellable error, let alone nullity. Rizhao's submissions to the contrary must be rejected.
For these reasons, Rizhao's contention that it is entitled as of right to have the orders of the primary judge set aside must be rejected. The forensic strategy adopted by Rizhao leads inexorably to the conclusion that it would be antithetical to the interests of justice for this court to now entertain a point which Rizhao chose not to raise before the primary judge.
These conclusions are sufficient to dispose of these appeals, irrespective of the view taken with respect to prejudice to Mount Gibson. However, for the sake of completeness I will consider that issue.
Prejudice to Mount Gibson
It will be apparent from the reasons I have already given that this is not a case in which Mount Gibson could be said to suffer no prejudice if Rizhao were permitted to take a new point on appeal. To the contrary, Mount Gibson would be severely prejudiced by Rizhao's lack of candour before the primary judge. Rizhao properly concedes that if it had taken the point which it now seeks to take before the primary judge, Mount Gibson would in all probability have moved to amend its process to include reference to the IAA in the alternative. There is no conceivable basis upon which Rizhao could have opposed an application for amendment, as the application would have had no material effect upon the procedure to be followed by the court. The substantive effect of the court proceeding under the IAA instead of the CAA would have been to deprive Rizhao of any realistic basis for opposition to the applications for enforcement under the IAA. Accordingly, if it be the case that the only source of the court's jurisdiction to enforce the arbitral awards is the IAA, the forensic strategy adopted by Rizhao of preserving that point to be raised for the first time on appeal would, if permitted, occasion significant prejudice to Mount Gibson. That conclusion is also, of itself, sufficient to result in the dismissal of these appeals.
Mount Gibson's contention
Mount Gibson contends that if, as Rizhao asserts, the primary judge erred in the identification of the source of his jurisdiction, his orders should nevertheless be upheld as a valid exercise of the jurisdiction conferred upon the court by the IAA. For the reasons which follow, I do not consider that the primary judge erred as to the source of his jurisdiction. However, on the assumption that a contrary view is taken, I would, nevertheless, uphold Mount Gibson's contention and affirm the orders made by the primary judge essentially for the reasons already given.
Put shortly, Rizhao accepts that the primary judge would have had jurisdiction to make orders enforcing the awards under the IAA if Mount Gibson had purported to invoke that jurisdiction. The cases to which I have referred establish that error by Mount Gibson and the primary judge as to the source of jurisdiction does not of itself invalidate the exercise of jurisdiction if there was another available source of jurisdiction (ie, the IAA). In the circumstances of the present cases, any error by the primary judge as to the source of his jurisdiction had no material effect on the outcome of the applications before him. If it did become necessary to uphold Mount Gibson's contention, it would be desirable to amend the orders made by the primary judge by deleting reference to the CAA in the prefatory words of order 1. If it were concluded that s 33 of the CAA is not the source of the court's jurisdiction in these cases, it would be necessary for Mount Gibson to move for judgment in the terms of the arbitral awards, as it could not rely upon the authority provided by s 33 of the CAA for the formal entry of judgment. However, in each case, the originating summons issued by Mount Gibson sought orders for judgment in terms of the relevant arbitral award, and there is no reason why this court could not further amend the orders made by the primary judge by directing entry of judgment in those terms and every reason why, in the interests of justice, it would be appropriate to do so.
However, for the reasons which follow, in my view it is unnecessary to amend the orders made by the primary judge, because he was correct to proceed upon the assumption that the jurisdiction he was exercising was the jurisdiction conferred by the CAA.
Should the court resolve the substantive issues?
I have concluded that these appeals should be dismissed because Rizhao should not be permitted to raise issues on appeal which it did not raise before the primary judge. That conclusion in turn raises an issue as to whether I should consider the substantive issues raised on appeal at all, given that they involve an assertion that the CAA has no operation in relation to the judicial review and enforcement of arbitral awards made in international arbitrations because of s 109 of the Constitution of the Commonwealth of Australia.
There is a well‑recognised principle, applicable at least in courts with the ultimate responsibility of construing and applying a written constitution, to the effect that determinations with respect to the constitutional validity of legislation will only be made where required for the determination of the controversy before the court. The classical exposition of this position is to be found in a decision of Brewer J in Chicago & Grand Trunk Railway Co v Wellman 143 US 339 (1892):
Whenever, in pursuance of an honest and actual antagonistic assertion of rights by one individual against another, there is presented a question involving the validity of any act of any legislature, state or federal, and the decision necessarily rests on the competency of the legislature to so enact, the court must, in the exercise of its solemn duties, determine whether the act be constitutional or not; but such an exercise of power is the ultimate and supreme function of courts. It is legitimate only in the last resort, and as a necessity in the determination of real, earnest and vital controversy between individuals (345).
The High Court of Australia has adopted this principle since its earliest days. In Attorney‑General (NSW) v Brewery Employees Union (NSW) [1908] HCA 94; (1908) 6 CLR 469, Griffith CJ observed:
The court will not decide abstract questions, nor will it decide any question except when raised by some person entitled by reason of his interest to claim a decision. This doctrine should certainly not be relaxed for the purpose of bringing in question the validity of Statutes passed either by the Commonwealth Parliament or by a State Legislature (491).
To similar effect, O'Connor J observed:
[T]he court cannot be called on or with propriety assume to question the legality of what Parliament has enacted as the will of the nation unless such a determination is absolutely necessary (553).
Higgins J observed:
Nothing would tend to detract from the influence and the usefulness of this court more than the appearance of an eagerness to sit in judgment on Acts of Parliament, and to stamp the Constitution with the impress which we wish it to bear. It is only when we cannot do justice, in an action properly brought, without deciding as to the validity of the Act, that we are entitled to take out this last weapon from our armoury (590).
The High Court has consistently maintained this approach. For example, in Universal Film Manufacturing Co (Australasia) Ltd v New South Wales [1927] HCA 50; (1927) 40 CLR 333 Starke J held:
[T]he jurisdiction of this court to determine whether a statute contravenes the Constitution should only be invoked, and according to the settled practice of this court is only invoked, when it is found necessary to secure and protect the rights of a party before it against unwarranted exercise of legislative power to his prejudice (356).
In the same case Isaacs ACJ observed:
Some very powerful arguments were addressed to us on the subject of invalidity. In the circumstances no expression of judicial opinion on that subject would be in accordance with recognised practice or be more than obiter. I therefore say nothing on that subject but reserve my opinion for a future occasion should the necessity arise (347).
More recently, in ICM Agriculture Pty Ltd v The Commonwealth [2009] HCA 51; (2009) 240 CLR 140, Hayne, Kiefel and Bell JJ observed:
Since its earliest days, the court has followed the precept that constitutional questions should not be decided unless it is necessary 'to do justice in the given case and to determine the rights of the parties' [141]. (citations omitted)
It might be doubted whether this principle applies with equal rigour to intermediate courts of appeal. That is because the decisions in intermediate courts of appeal are subject to a contingency which does not attend the decisions of ultimate courts. Taking this case as an example, if the conclusion that Rizhao should not be allowed to raise a new point on appeal is disturbed on appeal, the substantive issues in the appeal would determine its outcome and the resolution of those issues at this level may be of some assistance to the ultimate court of appeal. It might also be doubted whether this principle applies with equal rigour to issues of validity arising under s 109 of the Constitution, where the constitutional principles are well settled and almost invariably turn critically upon the proper construction given to the relevant state and federal statutes.
There are three reasons why I have concluded, in the particular circumstances of these cases, I should consider the substantive issues raised by these appeals notwithstanding my view that they should be dismissed irrespective of the determination of those issues.
First, if it is correct that the IAA was the only source of jurisdiction available to the primary judge, out of an abundance of caution, and so as to fully protect Mount Gibson's interests, it would be appropriate to uphold Mount Gibson's contention and amend the orders of the primary judge in the manner I have proposed.
Second, in these cases the constitutional aspect of the substantive issues for determination is not contentious. If it is determined that the agreement of the parties to the effect that arbitration of their disputes would be governed by the CAA was not effective to exclude the application of the provisions of the Model Law relating to judicial review and enforcement of the arbitral awards at the time Mount Gibson applied for enforcement of those awards, there is no doubt that there would be a direct inconsistency between the rights and obligations of the parties under the Model Law, and the rights and obligations of the parties under the CAA, with the result that the CAA would be overridden by virtue of s 109 of the Constitution. On the other hand, if the IAA, properly construed, does not apply the provisions of the Model Law with respect to judicial review and enforcement to arbitral awards made pursuant to arbitration agreements which exclude the Model Law and were entered into prior to the commencement of the 2010 amendments, it follows that the 'field' covered by the IAA does not extend to cover the judicial review and enforcement of awards made pursuant to such agreements, and that the CAA will remain valid in its application to such awards. Neither party to these appeals advanced any argument to the contrary of these obvious propositions, which apply principles relating to the operation of s 109 of the Constitution which are well settled.
I would also note in this context that it seems to me to be at least arguable that s 109 of the Constitution has no part to play in the resolution of the substantive issues that arise in these appeals. That is because those issues turn critically upon the proper construction and effect of s 21 of the IAA before and after its amendment in July 2010. It is common ground that before its amendment it permitted parties to contract out of the application of the provisions of the Model Law. The difference between the parties is as to the extent of the contracting out permitted. In these cases the parties, by their agreement, purported to adopt the provisions of the CAA to govern the arbitration of their disputes. If that agreement was effective to apply the provisions of the CAA to the judicial review and enforcement of the arbitral awards, in these cases, the applicability of the CAA arose from the agreement of the parties to adopt its terms, not from its operation as a law of the state. On this view of the case, which seems to me to be consistent with the position of both parties, the only question which arises is as to the proper construction and effect of the IAA before and after amendment, and no question arises under s 109 of the Constitution.
Third, it is reasonable to suppose that the question of whether the Model Law applies to international arbitrations conducted in respect of arbitration agreements entered into prior to 6 July 2010, even if those agreements purported to exclude the operation of the Model Law, is of some significance to the commercial community generally.
The IAA before amendment
Prior to the amendments which came into effect in July 2010, s 21 of the IAA provided:
If the parties to an arbitration agreement have (whether in the agreement or in any other document in writing) agreed that any dispute that has arisen or may arise between them is to be settled otherwise than in accordance with the Model Law, the Model Law does not apply in relation to the settlement of that dispute.
Rizhao accepts that this provision enables parties to an arbitration agreement to effectively agree that the provisions of the Model Law will not apply in relation to the settlement of their dispute and that the iron ore sales contracts contain provisions to that effect. However, Rizhao contends that the authority conferred by the section extends only to contracting out of the Model Law up to the point of settlement of their dispute, which occurs when an arbitral award is delivered. Accordingly, Rizhao contends that it has never been competent for parties to an arbitration agreement to which the IAA applies to effectively contract out of those provisions of the Model Law which apply following delivery of an arbitral award, such as the provisions relating to judicial review, recognition and enforcement.
Rizhao accepts that its submission is directly contrary to two decisions of the New South Wales Supreme Court at first instance - namely: Aerospatiale Holdings Australia Pty Ltd v Elspan International Ltd (1992) 28 NSWLR 321; and American Diagnostica Inc v Gradipore Ltd (1998) 44 NSWLR 312. In both of those cases it was accepted that all provisions of the Model Law, including those provisions which operated post‑award, such as the provisions relating to judicial review, enforcement and recognition, could be excluded by an agreement by the parties to arbitrate in accordance with the arbitral law of New South Wales.
Rizhao seeks to discount these decisions by noting (correctly) that issues of constitutional inconsistency and those which might arise under s 109 of the Constitution were not squarely raised and determined in either of those cases. However, as I have already noted, it seems to me that the critical issue raised by Rizhao in these cases is an issue which turns upon the proper construction of s 21 of the IAA, rather than upon any issue of inconsistency between state and federal legislation. In assessing the weight to be given to these prior decisions, the fact that the construction issue raised by Rizhao was not squarely raised and determined is of more significance than the fact that no issue arising under s 109 of the Constitution was raised and determined.
There is another decision at first instance of the Supreme Court of New South Wales which proceeded upon the unquestioned assumption that all provisions of the Model Law, including those which would operate post‑award, could be completely displaced by the agreement of the parties: Cargill International SA v Peabody Australia Mining Ltd [2010] NSWSC 887. Similarly, in Wagners Nouvelle Caledonie Sarl v Vale Inco Nouvelle Caledonie SAS [2010] QCA 219, the Queensland Court of Appeal determined a case stated for its opinion which presumed that if the parties had, by their agreement, excluded the Model Law, the provisions of the Commercial Arbitration Act 1990 (Qld) would govern the right to seek judicial review of the arbitral award. In each of these cases the litigation was conducted on the basis of an assumption that the Model Law could be entirely excluded by agreement, so that it was unnecessary for either court to rule upon the validity of that assumption.
The proper construction of the expression 'the settlement of that dispute' viewed in its context within s 21 of the IAA and in the context of the Act as a whole is central to Rizhao's argument. Rizhao contends that a dispute is settled by the delivery of an arbitral award. However, Mount Gibson contends that viewed in context, 'settlement' of a dispute extends to and includes all matters leading up to the satisfaction of the claims advanced by the parties to the dispute and therefore extends to and includes matters relating to the judicial review of awards, and their recognition and enforcement.
Mount Gibson's position is supported by the natural and ordinary meaning of the language used in s 21. The word 'settlement' bears a number of meanings which have no relationship to its meaning in the context of s 21 of the IAA. Meanings that are relevant to that context given by the Macquarie Dictionary include:
The satisfying of a claim or demand; (law) final disposition of an estate or the like.
The context in which the word 'settlement' is used in s 21, and in the Act as a whole, strongly support giving that word its natural and ordinary meaning, extending to and including all matters up to the final resolution and disposition of claims. International commercial arbitration is a process invoked by a party who seeks to have claims satisfied. The commencement of arbitral proceedings, the conduct of those proceedings, and the delivery of an award are steps along the road towards satisfaction of the claims advanced. Although in one sense it might be said that the purpose of a party commencing arbitral proceedings is to obtain an award in its favour, plainly the award is not an end in itself, but merely a means by which the ultimate goal of obtaining satisfaction of that party's claims might be achieved. There are a number of steps which must be taken between delivery of the award and achievement of the ultimate goal of satisfaction of the disputed claim. Those steps include judicial review of the award (if any application is made to set aside the award), and enforcement of the award by a court of competent jurisdiction which might use its coercive processes and powers to compel compliance with the award and thereby achieve the ultimate goal of satisfaction of the disputed claim.
Clause 21.7 of each agreement provided that it was governed by the laws in force in Western Australia and, where applicable, the Commonwealth of Australia. Clause 21.8 excluded the application of the Vienna Convention on the Sale of Goods.
Construction
An arbitration clause is considered to be a contract independent of the underlying contract in which it is contained - and for that reason survives termination of the underlying contract: Ferris v Plaister (1994) 34 NSWLR 474, 484, 496 ‑ 497, 500 ‑ 501, 503 ‑ 504; Harbour Assurance Co (UK) Ltd v Kansa General International Insurance Co Ltd (1993) 3 WLR 42, 52 ‑ 54, 61; Heyman v Darwins Ltd [1942] AC 356, 374; Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corp Ltd [1981] 2 WLR 141, 166.
The terms of an arbitration agreement bind the parties and the arbitrator who enters upon a reference pursuant to the arbitration agreement: Esso Australia Resources Ltd v Plowman [1995] HCA 19; (1995) 183 CLR 10, 29. In this regard, there is a further agreement which arises when a dispute is referred to arbitration, which is subsidiary to, but separate from, the arbitration agreement itself: Black Clawson International Ltd v Papierwerke Waldhof‑Aschaffenburg AG [1981] 2 Lloyd's Rep 446, 454 ‑ 455; Sumitomo Heavy Industries Ltd v Oil and Natural Gas Commission [1994] 1 Lloyd's Rep 45, 57; C v D [2007] EWCA (Comm) 1541 [43].
By cl 20.5(a), particularly read in the context of cls 20.5(c) and 21.7, the parties agreed, in effect, that the 'seat' of the arbitration would be Western Australia - the 'seat' being a juridical concept identifying the 'legal place' of the arbitration: Raguz v Sullivan (2000) 50 NSWLR 236; [2000] NSWCA 240, 254 ‑ 257, 259.
Both by implication from the agreed seat of the arbitration, and expressly by cl 20.3(b), the parties agreed that the curial or procedural law of the arbitration of the relevant disputes would be the law applying in Western Australia. As to the system of curial law generally being implied by the agreement of the seat of an arbitration, and the seat of the arbitration generally being implied by the agreement as to the curial law, see for example: Naviera Amazonica Peruana SA v Compania Internacional de Seguros del Peru [1988] 1 Lloyd's Rep 116, 119 ‑ 120; Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] 1 AC 334, 357 ‑ 358; Union of India v McDonnell Douglas Corporation [1993] 2 Lloyd's Rep 48, 50; Sumitomo v Oil and Natural Gas (57); American Diagnostica Inc v Gradipore Ltd (1998) 44 NSWLR 312, 324.
It was common ground in this appeal that on the proper construction of the arbitration agreements, the parties agreed that relevant disputes were to be settled 'otherwise than in accordance with the Model Law', within the meaning of s 21 of the IA Act as it stood prior to the commencement of the Amendment Act. In this regard, see, eg, Aerospatiale Holdings Australia Pty Ltd v Elspan International Ltd (1992) 28 NSWLR 321, 325 (in relation to a clause with similar wording) and Cargill International SA v Peabody Australia Mining Ltd [2010] NSWSC 887 [55] ‑ [57]; American Diagnostica Inc v Gradipore Ltd (323). This is not a case where the parties have merely agreed that a set of procedural rules is to apply and the question is whether the agreement as to the application of the procedural rules is sufficient to exclude the Model Law as the curial or procedural law - see Cargill v Peabody; cf Australian Granites Ltd v Eisenwerk Hensel Bayreuth Dipl.‑ing Burkhardt GmbH [2001] 1 Qd R 461.
Accordingly, in my view, the parties had agreed, and the agreement was sanctioned by s 21 of the IA Act at the time, that their disputes were to be referred to arbitration in Western Australia and that the curial or procedural law of the arbitration should be the Commercial Arbitration Act and not the Model Law.
By the arbitration agreement, properly construed, the parties also agreed that the Commercial Arbitration Act should apply as it stood at the time that a dispute is referred to arbitration. That is so because under cl 20.3(b) the parties have agreed that the Commercial Arbitration Act is to apply at the point in time when the unresolved dispute is referred to arbitration.
Finally, I would add that the meaning of cl 20.6(b) was not debated in this appeal, and it is not necessary to consider whether it operated as an effective 'exclusion agreement' within the meaning of s 40(1) and s 41 of the Commercial Arbitration Act, either with respect to judicial review of an award under s 38(2) or the determination of a question of law under s 39(1) of the Commercial Arbitration Act.
The arbitration proceedings
Disputes arose between the parties in 2008 within the meaning of cl 20.3(b) and the disputes were referred to arbitration in accordance with the agreements.
On 16 February 2009, the arbitrator (the Hon Murray Gleeson AC QC) was appointed an arbitrator by the chairman of the Perth Branch of the Australasian Institute of Mining and Metallurgy, at the joint request of the parties.
There were various interlocutory proceedings in the arbitration over the period 5 March 2009 to February 2010.
The hearing of the arbitration commenced in Perth on 22 March 2010. The hearing continued until 1 April 2010, when, by consent, it was adjourned until 1 July 2010. The hearing resumed in Perth on 1 July 2010 and concluded on 8 July 2010.
On 16 August 2010, the arbitrator delivered his awards pursuant to the references under the arbitration agreements.
The arbitrator recorded (Award par 20):
20.It is common ground between the parties that the arbitrator has jurisdiction to hear and determine the disputes set out in the Points of Claim and the Counterclaim referred to below. For the avoidance of doubt, on the first day of the hearing the parties made application for an order under s 25 of the Commercial Arbitration Act 1925 (WA) [sic 1985] directing that the arbitration be extended to include all the disputes referred to in or arising out of the Points of Claim and Counterclaim in their final amended forms, and such an order was made.
Arbitral procedural law
Although the parties agreed that the procedural law of the arbitration should be the Commercial Arbitration Act, as Toulson J (as his Lordship then was) observed in XL Insurance Ltd v Owens Corning [2000] 2 Lloyd's Rep 500, 507, in relation to broadly analogous UK legislation:
Arbitration law is all about a particular method of resolving disputes. Its substances and processes are closely intertwined. The Arbitration Act contains various provisions which could not readily be separated into boxes labelled substantive arbitration law or procedural law, because that would be an artificial division.
Similarly, in American Diagnostica Inc v Gradipore (324), Giles CJ Comm D said:
Although the law governing the conduct of the arbitration (the lex arbitri) is said to be concerned only with procedural matters, it goes beyond, for example, the production of documents or the order of witnesses. The appointment, removal, and replacement of arbitrators, time‑limits, interim relief, consolidation of arbitrations, representation before the arbitrator, the form and validity of the award, and the finality of the award, are amongst the matters which can fall within the lex arbitri.
The Commercial Arbitration Act 1985 (WA) is a statute which broadly followed the form of similar statutes in other States and Territories.
In PMT Partners Pty Ltd (in liq) v Australian National Parks and Wildlife Service [1995] HCA 36; (1995) 184 CLR 301, 319 Toohey and Gummow JJ described cognate Northern Territory legislation in these terms:
One evident object of the Act is to encourage resolution by arbitration of disputes. But the legislation has a system of checks and balances. Thus, it provides for review of awards by the Court in respect of questions of law (s 38) and the determination of preliminary points of law by the Court (s 39); in certain circumstances, the rights to approach the Court under ss 38 and 39 may be excluded (ss 40, 41). The Court may stay proceedings brought in respect of a matter agreed to be referred to arbitration (s 53). On the other hand, a 'Scott v Avery clause' does not, in the circumstances described in s 55, operate to prevent the institution of legal proceedings on the matter in dispute and is to be construed as an agreement to refer the matter to arbitration.
Further, s 53, while providing for an application to the Court to stay proceedings which have been instituted in the Court in respect of a matter agreed to be referred to arbitration, provides that, notwithstanding any rule of law to the contrary, a party to an arbitration agreement shall not be entitled to recover damages from another party to the agreement by reason that the other party has taken proceedings in a court in respect of a matter agreed to be referred to arbitration … (emphasis added) (footnotes omitted)
The legislative system of 'checks and balances' in the Commercial Arbitration Act also enables the court to set aside an award in certain circumstances relating, in effect, to misconduct (s 42). There is provision for remitter to the arbitrator subject to s 38(1) (s 43). The court may, on the application of a party, remove the arbitrator if the court is satisfied that certain circumstances exist, including on the grounds of incompetence (s 44). The court may also, on the application of a party, terminate the arbitration and remove the dispute into court in specified circumstances involving inordinate delay (s 46).
The Commercial Arbitration Act also shapes the character of the arbitral proceedings and, in effect, the potential scope of their time and cost, by providing, in effect, that the parties' disputes are to be settled by a single arbitrator unless the arbitration agreement provides otherwise or the parties otherwise agree (s 6). The general law background was that where there are more arbitrators than one, apart from statute or agreement, a majority award is insufficient: United Kingdom Mutual Steamship Assurance Association v Houston & Co [1896] 1 QB 567. Section 8 allows an arbitrator to be appointed by a party where there has been a default in the exercise of the power by the person conferred with the authority for nomination, subject to the power of the court to set aside that party's nomination and make its own appointment. The composition of an arbitral tribunal (as opposed to the identity of a judge in curial proceedings) is generally a matter of major importance to the parties in an arbitration.
Provisions of the nature referred to in [182] ‑ [184] above, at least in their collective operation, could not, in my view, be readily described as matters of mere procedure. They may be compared with a provision such as s 19(1) of the Commercial Arbitration Act which provides that unless a contrary intention is expressed in the arbitration agreement, evidence may be given orally or in writing and, if the arbitrator so requires, be given on oath or affirmation or by affidavit. A provision of that kind is evidently a matter of mere procedure.
The Model Law, on the other hand, provides, in effect, for the appointment of three arbitrators unless the parties determine otherwise (Article 10). An arbitrator's appointment may be challenged only if circumstances exist that give rise to a justifiable doubt as to his impartiality or independence, or if he does not possess qualifications agreed to by the parties (Article 12(2)). Absent agreement otherwise, a challenge must be made within 15 days after a party becomes aware of the constitution of the tribunal or after becoming aware of circumstances giving rise to a challenge under Article 12(2) (Article 13(2)). The Model Law provides that an award may (not must) be set aside on limited, specified grounds (Article 34(1) and (2)), and requires an application to set aside to be made within a three‑month period (Article 34(3)). The remedy of remitter is confined within the framework of an application to set aside (Article 34(4)). Recognition or enforcement of an award may only be refused, in effect, on largely the same grounds as those available to set aside an award (Articles 35 and 36)). Except where the Model Law so provides, no court shall intervene in matters governed by the Model Law (Article 5). The Model Law provides a different, and in general terms more restrictive, regime of checks and balances, but the regime is again not readily characterised as mere procedure.
The question of retrospectivity
In Rodway v The Queen [1990] HCA 19; (1990) 169 CLR 515, 518, Mason CJ, Dawson, Toohey, Gaudron & McHugh JJ said:
The rule at common law is that a statute ought not be given a retrospective operation where to do so would affect an existing right or obligation unless the language of the statute expressly or by necessary implication requires such construction. It is said that statutes dealing with procedure are an exception to the rule and that they should be given a retrospective operation. It would, we think, be more accurate to say that there is no presumption against retrospectivity in the case of statutes which affect mere matters of procedure. Indeed, strictly speaking, where procedure alone is involved, a statute will invariably operate prospectively and there is no room for the application of such a presumption. It will operate prospectively because it will prescribe the manner in which something may or must be done in the future, even if what is to be done relates to, or is based upon, past events. A statute which prescribes the manner in which the trial of a past offence is to be conducted is one instance. But the difference between substantive law and procedure is often difficult to draw ...
In John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503, Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ said [99]:
Two guiding principles should be seen as lying behind the need to distinguish between substantive and procedural issues. First, litigants who resort to a court to obtain relief must take the court as they find it. … the plaintiff cannot ask that the courts of the forum adopt procedures or give remedies of a kind which their constituting statutes do not contemplate any more than the plaintiff can ask that the court apply any adjectival law other than the laws of the forum. Secondly, matters that affect the existence, extent or enforceability of the rights or duties of the parties to an action are matters that, on their face, appear to be concerned with issues of substance, not with issues of procedure. Or to adopt the formulation put forward by Mason CJ in McKain, 'rules which are directed to governing or regulating the mode or conduct of court proceedings' are procedural and all other provisions or rules are to be classified as substantive. (footnotes omitted)
In Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261, 270, Dixon CJ adopted a practical summary of the relevant principles as follows:
(a)a statute divesting vested rights is to be construed as prospective;
(b)a statute, merely procedural, is to be construed as retrospective;
(c)a statute which, while procedural in its character, affects vested rights adversely is to be construed as prospective.
Thus, a provision conferring a right of appeal is not 'merely' procedural with respect to pending actions: The Colonial Sugar Refining Co Ltd v Irving [1905] AC 369, 372, per Lord Macnaghten speaking for the Judicial Committee; Worrall v The Commercial Banking Co of Sydney Ltd [1917] HCA 67; (1917) 24 CLR 28, 31; The Australian Coal and Shale Employees Federation v Aberfield Coal Mining Co Ltd [1942] HCA 23; (1942) 66 CLR 161, 175, 178, 185, 194; Minister for Home & Territories v Smith [1924] HCA 41; (1924) 35 CLR 120.
In the last‑mentioned case, which I will refer to as Minister for Home & Territories v Smith (No 2), Isaacs ACJ and Starke J quoted Lord Macnaghten's observations in Colonial Sugar v Irving and said with respect to his Lordship's remarks:
Seeing that the appellants were suitors in a pending action, he [Lord Macnaghten] holds they had a right. The decision established that the Judiciary Act did not operate upon pending actions so as to deprive the suitors in those actions of rights including rights of appeal which were in existence at the time of the passing of the Act. It supplies an instance of 'a good reason,' referred to by Lord Blackburn [in Gardner v Lucas (1878) App Cas at 603], why an Act altering procedure should not operate retrospectively. (emphasis in original)
The decision in Minister for Home & Territories v Smith (No 2) arose in the following circumstances.
In that case, the Commonwealth had compulsorily acquired certain land in South Australia owned by Smith and another. The Minister applied to the High Court, by originating summons, to determine the compensation claim which had been made by Smith and the other owners. The application in the High Court was stayed when, by private agreement, the parties agreed to submit their dispute to arbitration by a justice of the High Court. The agreement provided that the South Australian Arbitration Act of 1891 would not apply, and that the parties would treat any award as a 'rule' (ie judgment) of the High Court. Justice Powers accepted the reference and made an award in due course. The Minister applied to the High Court to have the award made a 'rule' (judgment) of the court. The application originally came before Starke J, who dismissed it on the basis that there was no statutory jurisdiction to enable the court to treat the award as a judgment of the court, and that the parties could not, by private agreement, confer such jurisdiction on the High Court: Minister for Home & Territories v Teesdale Smith [1920] HCA 48; (1920) 28 CLR 584, 586 ‑ 587.
Subsequently, the Commonwealth enacted s 33A of the Judiciary Act which relevantly provided, in effect, that the High Court could direct that an award in an arbitration in respect of any matter in which it had original jurisdiction, 'shall be made a rule [judgment] of the High Court'. The Minister then renewed his application to have the award by Powers J made a judgment of the court, relying upon the enlarged statutory jurisdiction provided by s 33A of the Judiciary Act. The claimants for compensation again opposed the application, this time on three bases, two of which need only be mentioned for present purposes. The first was that s 33A could not operate retrospectively, and the second was that the decision of Starke J in refusing the earlier application by the Minister operated as a res judicata. The High Court rejected these arguments. In dealing with the question of alleged retrospectivity, Isaacs ACJ and Starke J in Minister for Home & Territories v Smith (No 2) made the observations quoted in [191] above, and continued (at 129):
Applying the principles stated to sec. 33A, it appears that the enactment is one relating to procedure, that is, to the method of enforcing existing rights. It does not assume to alter any rights; it merely invests the High Court with a measure of original jurisdiction to ascertain and compel the observance of rights. Awards are not altered, the contracts of the parties to the submission under which the awards are made are not varied - nothing is done but to provide for a judicial recognition of whatever rights exist. (emphasis added)
In relation to the res judicata argument, Isaacs ACJ and Starke J said (at 129):
The decision of Starke J was not founded on the rights of the parties as between themselves, or on the circumstances of the award, or on the general law of liability to make awards rules of Court. It rested solely on the incapacity of the Court to entertain such an application. Now that the Court is invested with the power to entertain, and in proper circumstances to grant, such an application, the applicant has for the first time a legal right to ask, and cannot be met with the objection that he has already lawfully asked once and been refused by a final judgment. (emphasis added)
In this case, the Amendment Act does not simply enlarge the jurisdiction of the court to enforce an award as a judgment of the court. It is not simply adding a right which had hitherto not existed.
Whilst a provision such as s 33 of the Commercial Arbitration Act provides a summary procedure for the enforcement of an award, and is in that regard procedural in character, the discretion to grant leave under s 33 is in terms unconfined, with its limitations to be ascertained by implication from the subject matter, scope and purpose of the provision in the context of the Commercial Arbitration Act read as a whole: see Minister for Aboriginal Affairs v Peko‑Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24, 39 ‑ 40. The relevant context includes the procedural law provisions referred to in [182] ‑ [184] above. Cases in which some consideration has been given to the nature and scope of the discretion under s 33 include Cockatoo Dockyard Pty Ltd v Commonwealth of Australia (No 3) (1995) 35 NSWLR 689, 695 ‑ 696; Tridon Australia Pty Ltd v ACD Tridon Inc (Incorporated in Ontario) [2004] NSWCA 146.
The Model Law, which the appellants contend applies to the enforcement of the awards in question, provides relevantly (Article 36) that the enforcement of an award may only be refused on limited, specified criteria, and similarly, may only be set aside on broadly the same limited criteria (Article 34). Accordingly, whilst the application of the Model Law would not alter the procedural character of summary enforcement, it would significantly alter the legislative criteria under which, and the legislative framework within which, the parties would be entitled to obtain or resist enforcement.
Here, the right to enforce an award under s 33 of the Commercial Arbitration Act was a final element within an integrated statutory system of checks and balances governing the enforceability of the underlying rights and obligations of the parties. Once the arbitrator entered upon the reference in accordance with an agreement which excluded the Model Law, the legislative system of checks and balances in the Commercial Arbitration Act, as it then stood, defined the rights of the parties, both as between themselves, and as between themselves and the arbitrator, in relation to the settlement up to and including the point of enforcement, of the particular disputes the subject of the reference to arbitration. If the Amendment Act were read so as to apply to disputes which, under existing contractual arrangements, the parties had already referred to arbitration to be settled other than in accordance with the Model Law, it would operate not to augment their accrued rights, but to displace them.
It is also to be noted that the current s 21 of the IA Act is prefaced by the word '[I]f'. It provides that if the Model Law 'applies' to 'an arbitration', then State law does not 'apply' to 'that arbitration'. The preclusion of State law is dependent upon the application of the Model Law to the arbitration in question. There is no express statutory provision which makes the repeal and substitution of s 21 retrospective, and it is difficult to discern from the statutory language a necessary intendment (as that concept is explained in Worrall v Commercial Banking Co of Sydney Ltd at (32)) that State law does not apply as the agreed procedural law to arbitrations underway in respect of which the Model Law has been lawfully excluded.
The objects of the IA Act which were enacted by the Amendment Act (see [161] above) are consistent with the IA Act operating as I have indicated. The objects are in accord with a statutory intention not to interfere with existing rights. Further, the absence from pt 2 of sch 1 to the Amendment Act of a provision dealing with the application of item 16 (see [162] above), does not signify a necessary intendment to interfere with existing rights.
As Martin CJ has observed, since the hearing of this appeal, Murphy J in the Federal Court has delivered his decision in Castel Electronics Pty Ltd v TCL Air Conditioner (Zhongshan) Co Ltd [2012] FCA 21, in which his Honour expressed the view, in the case before him, that the current s 21 of the IA Act operated as a procedural law which applied to arbitration agreements entered into prior to the commencement of the Amendment Act. In that case, the arbitration agreement did not exclude the Model Law and, accordingly, the Model Law applied as the procedural law of the arbitration, both before and after the commencement of the Amendment Act. The respondent in that case contended, however, that under the IA Act prior to the Amendment Act, it was the Supreme Court of Victoria, and not the Federal Court, which was the court which was empowered to enforce the award in question. His Honour was not required to address the particular questions which have arisen for consideration in this case. Also, his Honour appears to have indicated at [69], as I understand it, that if and insofar as the amendment was said to operate to give the Federal Court jurisdiction to enforce an award in an arbitration conducted under the Model Law, it was difficult to see how its operation could be regarded as altering substantive rights. In that event, in whichever court the application to enforce the award was made, the court would be applying the Model Law as the procedural law of the arbitration.
Finally, we were referred, by the appellants, to the revised explanatory memorandum with respect to the International Arbitration Amendment Bill 2010. In my view, it is unnecessary to have recourse to the revised explanatory memorandum to construe the IA Act. Moreover, the memorandum does not seem to me to provide a clear guide to the resolution of the issue under contention. Indeed, on one view of it, it points towards the proposition that the repeal and substitution of s 21 is intended to apply prospectively rather than retrospectively. For example, in the 'Outline', in the section dealing with 'Application of the Act and the Model Law', the revised explanatory memorandum provides:
The Bill repeals s 21, removing the ability of the parties to an arbitration agreement to nominate an alternative arbitral law. (emphasis added)
Paragraph 114 of the revised explanatory memorandum provides, with reference to the repeal of s 21:
While it is appropriate to give parties the flexibility to determine the procedures they want and the substantive law that is applicable to the dispute, allowing parties to oust the arbitral law creates significant difficulties that cannot be easily remedied without complex litigation. Accordingly, this item repeals section 21. Consequently, while the parties will continue to have freedom to choose both the procedures and applicable substantive law, they will not be free to oust the Model Law as the applicable arbitral law. (emphasis added)
As I have said, it seems to me that no real assistance can be derived from the revised explanatory memorandum, but I would not accept the appellants' submission that it positively assists their case in these appeals.
For these reasons, in my view, on general law principles, the repeal of the former section 21 of the IA Act and its replacement with the current provision, do not affect the continuing operation of the Commercial Arbitration Act with respect to the enforcement of the arbitral awards in this case. The result is the same by virtue of the operation of s 7(2) of the Acts Interpretation Act 1901 (Cth) as it now stands, or s 8 of that Act it stood prior to its repeal and replacement by the Acts Interpretation Amendment Act 2011 (Cth): cf Carr v Finance Corporation of Australia Ltd [No 2] [1982] HCA 43; (1982) 150 CLR 139, 152.
The situation may be different with respect to disputes not referred to arbitration prior to 6 July 2010. In that event, the arbitration agreement would be wholly executory, and the rights under the agreement to have any particular dispute settled by arbitration in accordance with its terms would arguably not have vested. As I have said, it appears to me that the contractual right was, in effect, to refer disputes to an arbitration to be governed by the Commercial Arbitration Act as it stood at the time of the referral. If, between the date of the arbitration agreement and the date of referral, the Commercial Arbitration Act had been modified directly by the Parliament of Western Australia, or by yielding to the operation of inconsistent Commonwealth legislation, it might be difficult to contend that there was a relevant accrued right which would invoke the principles of statutory construction concerning retrospectivity. That point is, however, not necessary to decide in this case.
119
55
10