Santos Ltd v Crusader Resources N L

Crusader Resources N.L. sought special leave to appeal to the High Court of Australia from decisions of the Supreme Court of South Australia concerning the interpretation and application of section 53 of the Commercial Arbitration Act 1986 (SA). Santos Ltd was the respondent in these proceedings. The applications, numbered A17 and A22 of 1991, were heard together as they raised identical questions of principle regarding the Commercial Arbitration Act.

The central legal issue before the High Court was the meaning and application of section 53 of the Commercial Arbitration Act, which deals with the power of a court to grant a stay of proceedings where there is an arbitration agreement. Specifically, the court was required to determine whether the Supreme Court had erred in refusing a stay of proceedings in circumstances where the parties had entered into an agreement for the extraction and sale of natural gas, which contained a clause providing for arbitration in the event of disagreement on certain matters.

The applicants argued that the Supreme Court's intervention, by refusing a stay and making orders for specific performance of the arbitration agreement, had deprived the parties of the intended arbitral process. The dispute concerned a clause in the parties' agreement that provided for variations in the quanta of their interests in natural gas extraction, affecting expenditure and entitlement. The resolution of these variations involved a two-step process, with arbitration being the ultimate recourse if agreement could not be reached on "input data." The applicants contended that the Supreme Court's decisions improperly supplanted the agreed arbitral mechanism.