Santos Limited v Fluor Australia Pty Ltd

Santos Limited has filed an application seeking an order that Fluor Australia Pty Ltd provide it with access to certain requested materials. The parties are in dispute as to whether the requested materials must be provided pursuant to the Engineering, Procurement and Construction contract between the parties. Santos and Fluor have already exchanged detailed correspondence in relation to the issues in dispute, with Fluor now seeking a stay of Santos’s application pending the parties’ compliance with the dispute resolution process provided for in the EPC contract. The parties have used the contractual dispute resolution process in previous disputes and disagree about the utility of the process in the settlement of those disputes. Santos submits that the nature of the dispute makes it unlikely to be amenable to resolution by the dispute resolution process provided for in the EPC contract. The court was required to determine whether the principal proceedings should be stayed pending the performance of the dispute resolution process provided for in the EPC contract.

The court found that the enforceability of the dispute resolution procedure adopted by the parties in cl 60 was undoubted. The countervailing considerations urged to justify the grant of a stay were not sufficient, in the court’s view, to make the reference to those procedures “obviously futile” or “so slight as not to justify enforcing the agreement”. The parties have succeeded in compromising such disputes in the past. The enforcement of the obligation in cl 60 will not deprive Santos of the right to have its claim determined judicially and may advance the public interest in obliging the parties to adhere to their agreement. That public interest lies in avoiding the potentially unnecessary use of court time and reducing the costs of civil litigation to both the public and litigants.

The court concluded that there is nothing to suggest that Santos will be prejudiced by being obliged to comply with its agreement. The history of previous dealings between the parties does not satisfy the court that there is no point in enforcing this agreement as it does demonstrate compromise by both parties.

The court ordered that the principal proceedings filed 13 May 2016 be stayed pending the performance of the parties’ obligations pursuant to cl 60 of the contract. The court also directed the parties to further appear to address the form of the order and costs.