Tesseract International Pty Ltd v Pascale Construction Pty Ltd

[2024] HCA 24

HIGH COURT OF AUSTRALIA

GAGELER CJ,
GORDON, EDELMAN, STEWARD, GLEESON, JAGOT AND BEECH‑JONES JJ

TESSERACT INTERNATIONAL PTY LTD  APPELLANT

AND

PASCALE CONSTRUCTION PTY LTD  RESPONDENT

Tesseract International Pty Ltd v Pascale Construction Pty Ltd

[2024] HCA 24

Date of Hearing: 15 November 2023

Date of Judgment: 7 August 2024

A9/2023

ORDER

1.Appeal allowed with costs.

2.Set aside order 1 of the orders made by the Court of Appeal of the Supreme Court of South Australia on 21 October 2022 and, in its place, order that:

The question of law reserved, "Does Part 3 of the Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA) and/or Part VIA of the Competition and Consumer Act 2010 (Cth) apply to this commercial arbitration proceeding conducted pursuant to the legislation and the [Commercial Arbitration Act 2011 (SA)]?", be answered "Yes".

On appeal from the Supreme Court of South Australia

Representation

B W Walker SC with T J Margetts KC and L J Connolly for the appellant (instructed by Macpherson Kelley)

F P Hicks SC with W V McManus for the respondent (instructed by Kennedys (Australasia) Partnership and FBR Law (as town agent))

Australian Centre for International Commercial Arbitration appearing as amicus curiae, limited to its written submissions

Notice:  This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Tesseract International Pty Ltd v Pascale Construction Pty Ltd

Arbitration – Proportionate liability – Where contract for engineering consultancy provided for referral of disputes to arbitration – Where dispute as to performance of contract referred to arbitration – Where arbitration conducted pursuant to Commercial Arbitration Act 2011 (SA) – Where law applicable to substance of dispute is the law of South Australia – Where respondent claims damages for breach of contract, negligence and misleading or deceptive conduct – Where appellant denies liability – Where in alternative appellant contends liability reduced by reference to alleged concurrent wrongdoing of third party in accordance with proportionate liability laws in Pt 3 of Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA) ("Law Reform Act") and Pt VIA of Competition and Consumer Act 2010 (Cth) ("CCA") – Where third party not and cannot be required to be party to arbitration – Where respondent denies applicability of proportionate liability laws in arbitration – Where appellant applied to Supreme Court of South Australia for leave to obtain determination of question of law as to applicability of proportionate liability laws in arbitration – Whether proportionate liability laws in Pt 3 of Law Reform Act and Pt VIA of CCA apply in arbitration.

Words and phrases – "apportionable claim", "arbitrability", "capable of settlement by arbitration", "capable of translation or adaptation", "choice of law", "concurrent wrongdoer", "express or implied choice of law", "joinder", "non‑arbitrable subject matter", "paramount object of arbitration", "party autonomy", "proportionate liability", "public policy", "rules of law applicable to the substance of the dispute", "solidary liability".

Competition and Consumer Act 2010 (Cth), Pt VIA.

Commercial Arbitration Act 2011 (SA), ss 1C, 5, 16, 19, 27J, 28, 34.

Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA), Pt 3.

UNCITRAL Model Law on International Commercial Arbitration (1985), Arts 5, 16, 19, 28, 34.

GAGELER CJ.  

Introduction

1. The United Nations Commission on International Trade Law ("UNCITRAL") adopted in 1985 and amended in 2006 the UNCITRAL Model Law on International Commercial Arbitration ("the Model Law"). The Model Law, which applies to "international commercial arbitration",[1] has force of law in Australia by operation of the International Arbitration Act 1974 (Cth) ("the International Arbitration Act").[2]

   [1]Article 1(1) of the Model Law.

   [2]Section 16(1) of the International Arbitration Act.

2. Legislation mirroring the Model Law, but applying to "domestic commercial arbitrations", exists in each Australian State and Territory.[3] In South Australia, that legislation is the Commercial Arbitration Act 2011 (SA) ("the Domestic Arbitration Act"). The text of the Domestic Arbitration Act comprises text drawn from the Model Law with some local modifications and additions.

   [3]See Jones and Walker, Commercial Arbitration in Australia: Under the Model Law, 3rd ed (2022) at 11-21 [1.200]-[1.270].

3. Like its counterparts in other States and Territories, the Domestic Arbitration Act provides that regard is to be had in its interpretation to the need to promote, so far as practicable, uniformity between its application to domestic commercial arbitration and the application by the International Arbitration Act of the Model Law to international commercial arbitration.[4] To that end, the Domestic Arbitration Act provides for reference to be made in its interpretation to UNCITRAL documents relating to the drafting and operation of the Model Law.[5]

   [4]Section 2A(1) of the Domestic Arbitration Act.

   [5]Section 2A(2) of the Domestic Arbitration Act.

4. This appeal arises out of a domestic commercial arbitration of a dispute which the appellant and the respondent have agreed is to be settled by arbitration. The place of the arbitration is South Australia. The law applicable to the substance of the dispute is the law of South Australia. The dispute which the appellant and the respondent have agreed is to be settled by arbitration encompasses reliance by the appellant, in answer to claims made against it by the respondent, on the proportionate liability regimes set out in both Pt 3 of the Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA) ("the Law Reform Act") and Pt VIA of the Competition and Consumer Act 2010 (Cth) ("the CCA").

5. Doubt as to whether those proportionate liability regimes apply in the arbitration led to the raising of a preliminary question of law for the determination of the Supreme Court of South Australia. The preliminary question was raised under s 27J of the Domestic Arbitration Act, which confers jurisdiction on the Supreme Court, on application made by a party to an arbitration agreement with the consent of an arbitrator or all other parties, "to determine any question of law arising in the course of the arbitration".

6. The preliminary question of law raised for the determination of the Supreme Court was: "Does Part 3 of [the Law Reform Act] and ... Part VIA of [the CCA] apply to this commercial arbitration proceeding conducted pursuant to ... [the Domestic Arbitration Act]?". The question was referred to the Court of Appeal of the Supreme Court of South Australia.

7. The answer given by the Court of Appeal to the preliminary question of law was: "No". This appeal, by special leave, is from the order of the Court of Appeal which embodied that answer. The Australian Centre for International Commercial Arbitration ("ACICA") was granted leave to file written submissions in the appeal as amicus curiae.

8. The arguments of the parties on the appeal focused primarily on whether the proportionate liability regimes applied to the arbitration through the operation of s 28 of the Domestic Arbitration Act. The parties were in conflict as to whether, and if so how, opaque notions of "arbitrability"[6] and of "public policy"[7] might bear on the application of the proportionate liability regimes to the arbitration through the operation of that provision. Helpfully, ACICA drew attention to the broader context of the Model Law.

   [6]See Mustill and Boyd, Commercial Arbitration: 2001 Companion Volume to the Second Edition (2001) at 70-71.

   [7]See Maurer, The Public Policy Exception under the New York Convention: History, Interpretation and Application, 2nd ed (2022).

9. For reasons to be explained, within the scheme of the Model Law as reflected in the Domestic Arbitration Act, notions of arbitrability and of public policy are not the province of Art 28 of the Model Law as reflected in s 28 of the Domestic Arbitration Act. Those notions are the subject of separate and discrete treatment in Art 34(2)(b) of the Model Law as reflected in s 34(2)(b) of the Domestic Arbitration Act. More than one question therefore needs to be asked and answered in considering the application of the proportionate liability regimes to the arbitration.

10. The primary question is undoubtedly the question which arises under Art 28 of the Model Law as reflected in s 28 of the Domestic Arbitration Act: whether all or some of the provisions of the proportionate liability regimes form part of the law applicable to the substance of the dispute.

11. Once the provisions of the proportionate liability regimes that are applicable to the substance of the dispute through the operation of Art 28 of the Model Law as reflected in s 28 of the Domestic Arbitration Act have been identified, however, two further questions arise to be addressed by reference to Art 34(2)(b) of the Model Law as reflected in s 34(2)(b) of the Domestic Arbitration Act. One arises by reference to Art 34(2)(b)(i) as reflected in s 34(2)(b)(i): whether the subject matter of the dispute to be decided through the application of those provisions of the proportionate liability regimes is incapable of settlement by arbitration under the law of South Australia. The other arises by reference to Art 34(2)(b)(ii) as reflected in s 34(2)(b)(ii): whether an award deciding the dispute by applying those provisions of the proportionate liability regimes would be contrary to the public policy of South Australia.

12. My conclusion in relation to the primary question – that arising under Art 28 of the Model Law as reflected in s 28 of the Domestic Arbitration Act – is that the law of South Australia applicable to the substance of the dispute which has been submitted to arbitration includes those provisions of the proportionate liability regimes that would be applied to determine the rights and liabilities in dispute between the appellant and the respondent were the dispute to be heard and determined in a court of competent jurisdiction in South Australia.

13. My conclusions in relation to the two further questions – those arising by reference to Art 34(2)(b)(i) and (ii) of the Model Law as reflected in s 34(2)(b)(i) and (ii) of the Domestic Arbitration Act – are that the subject matter of the dispute to be decided through the application of the applicable provisions of the proportionate liability regimes is not incapable of settlement by arbitration under the law of South Australia and that an award deciding the dispute by applying those provisions would not be contrary to the public policy of South Australia. The consequence of those conclusions is that an award settling the dispute through the application of the applicable provisions of the proportionate liability regimes would not be liable to be set aside under Art 34(2)(b) of the Model Law as reflected in s 34(2)(b) of the Domestic Arbitration Act and that the arbitrator therefore has jurisdiction to make the award.

14. In the result, together with Gordon and Gleeson JJ, and Jagot and Beech‑Jones JJ, I would allow the appeal.

    The international context of the Model Law

15. To appreciate the analysis required to determine whether the arbitrator can and must apply all or some of the provisions of Pt 3 of the Law Reform Act and Pt VIA of the CCA in deciding the dispute, it is necessary to appreciate the international context of the Model Law. UNCITRAL framed the Model Law to be applied to international arbitration against the background of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted by the United Nations Conference on International Commercial Arbitration in 1958 ("the New York Convention").

16. The international context needs to be borne in mind to appreciate a number of distinctions drawn in the framing of the Model Law which have been carried over into the Domestic Arbitration Act. Most of those distinctions are readily comprehensible in their original application to international arbitration. Some can seem obscure and recondite when translated to be applied to domestic arbitration. They can seem especially abstruse in a case such as the present, where the law applicable to the substance of the dispute and the law of the place of the arbitration are one and the same.

17. The distinctions nonetheless are the foundation of the framework within which the capacity of an arbitral tribunal to apply a particular law or body of law in determining the substance of a dispute which the parties have agreed is to be settled by arbitration falls to be analysed. Understanding that framework is critical not only to understanding what law is applicable to the substance of the dispute through the operation of Art 28 of the Model Law as reflected in s 28 of the Domestic Arbitration Act but also to understanding how and to what extent notions of arbitrability and of public policy can affect the capacity of the arbitral tribunal to apply that law having regard to Art 34(2)(b)(i) and (ii) of the Model Law as reflected in s 34(2)(b)(i) and (ii) of the Domestic Arbitration Act.

18. An explanation of the critical distinctions best begins with an explanation of the principle of party autonomy. That principle will be seen to be manifested in the operation of the Model Law in more than one way.

    Party autonomy under the Model Law

19. Having noted that the international origin and international application of the Model Law make imperative that the Model Law be construed without any assumption that the Model Law embodies common law concepts, French CJ and I added in TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia:[8]

    "In common with the New York Convention, the Model Law nevertheless proceeds on a conception of the nature of an arbitral award, and a conception of the relationship of an arbitral award to an arbitration agreement, identical in substance to the conception that has for centuries underpinned the understanding of an arbitral award at common law as 'a satisfaction pursuant to [the parties'] prior accord of the causes of action awarded upon' and as thereby 'precluding recourse to the original rights the determination of which had been referred to arbitration'. That conception, in short, is that 'the foundation of arbitration is the determination of the parties' rights by the agreed arbitrators pursuant to the authority given to them by the parties'."

    [8](2013) 251 CLR 533 at 545-546 [9] (footnotes omitted), quoting Dobbs v National Bank of Australasia Ltd (1935) 53 CLR 643 at 653-654 and Associated Electric and Gas Insurance Services Ltd v European Reinsurance Co of Zurich [2003] 1 WLR 1041 at 1046 [9].

20. The conception that the foundation of arbitration is the determination of the rights and liabilities of the parties in dispute by an arbitral tribunal pursuant to authority given by the agreement of the parties is manifested in the Model Law giving the parties to an arbitration a number of distinct choices.

21. One choice given to the parties is to designate the law applicable to the substance of the dispute, sometimes termed the law applicable to the merits of the dispute:[9] the substantive law. That is the province of Art 28 of the Model Law as reflected in s 28 of the Domestic Arbitration Act. Article 28 is headed "Rules applicable to substance of dispute". Article 28(1) provides that "[t]he arbitral tribunal shall decide the dispute in accordance with such rules of law as are chosen by the parties as applicable to the substance of the dispute" and that "[a]ny designation of the law or legal system of a given State shall be construed, unless otherwise expressed, as directly referring to the substantive law of that State and not to its conflict of laws rules". Article 28(2) provides that "[f]ailing any designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules which it considers applicable".

    [9]See Jones and Walker, Commercial Arbitration in Australia: Under the Model Law, 3rd ed (2022) at 364-366 [9.120]; Mustill and Boyd, Commercial Arbitration: 2001 Companion Volume to the Second Edition (2001) at 124; Poudret and Besson, Comparative Law of International Arbitration, 2nd ed (2007) at 569-574.

22. Another choice given to the parties is to agree on the procedure to be followed by the arbitral tribunal in conducting the arbitral proceedings: the arbitral procedure. That is the province of Art 19 of the Model Law as reflected in s 19 of the Domestic Arbitration Act. Article 19 is headed "Determination of rules of procedure". Article 19(1) provides that "the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings". Article 19(2) provides that, "[f]ailing such agreement, the arbitral tribunal may, subject to the provisions of this Law, conduct the arbitration in such manner as it considers appropriate". The power conferred by Art 19(2) "enables the arbitral tribunal to meet the needs of the particular case and to select the most suitable procedure when organizing the arbitration",[10] including by "adopting suitable features from different legal systems and relying on techniques proven in international practice".[11] 

    [10]Analytical Commentary on Draft Text of a Model Law on International Commercial Arbitration, UN Doc A/CN.9/264 (1985) at 45 [5].

    [11]Analytical Commentary on Draft Text of a Model Law on International Commercial Arbitration, UN Doc A/CN.9/264 (1985) at 46 [6].

23. Separate and no less important is the choice given to the parties to designate the place of the arbitration. That is the province of Art 20 of the Model Law as reflected in s 20 of the Domestic Arbitration Act, under which the parties are free to agree on the place of the arbitration.

24. The choice of the parties as to the place of the arbitration does not constrain the place where the arbitral tribunal can convene or deliberate[12] or the place where it can physically deliver its award.[13] Rather, through Art 1(2) of the Model Law as reflected in s 1(2) of the Domestic Arbitration Act, the choice of the place of the arbitration governs the overarching question of whether provisions which relevantly include Arts 16, 19, 28 and 34 of the Model Law, as reflected in this case in ss 16, 19, 28 and 34 of the Domestic Arbitration Act, apply to the arbitration at all. The choice of the parties as to the place of the arbitration supplies a singular definitive answer to that overarching question.

    [12]See Art 20(2) of the Model Law as reflected in s 20(3) of the Domestic Arbitration Act.

    [13]See Art 31(3) of the Model Law as reflected in s 31(4) and (5) of the Domestic Arbitration Act.

25. The choice of the parties as to the place of the arbitration also enlivens the jurisdiction of a designated court of that place[14] – here relevantly the Supreme Court of South Australia – to supervise the arbitration, including by reviewing any decision made by the arbitral tribunal as to its own jurisdiction under Art 16 of the Model Law as reflected in s 16 of the Domestic Arbitration Act and by adjudicating any application to set aside an award under Art 34 of the Model Law as reflected in s 34 of the Domestic Arbitration Act.

    [14]See Art 6 of the Model Law as reflected in s 6 of the Domestic Arbitration Act.

26. The Supreme Court of the United Kingdom has explained the legal consequence of a functionally equivalent choice of parties, as to the "seat" of an arbitration, as follows:[15]

    "[T]he seat of an arbitration is a legal concept rather than a physical one. A choice of place as the seat does not dictate that hearings must be held, or that any award must actually be issued, in that place ... The point of agreeing a seat is to agree that the law and courts of a particular country will exercise control over an arbitration which has its seat in that country to the extent provided for by that country's law. A choice of seat can in these circumstances aptly be regarded as a choice of the curial law."

    [15]Enka Insaat ve Sanayi AS v OOO "Insurance Company Chubb" [2020] 1 WLR 4117 at 4139 [68]; [2021] 2 All ER 1 at 23.

1. Substituting "place" for "seat" and substituting "State or Territory" for "country", the explanation encapsulates the significance of the choice of the parties as to the place of the arbitration under the Model Law as reflected in the Domestic Arbitration Act. The choice of the place of the arbitration is a choice of the curial law.

2. The important point for present purposes is that the Model Law as reflected in the Domestic Arbitration Act gives parties who have agreed to submit a dispute to arbitration distinct choices as to:

   • the substantive law, under Art 28 as reflected in s 28;

   • the arbitral procedure, under Art 19 as reflected in s 19; and

   •         the curial law, under Art 1(2) as reflected in s 1(2).

3. Whether an arbitral tribunal can and must apply a particular rule of law in determining a dispute which parties have agreed is to be settled by arbitration turns on the scope and consequence of each of those three choices of the parties and on the relationship between those consequences. To explain those consequences and the relationship between them, reference needs to be made to aspects of the history of UNCITRAL's drafting of the Model Law.

   The scope and consequence of the choice as to arbitral procedure

4. UNCITRAL framed the Model Law to ensure that the power of an arbitral tribunal to determine the arbitral procedure under Art 19(2) was not to be constrained by the substantive law, whether that substantive law was chosen by the parties under Art 28(1) or determined by the tribunal under Art 28(2). So much is clear from the drafting history. It was recognised during the drafting process that rules of procedure (such as those governing the admissibility or weight of evidence) are in many legal systems regarded as rules of substantive law. Against the background of that recognition, a proposal was advanced that Art 19(2) should be amended "to conform to the wording of [Art] 28".[16] UNCITRAL rejected the proposal, stating that "the objective of [Art 19(2)] was to recognize a discretion of the arbitral tribunal which would not be affected by the choice of law applicable to the substance of the dispute".[17]

   [16]Holtzmann and Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (1994) at 587.

   [17]Report of the United Nations Commission on International Trade Law on the Work of its Eighteenth Session, UN GAOR, 40th sess, Supp No 17, UN Doc A/40/17 (1985) at 34 [174].

5. The consequence of UNCITRAL's rejection of the amendment proposal for the relationship between Art 19(2) and Art 28 of the Model Law has been understood to be that "[a]s a matter of interpretation, the specific provision in [Art] 19(2) should prevail over the general one in [Art] 28".[18] Put in other words, rules of procedure prescribed to be followed in the conduct of proceedings between parties are carved out of the substantive law determined under Art 28. Absent agreement by the parties under Art 19(1) on the procedure to be followed by the arbitral tribunal in conducting the proceedings, the rules of procedure that are to apply in the conduct of arbitral proceedings are within the exclusive power of the arbitral tribunal to determine under Art 19(2).

   [18]Holtzmann and Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (1994) at 567.

6. Moreover, the power of an arbitral tribunal to determine a rule of procedure under Art 19(2) of the Model Law extends to making a procedural order on a topic that would be regarded as governed by a substantive rule of law under the substantive law or the curial law. An example, drawn from the decision of the Court of Appeal of Singapore in Republic of India v Vedanta Resources plc,[19] is that the power enables an arbitral tribunal to fashion procedural orders governing confidentiality and disclosure of information to third parties. The fact that an obligation of confidentiality was imposed on parties to an arbitral proceeding "as a substantive rule of the common law" was said not to take such procedural orders outside the scope of arbitral procedure governed by Art 19.[20]

   [19][2021] 2 SLR 354.

   [20][2021] 2 SLR 354 at 367 [28]-[29].

7. What then is the distinguishing feature of a rule of procedure carved out of the substantive law determined under Art 28 of the Model Law and within the exclusive power of the arbitral tribunal to determine under Art 19(2)? In the language of the Court of Appeal of Singapore in Bloomberry Resorts and Hotels Inc v Global Gaming Philippines LLC,[21] it is that a rule of procedure is a rule that does not purport to determine the parties' disputed rights and liabilities conclusively.[22] The Court of Appeal also there emphasised that the power conferred by Art 19(2) is broad enough to enable an arbitral tribunal, in an appropriate case where necessary to accomplish justice, "to order a party to take steps vis-à-vis third parties to prevent or accomplish specified actions".[23]

   [21][2021] 2 SLR 1279.

   [22][2021] 2 SLR 1279 at 1318 [109].

   [23][2021] 2 SLR 1279 at 1317 [105].

8. The significance of recognising the exclusive province of Art 19(2) of the Model Law as reflected in s 19(2) of the Domestic Arbitration Act in the present case is that a provision within Pt 3 of the Law Reform Act or Pt VIA of the CCA which prescribes a rule of procedure which would be applicable in proceedings to determine the rights and liabilities of the parties in a court of competent jurisdiction in South Australia is not applicable to the arbitration proceedings by operation of Art 28 of the Model Law as reflected in s 28 of the Domestic Arbitration Act even if the rule might also be characterised as a rule of substantive law. Unless applied by agreement of the parties under Art 19(1) of the Model Law as reflected in s 19(1) of the Domestic Arbitration Act, any such rule of procedure is applicable in the arbitration proceedings only if it is replicated as a procedural order through the exercise of the arbitral tribunal's power under Art 19(2) of the Model Law as reflected in s 19(2) of the Domestic Arbitration Act.

   The relevant consequence of the choice as to the curial law

9. It has been seen that the choice of the parties under Art 20 of the Model Law as to the place of the arbitration invokes through Art 1(2) of the Model Law the application of Arts 19 and 28 of the Model Law of that place together relevantly with Arts 16 and 34 of the Model Law of that place and that each of those provisions of the Model Law is replicated in the Domestic Arbitration Act. The present focus of attention is on the relationship between Art 28 and Art 34 of the Model Law.

10. Article 34 of the Model Law is headed "Application for setting aside as exclusive recourse against arbitral award". Article 34(1) provides that "[r]ecourse to a court against an arbitral award may be made only by an application for setting aside in accordance with" Art 34(2) or (3). Article 34(2)(b)(i) and (ii) set out grounds on which an arbitral award may be set aside by a designated court of the place of the arbitration. The ground set out in Art 34(2)(b)(i) is if the court finds that "the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State". The ground set out in Art 34(2)(b)(ii) is if the court finds that "the award is in conflict with the public policy of this State".

11. Article 34 of the Model Law must be understood in the context of Arts 35 and 36 of the Model Law. Article 35 is headed "Recognition and enforcement". Article 35(1) provides that "[a]n arbitral award, irrespective of the country in which it was made, shall be recognized as binding and ... shall be enforced subject to the provisions of [Arts 35 and 36]". Article 36(1)(b)(i) and (ii) use language substantially the same as that in Art 34(2)(b)(i) and (ii) to express grounds on which recognition or enforcement of an arbitral award may be refused irrespective of the place of the arbitration. The substantially common language was drawn in the drafting of the Model Law from Art V(2) of the New York Convention, which allows for recognition and enforcement of an arbitral award to be refused if a competent authority in a country where recognition and enforcement is sought finds that "[t]he subject matter of the difference is not capable of settlement by arbitration under the law of that country" or "[t]he recognition or enforcement of the award would be contrary to the public policy of that country".

12. The potential for inconsistent outcomes between the application of Art 34(2)(b)(i) and (ii) by the supervising court in the place of the arbitration and the application of Art 36(1)(b)(i) and (ii) by a court in any jurisdiction where an award might be sought to be recognised and enforced is ameliorated by the "global effect" that the setting aside of an award under Art 34(2)(b)(i) and (ii) has through Art 36(1)(a)(v) of the Model Law: an award set aside by the supervising court in the place of the arbitration cannot be enforced in the place of the arbitration or anywhere else.[24] In recognition of the global effect given to an order of the supervising court in the place of the arbitration setting aside an award, Art 36(2) of the Model Law allows another court to defer its decision on an application for recognition or enforcement of an award pending a decision by the supervising court on an application to set the award aside.

    [24]Holtzmann and Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (1994) at 918, 1062-1063.

13. Relevant to the relationship between Art 28 and Art 34, the drafting history of the Model Law reveals that the issue of whether the law and public policy of the place of the arbitration should govern a question as to the amenability of a dispute to settlement by arbitration or as to whether a resultant award would be contrary to public policy was an issue in respect of which strongly divergent views engendered considerable debate. The ultimate resolution of that issue, through the retention of Art 34(2)(b) in the form in which it has remained, was for those questions to be governed by the law as to non-arbitrability and the public policy of the place of the arbitration. That resolution of the issue involved rejection of two specific alternative proposals. One was for the provision in Art 34(2)(b)(i), allowing an award to be set aside for non-arbitrability under the law of the place of the arbitration, to be deleted altogether. The other was to limit the public policy to which Art 34(2)(b)(ii) refers as a ground for setting an award aside to "international public policy".[25]

    [25]See Holtzmann and Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (1994) at 918.

14. For present purposes, it is the history of the first of these alternative proposals which is most important. The history has been summarised as follows:[26]

    "The first of these proposals – to delete the reference to arbitrability – was based on the view that the law of the Model Law State should not necessarily govern the question of arbitrability. Some suggested that this question should be governed by the law applicable to the substance of the dispute on that issue. This concern was heightened by the fact that, unlike in the context of recognition and enforcement, application of the forum's law for this purpose in a setting aside procedure gave that law 'global effect', since an award that had been set aside could not be enforced. While this view attracted 'considerable support', the Working Group agreed to retain the existing text with a view to inviting consideration of the matter by the Commission.

    The Commission also decided to retain the provision. Deletion of the provision – or merely of the reference to the forum's law, as was also proposed – was said to 'be contrary to the need for predictability and certainty [on] that important issue'. It was noted in support of this conclusion that the provision allowed parties – by choosing their place of arbitration carefully – to ensure that their dispute would not be set aside for nonarbitrability."

    [26]Holtzmann and Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (1994) at 918 (footnotes omitted). See also at 1001.

15. UNCITRAL's decision to retain Art 34(2)(b)(i) of the Model Law in the form in which Art 34(2)(b)(i) was adopted and has remained therefore entailed its considered rejection of a specific suggestion that a question as to the non-arbitrability of the subject matter of the dispute should be governed by the law applicable to the substance of the dispute determined through the operation of Art 28 of the Model Law. The suggestion which was rejected had been couched in terms that the global effect which the setting aside of an award was to have through Art 36(1)(a)(v) of the Model Law operating to prevent recognition or enforcement of the award once set aside "should obtain only from a finding that the subject-matter of the dispute was not capable of settlement by arbitration under the law applicable to that issue".[27]

    [27]Holtzmann and Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (1994) at 966.

16. UNCITRAL's decision to retain Art 34(2)(b)(i) of the Model Law accordingly entailed its considered acceptance of the view that the law of the place chosen as the place of the arbitration under Art 20 was to govern a question of non‑arbitrability to the exclusion of the law applicable to the substance of the dispute chosen under Art 28. The choice of the parties concerning the place of the arbitration was by those means and to that extent to prevail over the choice of the parties concerning the substantive rules of law to be applied by the arbitral tribunal, having regard to "the need for predictability and certainty".

17. How then is Art 28 of the Model Law to be reconciled with Art 34(2)(b)? Does Art 28 compel the arbitral tribunal to apply the substantive law in deciding the dispute even if the dispute encompassing the application of that law is incapable of resolution by arbitration under the curial law such that the resultant award would be set aside by the supervising court under Art 34(2)(b)(i) or even if the resultant award will be in conflict with the public policy of the place of the arbitration such that the award would be set aside by the supervising court under Art 34(2)(b)(ii)?

18. The written submissions of ACICA argue that Art 28 of the Model Law requires the arbitral tribunal to apply the substantive law without any "outer limit" being imposed through the operation of Art 34(2)(b) of the Model Law. Whether the resultant award would be liable to be set aside under Art 34(2)(b)(i) or (ii) of the Model Law, ACICA argues, are questions "external" to the arbitration in the sense that they are questions which only the supervising court can consider and determine and are not questions that the arbitral tribunal can consider at all. I cannot accept that argument.

19. Article 28 of the Model Law should not be construed to compel an arbitral tribunal to engage in the futile exercise of applying the substantive law to produce an award which, by reason of its application of that law, would be liable to be set aside by a supervising court under Art 34(2)(b)(i) or (ii) of the Model Law applying the law or public policy of the place chosen by the parties as the place of the arbitration.

20. The harmonious construction of Art 28 of the Model Law and Art 34(2)(b) of the Model Law is that suggested by the Court of Appeal of Singapore in Tomolugen Holdings Ltd v Silica Investors Ltd[28] in taking the view that an agreement to arbitrate a dispute concerning a non-arbitrable subject matter within the scope of Art 34(2)(b)(i) of the Model Law would be an agreement that was, if not "null and void", at least "inoperative" or "incapable of being performed" within the meaning of Art II(3) of the New York Convention and Art 8 of the Model Law. The view so taken can be seen to accord with a view taken in the United States of the relationship between Art II(3) and Art V(2)(b) of the New York Convention according to which a court of the place of an arbitration can refuse to order parties to arbitration on the basis that the public policy of that place would preclude recognition of the resultant award such as to render the arbitral agreement "null and void, inoperative or incapable of being performed".[29]

    [28][2016] 1 SLR 373 at 402-403 [72]-[74].

    [29]See Restatement of the Law: The US Law of International Commercial and Investor-State Arbitration §2.17. But see Escobar v Celebration Cruise Operator Inc (2015) 805 F 3d 1279, refusing to overrule Lindo v NCL (Bahamas) Ltd (2011) 652 F 3d 1257.

21. If the non-arbitrability of the subject matter of a dispute within the meaning of Art 34(2)(b)(i) of the Model Law and the susceptibility of a resultant award to being set aside as contrary to public policy under Art 34(2)(b)(ii) of the Model Law are sufficient to render the arbitration agreement "inoperative" or "incapable of being performed" within the meaning of Art 8 of the Model Law, then those matters of non-arbitrability and public policy are necessarily matters which go to the jurisdiction of the arbitral tribunal, which the arbitral tribunal can determine for itself under Art 16 of the Model Law subject to review by the supervising court. The duty of the arbitral tribunal under Art 28 of the Model Law is a duty to be exercised within jurisdiction.

22. The consequence is that the arbitral tribunal will lack jurisdiction, and the substantive law will have no application, if and to the extent that the dispute encompassing the application of that law is a dispute:

    •which is incapable of resolution by arbitration under the curial law – such that the resultant award would be susceptible to being set aside under Art 34(2)(b)(i) of the Model Law as reflected in s 34(2)(b)(i) of the Domestic Arbitration Act; or

    •the determination of which would result in an award which would conflict with the public policy of the place of the arbitration – such that the resultant award would be susceptible to being set aside under Art 34(2)(b)(ii) of the Model Law as reflected in s 34(2)(b)(ii) of the Domestic Arbitration Act.

23. Questions as to whether application of provisions within Pt 3 of the Law Reform Act and Pt VIA of the CCA, applicable by operation of Art 28 of the Model Law as reflected in s 28 of the Domestic Arbitration Act, would render the dispute non-arbitrable or in conflict with public policy might therefore have been determined by the arbitrator as preliminary questions of jurisdiction under Art 16 of the Model Law as reflected in s 16 of the Domestic Arbitration Act. Those further questions are encompassed within the preliminary question of law raised under s 27J of the Domestic Arbitration Act.

    The primary question arising under Art 28 of the Model Law as reflected in s 28 of the Domestic Arbitration Act: does the law of South Australia applicable to the substance of the dispute include provisions within Pt 3 of the Law Reform Act and Pt VIA of the CCA?

24. Section 28(1) of the Domestic Arbitration Act mirrors the first sentence of Art 28(1) of the Model Law in providing that "[t]he arbitral tribunal must decide the dispute in accordance with such rules of law as are chosen by the parties as applicable to the substance of the dispute". Section 28(2) adapts the second sentence of Art 28(1) to the Australian legal system in providing that "[a]ny designation of the law or legal system of a given State or Territory must be construed, unless otherwise expressed, as directly referring to the substantive law of that State or Territory and not to its conflict of laws rules". Section 28(3) reflects Art 28(2) in providing that "[f]ailing any designation by the parties, the arbitral tribunal must apply the law determined by the conflict of laws rules which it considers applicable".

1. It is uncontroversial in the present case that the law applicable to the substance of the dispute between the appellant and the respondent is the law of South Australia. It is unclear whether that uncontroversial application of the law of South Australia to the substance of the dispute is attributable to a choice made by the parties for the purpose of s 28(1), which choice might have been made expressly or impliedly in the contract pursuant to which the dispute between them is agreed to be settled by arbitration[30] or might have been made by subsequent agreement, or is attributable to the residual operation of s 28(3). That lack of clarity is of no moment. Absent any suggestion by either the appellant or the respondent of the existence of any agreement between them to add to or subtract from the rules of the substantive law of South Australia to be applied in the arbitration, the result is the same no matter which of s 28(1) or s 28(3) is the operative provision: the "rules of law" referred to in s 28(1) equate to the "law" referred to in s 28(3).

   [30]See Akai Pty Ltd v People's Insurance Co Ltd (1996) 188 CLR 418 at 441.

2. The parties and ACICA all took up a post-hearing invitation to make submissions on the relevance, if any, to the application of s 28(1) of the Domestic Arbitration Act of the statement of Lord Hoffmann in Fiona Trust & Holding Corporation v Privalov[31] that "the construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal". All correctly pointed out that the statement has not been adopted as part of the Australian law of contractual construction.[32] None argued that the assumption referred to in the statement, if adopted, could be employed to exclude any rule of law from the rules of law otherwise chosen by the parties to an arbitration to be applicable to the substance of the dispute. They were correct to abstain from making such an argument.

   [31][2007] 4 All ER 951 at 958 [13].

   [32]See Rinehart v Hancock Prospecting Pty Ltd (2019) 267 CLR 514 at 527-528 [19]-[21].

3. To import the assumption into the application of s 28(1) of the Domestic Arbitration Act would not be to apply the statement of Lord Hoffmann in Fiona Trust but to extend it. The statement was directed to the problem of determining the scope of a dispute which it has been agreed is to be settled by arbitration. The statement was not directed to the problem of determining the rules of law chosen by the parties to be applicable to the substance of the dispute.

4. More fundamentally, as ACICA pointed out, to import any assumption into the application of s 28(1) of the Domestic Arbitration Act would be wrong in principle given that s 28(1), conformably with Art 28(1) of the Model Law, expressly contemplates that the parties might pick and choose between rules of law or sets of rules of law. Where, as here, the applicable rules of law are identified as those of a particular legal system, there can be no justification for importing an assumption the application of which would be to exclude a rule of law which forms part of that system.

5. The law of South Australia applicable to the substance of the dispute through the operation of either s 28(1) or s 28(3) of the Domestic Arbitration Act is the same law as would be applicable to the substance of the dispute in a court in South Australia. The law applicable to the substance of the dispute in the arbitration therefore includes Commonwealth statute law as well as South Australian statute law. It excludes conflict of laws rules, either through the express operation of s 28(2) in relation to s 28(1) or through the antecedent application of conflict of laws rules to determine the applicable law in the operation of s 28(3). And, given that the scheme of the Model Law as reflected in the Domestic Arbitration Act requires arbitrability to be addressed distinctly from s 28 by reference to s 34(2)(b)(i), it necessarily excludes such rules limiting or excluding the arbitrability of the dispute as might be expressed or implied in a Commonwealth or South Australian statute.[33]

   [33]Compare Mastrobuono v Shearson Lehman Hutton Inc (1995) 514 US 52 at 63-64.

6. If and to the extent that a Commonwealth or South Australian statute applicable in the determination of the dispute in a court in South Australia performs the "double function"[34] of conferring a power on a South Australian court and making a legal right or liability dependent on the making of an order by the court in the exercise of that power, the language of the statute as applied in the arbitration through the operation of either s 28(1) or s 28(3) of the Domestic Arbitration Act needs to be translated to place the arbitral tribunal in the position of the court and to place the parties to the arbitration in the position of parties to a proceeding before the court. That modest recasting of statutory language aligns the operation of the Domestic Arbitration Act with the principle illustrated by Government Insurance Office of New South Wales v Atkinson-Leighton Joint Venture,[35] according to which the authority of an arbitral tribunal can extend to the exercise for the purpose of determining a dispute of a power conferred by statute on a court. The difference is that the principle is worked out as an explication of the statutory text purposively construed to give effect to the principle of party autonomy conformably with the Model Law[36] rather than as an implication of the agreement of the parties.

   [34]R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 165-166.

   [35](1981) 146 CLR 206 at 235, 247. See also Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 at 166-167; Rinehart v Welker (2012) 95 NSWLR 221 at 267 [214]-[215].

   [36]Compare Wealands v CLC Contractors Ltd [2000] 1 All ER (Comm) 30 at 38 [17], referring to s 46 of the Arbitration Act 1996 (UK), a provision loosely modelled on Art 28 of the Model Law. See also Fulham Football Club (1987) Ltd v Richards [2012] Ch 333 at 360 [96].

7. Subject to the distinct questions of arbitrability and public policy which would arise on an application to set aside an award under s 34(2)(b)(i) or (ii) of the Domestic Arbitration Act and which for that reason bear on the jurisdiction of the arbitral tribunal, a provision of a Commonwealth or South Australian statute which makes a disputed right or liability dependent on the making of an order by a South Australian court is applicable in the arbitration through the operation of s 28(1) or s 28(3) of the Domestic Arbitration Act provided only that the provision applied by the arbitrator would have the same legal operation as the provision would have were the provision applied by a court.

8. Applying that approach, the central provisions within Pt 3 of the Law Reform Act and Pt VIA of the CCA which empower a court to limit a defendant's liability in a case of apportionable liability (ss 8 and 9 of the Law Reform Act and ss 87CB, 87CC and 87CD of the CCA) are applicable and exercisable in the arbitration through the operation of s 28(1) or s 28(3) of the Domestic Arbitration Act. Each provision limits the liability of a concurrent wrongdoer for harm that is claimed to have resulted from that concurrent wrongdoer's contravention of a legal norm. By force of each, the liability of the concurrent wrongdoer is limited in proportion to the wrongdoer's assessed responsibility for the harm.

9. Indeed, those central provisions within Pt 3 of the Law Reform Act and Pt VIA of the CCA are applicable and exercisable in the arbitration through the operation of s 28(1) or s 28(3) of the Domestic Arbitration Act in the same way as is the provision within Pt 2 of the Law Reform Act which empowers a court to limit a claimant's entitlement to damages in a case of contributory negligence (s 7 of the Law Reform Act). There is no controversy between the parties that that other provision is applicable and exercisable in the arbitration.

10. That does not mean that every provision within Pt 3 of the Law Reform Act or Pt VIA of the CCA needs to be, or is, applicable in the arbitration through the operation of s 28(1) or s 28(3) of the Domestic Arbitration Act.

11. As has been foreshadowed,[37] there are provisions within Pt 3 of the Law Reform Act and Pt VIA of the CCA which are designed to facilitate determination of the substantive proportionate liability of all concurrent wrongdoers in one proceeding which are outside the scope of s 28 of the Domestic Arbitration Act because they set out rules of procedure. The excluded provisions are those within each of Pt 3 of the Law Reform Act and Pt VIA of the CCA which require a defendant to notify a plaintiff of a concurrent wrongdoer of whom the defendant is aware (s 10 of the Law Reform Act and s 87CE of the CCA) and a provision within Pt VIA of the CCA (s 87CH) which confers power on the court to join another concurrent wrongdoer as a party to proceedings.

    [37]See [34] above.

12. There are also provisions within Pt 3 of the Law Reform Act and Pt VIA of the CCA according to which a judgment first given can affect the rights or liabilities of third parties in subsequent proceedings (s 11 of the Law Reform Act and s 87CG of the CCA) which are outside the scope of s 28 because they have nothing to say about how the substance of the dispute between the parties to the arbitration is to be determined.

13. What is important to the application of the central provisions within Pt 3 of the Law Reform Act and Pt VIA of the CCA (ss 8 and 9 of the Law Reform Act and ss 87CB, 87CC and 87CD of the CCA) through the operation of s 28(1) or s 28(3) of the Domestic Arbitration Act is that the legal operation of those provisions on the rights or liabilities of the parties in dispute is not altered by the inapplicability of the other provisions within Pt 3 of the Law Reform Act and Pt VIA of the CCA (ss 10 and 11 of the Law Reform Act and ss 87CE, 87CH and 87CG of the CCA). The operation of the central provisions does not depend on all concurrent wrongdoers being parties to one proceeding for a determination to be made as to the proportionate liability of any one concurrent wrongdoer. Nor does their operation as between the parties to a dispute depend on any effect that the resolution of the dispute between those parties might have on third parties.

14. Hence, the law of South Australia applicable to the substance of the dispute through the operation of either s 28(1) or s 28(3) of the Domestic Arbitration Act includes the central provisions within Pt 3 of the Law Reform Act and Pt VIA of the CCA which empower a court to limit a defendant's liability in a case of apportionable liability (ss 8 and 9 of the Law Reform Act and ss 87CB, 87CC and 87CD of the CCA). The inapplicability of the other provisions within Pt 3 of the Law Reform Act and Pt VIA of the CCA (ss 10 and 11 of the Law Reform Act and ss 87CE, 87CH and 87CG of the CCA) bears at most on the distinct questions of arbitrability and public policy which arise by reference to s 34(2)(b)(i) or (ii) of the Domestic Arbitration Act.

15. Before turning to considerations of arbitrability and public policy, however, two practical observations should be made concerning the inapplicability of those other provisions through the operation of either s 28(1) or s 28(3) of the Domestic Arbitration Act.

16. The first is that, in the absence of some other agreement between the parties as to the procedure to be followed, the notice provisions of s 10 of the Law Reform Act and s 87CE of the CCA can reasonably be expected to be replicated in procedural orders made by the arbitrator under s 19(2) of the Domestic Arbitration Act, which reflects Art 19(2) of the Model Law. Section 19(6) of the Domestic Arbitration Act makes a procedural order made by an arbitral tribunal enforceable by leave of the Supreme Court in the same manner as if it were an order of that Court.

17. The second is that, as Jagot and Beech-Jones JJ point out,[38] an award can be accorded the status of a judgment through recognition and enforcement under Art 35 of the Model Law as reflected in s 35 of the Domestic Arbitration Act[39] so as to be capable of engaging s 11 of the Law Reform Act and s 87CG of the CCA in any event.

    The further question arising under Art 16 of the Model Law as reflected in s 16 of the Domestic Arbitration Act by reference to Art 34(2)(b)(i) of the Model Law as reflected in s 34(2)(b)(i) of the Domestic Arbitration Act: is the subject matter of the dispute incapable of settlement by arbitration under the law of South Australia?

    [38]At [362], [382]-[383].

    [39]TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia (2013) 251 CLR 533 at 552 [24].

18. Questions about the capacity of the subject matter of a dispute to be settled by arbitration have often been seen to overlap with, or to be informed by, questions of public policy.[40] Within the context of the Model Law as reflected in the Domestic Arbitration Act, it is apparent that non-arbitrability and public policy raise separate questions.

    [40]See Blackaby, Partasides and Redfern, Redfern and Hunter on International Arbitration, 7th ed (2022) at 86 [2.130].

19. By making plain that an award is liable to be set aside if the subject matter of the dispute is not capable of settlement by arbitration under the law of the place of the arbitration, Art 34(2)(b)(i) of the Model Law as reflected in s 34(2)(b)(i) of the Domestic Arbitration Act equally makes two things plain. One is that the question is whether the subject matter of the dispute is not capable of settlement by arbitration, not whether the dispute is capable of settlement by arbitration. The other is that the question is a question of law as distinct from a question of public policy. The legal nature of the question is reinforced by the juxtaposition of Art 34(2)(b)(i) as reflected in s 34(2)(b)(i) with Art 34(2)(b)(ii) as reflected in s 34(2)(b)(ii). The legal nature of the question is further reinforced by s 1(5) of the Domestic Arbitration Act, which, adapting Art 1(5) of the Model Law, provides that the Domestic Arbitration Act "does not affect any other Act by virtue of which certain disputes may not be submitted to arbitration".

20. Where, as here, the place of the arbitration also supplies the law applicable to the substance of the dispute and the relevant law is statutory, the question of non-arbitrability of the subject matter of the dispute reduces to a single question of statutory interpretation: does anything in the statutory text or structure or subject matter or purpose evince a legislative intention to exclude arbitration of the statutory rights or liabilities in issue in the arbitration? Here, the answer to that question is: no.

21. Neither Pt 3 of the Law Reform Act nor Pt VIA of the CCA is expressed to exclude arbitration of rights and liabilities arising under its provisions. Nor is the subject matter of Pt 3 of the Law Reform Act or Pt VIA of the CCA of such public interest as distinct from private interest as to indicate a legislative intention that the substantive rights and liabilities for which each provides should be litigated only in a court.[41] Rather, the subject matter of Pt 3 of the Law Reform Act and Pt VIA of the CCA governs the determination of substantive rights and liabilities as between private parties.

    The further question arising under Art 16 of the Model Law as reflected in s 16 of the Domestic Arbitration Act by reference to Art 34(2)(b)(ii) of the Model Law as reflected in s 34(2)(b)(ii) of the Domestic Arbitration Act: would an arbitral award conflict with the public policy of South Australia?

    [41]See Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45 at 97-98 [200]; Pipeline Services WA Pty Ltd v ATCO Gas Australia Pty Ltd [2014] WASC 10 at [80].

22. UNCITRAL explained in its Final Report on the Model Law in 1985:[42]

    "In discussing the term 'public policy', it was understood that it was not equivalent to the political stance or international policies of a State but comprised the fundamental notions and principles of justice. It was noted, however, that in some common law jurisdictions that term might be interpreted as not covering notions of procedural justice while in legal systems of civil law tradition, inspired by the French concept of 'ordre public', principles of procedural justice were regarded as being included."

    And further:[43]

    "It was understood that the term 'public policy', which was used in the 1958 New York Convention and many other treaties, covered fundamental principles of law and justice in substantive as well as procedural respects. Thus, instances such as corruption, bribery or fraud and similar serious cases would constitute a ground for setting aside. It was noted, in that connection, that the wording 'the award is in conflict with the public policy of this State' was not to be interpreted as excluding instances or events relating to the manner in which an award was arrived at."

    [42]Report of the United Nations Commission on International Trade Law on the Work of its Eighteenth Session, UN GAOR, 40th sess, Supp No 17, UN Doc A/40/17 (1985) at 57 [296].

    [43]Report of the United Nations Commission on International Trade Law on the Work of its Eighteenth Session, UN GAOR, 40th sess, Supp No 17, UN Doc A/40/17 (1985) at 58 [297].

23. The design of the Model Law to make the public policy to which Art 34(2)(b)(ii) refers as a ground for setting an award aside the public policy of the place of the arbitration rather than "international public policy" means that little is to be gained from surveying the variety of circumstances in which public policy has been found to impact on arbitration in other jurisdictions, including in the application of Art 34(2)(b)(ii) of the Model Law and Art V(2)(b) of the New York Convention,[44] beyond noting that "[t]he modern trend both domestically and internationally is to facilitate and promote the use of arbitration and to minimise judicial intervention in the process".[45]

    [44]See Maurer, The Public Policy Exception under the New York Convention: History, Interpretation and Application, 2nd ed (2022).

    [45]Larkden Pty Ltd v Lloyd Energy Systems Pty Ltd (2011) 279 ALR 772 at 783 [65].

24. The public policy of South Australia is informed by both the object of the International Arbitration Act "to facilitate international trade and commerce by encouraging the use of arbitration as a method of resolving disputes"[46] and the paramount object of the Domestic Arbitration Act "to facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense".[47]

    [46]Section 2D(a) of the International Arbitration Act.

    [47]Section 1C(1) of the Domestic Arbitration Act.

25. The public policy of South Australia as so informed provides no justification for treating a dispute about rights or liabilities arising under a Commonwealth statute or a South Australian statute as incapable of settlement by arbitration where those statutes on their proper construction do not themselves render the dispute incapable of settlement by arbitration.  

    Disposition

26. For these reasons, the appeal should be allowed with costs and order 1 of the orders made by the Court of Appeal should be set aside. The preliminary question of law should instead be answered "Yes".

    GORDON AND GLEESON JJ.  

    Introduction

27. The central question in this appeal is whether, in a commercial arbitration where the laws governing the substance of the dispute for the purposes of s 28 of the Commercial Arbitration Act 2011 (SA) ("the Arbitration Act") are the substantive laws of South Australia and those substantive laws include the proportionate liability laws in Pt 3 of the Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA) ("the Law Reform Act") and Pt VIA of the Competition and Consumer Act 2010 (Cth) ("the Consumer Act") (together, "the proportionate liability laws"), the arbitrator is required to apply the proportionate liability laws. The answer to that question is "Yes".

1. The appellant, Tesseract, and the respondent, Pascale, entered into a contract for the provision of engineering consultancy work by Tesseract in connection with building works comprising Pascale's design of a multilevel warehouse at Windsor Gardens in South Australia ("the contract"). A dispute arose between the parties as to whether Tesseract's work was done to the standard required under the contract.

2. The contract provides for conciliation of any dispute between the contracting parties "in connection with" the contract and, if such a dispute is not resolved by dispute conciliation, either party is permitted to refer the dispute to arbitration ("the arbitration agreement"). It makes provision for an arbitration, including for the appointment of an arbitrator; the qualification of the arbitrator as a member of the Institute of Arbitrators; for the arbitrator to "handle the dispute as he or she wishes" except as required by the contract; for the arbitrator to give their decision in writing, stating the issues in dispute and their decision on them; and for the decision to be binding on the contracting parties. Pascale referred the dispute to arbitration, pursuant to the dispute resolution provision in the contract.

3. In the arbitration, Pascale claims damages for breach of contract and negligence and, pursuant to s 236 of the Australian Consumer Law,[48] for misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law. In its defence, Tesseract denies liability. In the alternative, Tesseract contends that any damages payable by it should be reduced by reference to Pascale's contributory negligence in accordance with Pt 2 of the Law Reform Act, or in accordance with the proportionate liability regimes established by Pt 3 of the Law Reform Act in relation to Pascale's contract and negligence claims and, further or alternatively, Pt VIA of the Consumer Act in relation to Pascale's claims under the Australian Consumer Law. These alternative defences are based on Tesseract's contention that a Mr Penhall is responsible for part, or all, of the losses claimed by Pascale in the arbitration, by reason of his negligence in assisting Pascale to prepare its tender for the design and construction of the warehouse.

   [48]Which appears in Sch 2 to the Consumer Act.

4. Pascale agrees that those defences form part of the dispute between the parties but denies the applicability of the proportionate liability laws to the resolution of that aspect of the dispute. According to Pascale, Tesseract is not entitled to the benefit of the proportionate liability laws against Pascale in any forum. Tesseract may not litigate the proportionate liability defences in court proceedings because it is contractually bound to arbitrate the dispute; and Tesseract may not avail itself of the benefit of the proportionate liability laws because Pascale is not entitled to join any other alleged concurrent wrongdoer to the arbitration who might otherwise be found partially responsible for Pascale's losses in accordance with those laws. Pascale accepts that it could bring separate proceedings to recover losses from a concurrent wrongdoer but contends that the opportunity for a plaintiff to recover all of its losses in a single proceeding is integral to the proportionate liability laws.

5. In order to resolve the question of the applicability of the proportionate liability laws, the arbitrator ordered Tesseract to apply to the Supreme Court of South Australia, pursuant to s 27J of the Arbitration Act, for leave to obtain a determination by that Court of the following question of law:

   "Does Part 3 of the [Law Reform Act] and/or Part VIA of the [Consumer Act] apply to this commercial arbitration proceeding conducted pursuant to the legislation and the [Arbitration Act]?"

   The Court of Appeal of the Supreme Court of South Australia granted Tesseract leave and answered the question of law in the negative.

6. The Court of Appeal found that Tesseract's defences based upon the proportionate liability laws form part of the dispute that the parties agreed to have settled by arbitration. There is no appeal from that finding. The Court of Appeal also found, and there is no issue between the parties, that the substantive laws to be applied by the arbitrator to resolve the dispute are the substantive laws of South Australia, and the proportionate liability laws form part of the substantive laws of South Australia.

7. The Court of Appeal accepted that the key operative provisions in the proportionate liability laws would be capable of operating in arbitration proceedings – that is, the provisions limiting the defendant's liability to its share in the responsibility for the plaintiff's harm. Even so, the Court of Appeal concluded that the arbitrator was not able to apply the proportionate liability laws to the resolution of the dispute between the parties. In reaching that conclusion, the Court of Appeal relied upon two matters: (1) that both regimes contemplate that the plaintiff will have the opportunity to join all wrongdoers in the one set of proceedings; and (2) the inability to join all wrongdoers to an arbitration except by consent. In short, the Court of Appeal concluded that the proportionate liability laws were not amenable to arbitration because the arbitrator could not apply the laws except in a manner that would differ materially from the regimes intended by the relevant legislatures.

8. For the following reasons, the Court of Appeal erred in reaching that conclusion. Once it is accepted that, under s 28 of the Arbitration Act, the law applicable to the resolution of the substance of the dispute is the law of South Australia and the proportionate liability laws form part of that law, it follows that s 28 of the Arbitration Act requires the arbitrator to apply the proportionate liability laws with such modifications as to take account of characteristics which distinguish an arbitration from court proceedings[49] unless the effect of the modifications is that the laws could no longer be described as part of the substantive laws of South Australia. Here, the proportionate liability laws are capable of application with modifications such that the laws can still be described as the substantive laws of South Australia.

   [49]Government Insurance Office of New South Wales v Atkinson-Leighton Joint Venture (1981) 146 CLR 206 at 235 ("GIO").

   Laws applied by arbitrator to resolve substance of dispute

9. The Arbitration Act forms part of a national statutory framework for domestic and international commercial arbitrations comprised of Pt III of the International Arbitration Act 1974 (Cth) ("the IAA") and uniform State and Territory laws governing domestic commercial arbitrations. These laws each adopt – with some modifications – the UNCITRAL Model Law on International Commercial Arbitration (as adopted by the United Nations Commission on International Trade Law on 21 June 1985, and as amended by the United Nations Commission on International Trade Law on 7 July 2006) ("the Model Law").

10. Foundational to the Model Law – and, in turn, to the Arbitration Act – is the principle of party autonomy. One of the clearest expressions of that principle is that the parties to an arbitration agreement are generally free to choose for themselves the law or legal rules applicable to that agreement. The substantive law applicable to the parties' dispute is determined by reference to s 28 of the Arbitration Act. Section 28(1) of that Act imposes a duty upon an arbitral tribunal to decide the dispute referred to arbitration "in accordance with such rules of law as are chosen by the parties as applicable to the substance of the dispute". Issues of substance include "the existence, extent or enforceability of the rights or duties of the parties to an action".[50] Section 28(2) provides that any designation of the law or legal system of a given State or Territory must be construed, unless otherwise expressed, as directly referring to the substantive law of that State or Territory and not to its conflict of laws rules.

    [50]John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 at 543 [99].

11. In the absence of any choice of substantive law by the parties to which s 28(1) applies, s 28(3) provides:

    "Failing any designation by the parties, the arbitral tribunal must apply the law determined by the conflict of laws rules which it considers applicable."

12. The proceedings in the court below and in this Court were conducted on the basis that the parties accepted that the contract did not specify the rules of law applicable to the substance of the dispute and that s 28(3) governed the identification of the applicable substantive law. In response to a direct question from the Court after the hearing, the parties confirmed their position on these two points. Whether s 28(1) or s 28(3) of the Arbitration Act applies, the answer is the same – the law of South Australia. These reasons address s 28(3).

13. Under the relevant conflict of laws rules, the proper law of the contract is the legal system with which the contract is most closely connected.[51] The parties accepted that, by s 28(3), the arbitrator is required to determine the dispute referred to arbitration in accordance with the substantive laws of South Australia based on: (1) the parties' and the contract's connections with South Australia; and (2) the absence of any equivalent connections with any other legal system.[52]

    [51]Bonython v The Commonwealth (1950) 81 CLR 486 at 498; [1951] AC 201 at 219; Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 217.

    [52]Tesseract International Pty Ltd v Pascale Construction Pty Ltd (2022) 140 SASR 395 at 414 [58].

14. Section 28(3) mirrors Art 28(2) of the Model Law. Article 28(2) is one of several default provisions within the Model Law, which serve to fill gaps in the agreement between the parties.[53] Having regard to the need to promote practicable uniformity between the Arbitration Act, in its application to domestic commercial arbitrations, and the Model Law (given effect by the IAA and the Arbitration Act), in its application to international commercial arbitrations, it is pertinent that the parties identified no international case law which construed Art 28(2) inconsistently with the following case law and analysis.

    [53]TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia (2013) 251 CLR 533 at 547 [11].

15. Where parties accept that s 28(3) is invoked, with the result that the relevant substantive laws to be applied in the arbitration comprise substantive laws of a particular jurisdiction, submission to arbitration impliedly confers on the arbitrator authority to identify and apply the substantive law that would be applied by a court of competent jurisdiction dealing with the dispute, subject only to the parties' agreement to the contrary. If statutory defences form part of the relevant substantive law, a consideration in support of the implication stated above is that the parties are "unlikely to have intended that different disputes should be resolved before different tribunals, or that the appropriate tribunal should be determined by fine shades of difference in the legal character of individual issues, or by the ingenuity of lawyers in developing points of argument".[54] Conversely, parties to an arbitration agreement are free to exclude the application of otherwise relevant substantive laws.

    [54]Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 at 165.

16. The implication was first identified by this Court in Government Insurance Office of New South Wales v Atkinson-Leighton Joint Venture ("GIO"), which found, by majority, that an arbitrator may award interest where interest would have been recoverable had the dispute been determined in a court.[55] In that case, the arbitrator's power extended to an award of interest in accordance with s 94 of the Supreme Court Act 1970 (NSW), which conferred upon the Supreme Court the power to award interest. Stephen J identified a common law principle that "arbitrators must determine disputes according to the law of the land", so that, subject to exceptions not presently relevant, "a claimant should be able to obtain from arbitrators just such rights and remedies as would have been available to him were he to sue in a court of law of appropriate jurisdiction".[56] Mason J (Murphy J agreeing) found that there was implied in the submission to arbitration an authority in the arbitrator to award interest "conformably" with s 94, based on the Supreme Court's supervisory function in relation to an arbitration, and the enforceability of an arbitral award as if it were a judgment or order of the Court pursuant to s 14 of the Arbitration Act 1902 (NSW).[57] Although in dissent, Barwick CJ accepted the general proposition that the agreement of the parties was that the arbitrator should decide the matter before them "according to the law of the land".[58] For Barwick CJ, the law of the land was that some, but not all, tribunals could award interest.

    [55](1981) 146 CLR 206.

    [56]GIO (1981) 146 CLR 206 at 235.

    [57]GIO (1981) 146 CLR 206 at 247.

    [58]GIO (1981) 146 CLR 206 at 224. cf Mitsubishi Motors Corp v Soler Chrysler-Plymouth Inc (1985) 473 US 614 at 636-638.

17. The decision in GIO followed the Court of Appeal of England and Wales in Chandris v Isbrandtsen-Moller Co Inc,[59] which found that an arbitrator was empowered to award interest in accordance with a statutory provision in terms similar to s 94, where interest was not recoverable at common law. In reaching that conclusion, Tucker LJ referred,[60] by analogy, to the duty of an arbitrator to give effect to legal defences and cited the following passage from the decision of the Privy Council in Ramdutt Ramkissen Das v E D Sassoon & Co:[61]

    "Although the Limitation Act does not in terms apply to arbitrations, they [their Lordships of the Judicial Committee] think that in mercantile references of the kind in question it is an implied term of the contract that the arbitrator must decide the dispute according to the existing law of contract, and that every defence which would have been open in a Court of Law can be equally proponed for the arbitrator's decision unless the parties have agreed – which is not suggested here – to exclude that defence. Were it otherwise, a claim for breach of a contract containing a reference clause could be brought at any time, it might be twenty or thirty years after the cause of action had arisen."

    [59][1951] 1 KB 240.

    [60][1951] 1 KB 240 at 261.

    [61](1929) 98 LJ(PC) 58 at 62.

18. In Codelfa Construction Pty Ltd v State Rail Authority of New South Wales, this Court applied GIO and Mason J (Stephen, Aickin and Wilson JJ agreeing) endorsed the conclusion of the court below that s 94 "should be regarded as defining the powers of an arbitrator [to award interest] with such variations as the nature of the circumstances requires, subject of course to any specific provision in that behalf which may be contained in the contract constituting the submission to arbitration".[62] Expounding upon the manner in which s 94 was to be modified when imported into the submission to arbitration, Mason J said:[63]

    "The terms of s 94 are necessarily modified when they are imported into the submission in order to take account of those characteristics which distinguish an arbitration from court proceedings. For the purpose of exercising his implied authority to award interest the Arbitrator proceeds on the footing that the arbitration and the award are to be assimilated to court proceedings and to a curial judgment respectively. The hypothesis is that his award which determines the dispute or difference is the equivalent of a judgment which determines a cause of action.

    ...

    The obverse of this picture is that the parties by arming the Arbitrator with implied authority to award interest have recognized that the arbitration has taken the place of court proceedings. The statutory power is therefore to be moulded so that it is expressed in terms appropriate to, and capable of being exercised in, an arbitration. It should be read accordingly as authorizing the Arbitrator to award interest for the period from the date when the dispute or difference arose to the date when the award became effective for the award settles the dispute or difference, not the cause of action."

    [62](1982) 149 CLR 337 at 368.

    [63]Codelfa (1982) 149 CLR 337 at 368-369 (emphasis added).

19. In President of India v La Pintada Compania Navigacion SA,[64] the House of Lords held that "[w]here parties refer a dispute between them to arbitration in England, they impliedly agree that the arbitration is to be conducted in accordance in all respects with the law of England, unless, which seldom occurs, the agreement of reference provides otherwise".[65] Lord Brandon identified this principle as the basis for the decision in Chandris, and observed, with apparent approval, that the decisions in GIO and Codelfa adopted the approach in Chandris.[66]

    [64][1985] AC 104.

    [65][1985] AC 104 at 119.

    [66]President of India [1985] AC 104 at 119.

20. In the United Kingdom, the approach in Chandris was applied by the Court of Appeal to a statutory right of contribution expressed by the statute to be conferred upon a court, where the arbitration agreement was silent as to the application of the statutory right to the resolution of the dispute referred to arbitration.[67] In Australia, the general principle has been applied to the resolution of arbitral disputes under statutory claims;[68] declaratory relief;[69] and statutory contribution.[70]

    [67]Wealands v CLC Contractors Ltd [2000] 1 All ER (Comm) 30 at 39-40 [22]-[24]; Fulham Football Club (1987) Ltd v Richards [2012] Ch 333 at 360 [96].

    [68]IBM Australia Ltd v National Distribution Services Ltd (1991) 22 NSWLR 466; Francis Travel Marketing (1996) 39 NSWLR 160.

    [69]Cufone v Cruse (2000) 210 LSJS 238.

    [70]Incitec Ltd v Alkimos Shipping Corporation (2004) 138 FCR 496 at 504 [37]-[39]; Passlow v Butmac Pty Ltd [2012] NSWSC 225.

21. In the United States, the United States Supreme Court construed "the laws of the State of New York" in a choice of law contractual provision "to encompass substantive principles that New York courts would apply, but not to include special rules limiting the authority of arbitrators".[71] Delivering the opinion of the Court, Stevens J referred to the Supreme Court's earlier authority which made "clear that if contracting parties agree to include claims for punitive damages within the issues to be arbitrated, the [Federal Arbitration Act] ensures that their agreement will be enforced according to its terms even if a rule of state law would otherwise exclude such claims from arbitration".[72]

    [71]Mastrobuono v Shearson Lehman Hutton Inc (1995) 514 US 52 at 64.

    [72]Mastrobuono (1995) 514 US 52 at 58 (emphasis in original).

22. The principle stated in GIO and expounded by Mason J in Codelfa is instructive. In this case, the substantive laws comprise all of the substantive laws of South Australia that are relevant to the resolution of the dispute referred to arbitration and are expressed in terms appropriate to, or capable of being applied in, the arbitration. Whether a substantive law is capable of application depends upon whether it can be adapted to the arbitral context without altering its effect such that what is applied can still be described as the substantive laws of South Australia.  

23. Understood in this way, s 28(3) of the Arbitration Act limits the substantive laws, once identified by the relevant conflict of laws rules, in only two respects: (1) the language of the law sought to be applied must be capable of translation or adaptation into the arbitration context; and (2) once translated or adapted, the law must not be so altered that it can no longer be described as part of the substantive laws identified by the relevant conflict of laws rules. This form of analysis is not unknown to the law. In Attorney-General (Cth) v Huynh, this Court held that where a Commonwealth law applied State and Territory laws for arrest and custody "so far as they are applicable" to Commonwealth offenders, the text of those laws could not be applied in a manner divorced from their statutory context, such as to give the State and Territory laws "a substantively different legal operation".[73] In a similar way, in translating or adapting the operation of substantive laws to an arbitration, the meaning of the law must not be distorted.[74]

    [73](2023) 97 ALJR 298 at 314 [66]; 408 ALR 684 at 700.

    [74]cf Huynh (2023) 97 ALJR 298 at 312-314 [59]-[66], 329-330 [150]-[156], 335-336 [183], 351-352 [269]-[272]; 408 ALR 684 at 698-700, 719-721, 728, 749-751.

    Procedural versus substantive laws

1. Conflict with public policy does not arise from mere inconsistency of the award with so‑called "mandatory laws" (also referred to as "mandatory rules") of the place in which the arbitration is being conducted (relevant to an application to set aside an award) or the place in which recognition and enforcement of the award may be sought. "Mandatory laws", being "laws that purport to apply [in arbitration] irrespective of a contract's proper law or the procedural regime selected by the parties",[345] may or may not embody fundamental precepts of public policy of the place in which the arbitration is being conducted or the place in which an award is sought to be recognised and enforced.[346]

   [345]Barraclough and Waincymer, "Mandatory Rules of Law in International Commercial Arbitration" (2005) 6 Melbourne Journal of International Law 205 at 206.

   [346]eg, PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] 1 SLR(R) 597 at 622 [59].

2. Similarly, principles applying to the severability of an invalid statutory provision do not answer the question of repugnancy to public policy. The limit on the availability of severance of an invalid from a valid statutory provision, that the remaining valid law is not substantially different from the law as enacted,[347] does not determine repugnancy to public policy. Courts, not contracting parties, are subject to the doctrine of statutory severance because of the separation of powers, one manifestation of which is that courts are not free to rewrite legislation so that it has a materially different effect under the guise of severing invalid from valid parts of legislation. Separation of legislative power from judicial power has nothing to do with the position of contracting parties agreeing to refer disputes between them to, and agreeing the rules of law to apply in, an arbitration. This explains why the kind of legislative intention that would suffice to prevent a court from severing one (invalid) provision from another (valid) provision does not satisfy the test of conflict with (or repugnancy to) the public policy of South Australia (or of any other State or Territory in or the Commonwealth of Australia). To the extent Pascale – and the Court of Appeal – conceived of the relevant issue in terms of this kind of legislative intention, they were in error.

   [347]Harrington v Lowe (1996) 190 CLR 311 at 328.

3. It follows from this that the Court of Appeal's statement that there was "unlikely to be any significant practical difference between" determining the applicable rules of law by reference to "the parties' implied (objective) intention under their arbitration agreement" or "some overriding (objective) intention on the part of the relevant legislature"[348] cannot be accepted. It conflates inapposite notions of statutory intention relevant to the doctrine of statutory severance with contractual intention.

   [348]Tesseract International Pty Ltd v Pascale Construction Pty Ltd (2022) 140 SASR 395 at 445 [179].

   Conclusions

4. For these reasons, in the circumstances of this case, where the arbitration has commenced but has not been completed (and there is as yet no award sought to be recognised or enforced in some other jurisdiction), the only limit in the present case on the parties' choice of the rules of law applicable to the substance of the dispute (being the laws of South Australia) is a choice which would lead to an award in conflict with or contrary to the public policy of South Australia (in the narrow sense described of repugnancy to the fundamental values underlying the laws of South Australia), South Australia being the place of the arbitration. While statutory intention will be relevant to the ascertainment of conflict with public policy, as discussed, the mere fact that a court would characterise one or more provisions of a statute as non‑severable is not a test for conflict with public policy in its relevant sense of repugnancy to that policy.

5. This means that, in the present case, if there is no conflict with (in the sense of repugnancy to) the public policy of South Australia in the proportionate liability regimes applying to the extent they are able to do so in the arbitration, those regimes, to that extent, were able to be chosen by the parties to apply. It is not necessary to go further to resolve the present appeal. The remaining issues, accordingly, are those of statutory and contractual intention.

   Statutory intention

   Background to potential reform of proportionate liability regimes

6. Aspects of the background to the reform of proportionate liability regimes in Australia are instructive and support the conclusions in these reasons.[349]

   [349]And the reasons of Gageler CJ and of Gordon and Gleeson JJ.

7. In 2011, the Standing Committee of Attorneys-General ("the SCAG") released a consultation draft of "Proportionate Liability Model Provisions".[350] These draft Model Provisions included in s 1 a definition of "court" as including "a tribunal, arbitrator and another entity able to make a binding determination about liability". The SCAG also released an accompanying "Proportionate Liability Regulation Impact Statement" (said to be "for consultation purposes" and not as necessarily reflecting "the views of [the] SCAG, or of any jurisdiction or Government Department"[351]). The Proportionate Liability Regulation Impact Statement recorded that the issue of whether the then existing proportionate liability regimes applied to arbitrations "is not specifically dealt with in the current legislation and views on this differ".[352] The Proportionate Liability Regulation Impact Statement included consideration of the arguments that had been made for and against the draft Model Provisions applying in arbitration.[353] The Proportionate Liability Regulation Impact Statement concluded that there "are strong policy arguments that proportionate liability legislation should apply to arbitrations and external dispute resolution schemes and all submissions on the consultation drafting instructions that addressed this issue supported this".[354] It was for this reason that "court" was defined in the draft Model Provisions to include a "tribunal, arbitrator and another entity able to make a binding determination about liability".[355]

   [350]Australia, Standing Committee of Attorneys-General, Consultation Draft 7 [PCC‑386] Proportionate Liability Model Provisions, 15 September 2011.

   [351]Australia, Standing Committee of Attorneys-General, Proportionate Liability Regulation Impact Statement, September 2011 at 1.

   [352]Australia, Standing Committee of Attorneys-General, Proportionate Liability Regulation Impact Statement, September 2011 at 32.

   [353]Australia, Standing Committee of Attorneys-General, Proportionate Liability Regulation Impact Statement, September 2011 at 32-33.

   [354]Australia, Standing Committee of Attorneys-General, Proportionate Liability Regulation Impact Statement, September 2011 at 33.

   [355]Australia, Standing Committee of Attorneys-General, Proportionate Liability Regulation Impact Statement, September 2011 at 33.

8. Bodies representing arbitrators and some arbitrators objected to this proposal during the consultation. For example, an article by Albert Monichino (a barrister, arbitrator, and mediator) recorded that the "future of domestic arbitration in Australia is threatened by proportionate liability reforms which are presently under consideration".[356] Monichino expressed his view that the then existing proportionate liability regimes did not apply in arbitration[357] but, more to the point for present purposes, said that the "leading arbitral institutions in Australia (ACICA, CIArb and IAMA)^[[358]^] opposed the proposal to make proportionate liability legislation expressly referrable to arbitrations seated in Australia".[359]

   [356]Monichino, "Arbitration Law in Victoria Comes of Age" (2012) 31(1) The Arbitrator & Mediator 41 at 60.

   [357]Monichino, "Arbitration Law in Victoria Comes of Age" (2012) 31(1) The Arbitrator & Mediator 41 at 61.

   [358]The Australian Centre for International Commercial Arbitration, the Chartered Institute of Arbitrators (Australia), and the Institute of Arbitrators and Mediators Australia respectively.

   [359]Monichino, "Arbitration Law in Victoria Comes of Age" (2012) 31(1) The Arbitrator & Mediator 41 at 62.

9. In 2013, the Standing Council on Law and Justice ("the SCLJ") (formerly the SCAG) released revised draft Proportionate Liability Model Provisions.[360] In the revised draft, "court" is defined (in s 1) to include "a tribunal". This section then appears:

   [360]Australia, Standing Council on Law and Justice, Proportionate Liability Model Provisions [PCC-386], 26 September 2013.

   "3        Non-application to arbitration etc

   To remove any doubt, an entity (other than a court) that is able to make a binding determination about liability in relation to an apportionable claim is not required to apply this part in making the determination.

   Drafting note

   Jurisdictions may choose whether or not to include this provision."

10. The arbitration bodies, or at least CIArb and the IAMA, considered this a victory. The former, in a submission supported by the IAMA, told the New South Wales Department of Attorney General and Justice that it was "self-evident that the SCLJ was persuaded by the submissions made by various stakeholders that applying PL [proportionate liability] to arbitrations would undermine the inter-governmental efforts to promote domestic and international arbitration in Australia" and argued that New South Wales should adopt the Model Provisions, including s 3, which, by the drafting note to the section, had been left to each jurisdiction to decide for itself.

11. No jurisdiction in Australia has incorporated s 3 into its proportionate liability regime.[361] Whatever the views expressed by the arbitration bodies (and some arbitrators) to the contrary, the legislatures did not accept that application of the proportionate liability regimes in arbitrations would be inappropriate.

    [361]Wrongs Act 1958 (Vic); Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA); Civil Liability Act 2002 (NSW); Civil Liability Act 2002 (Tas); Civil Liability Act 2002 (WA); Civil Liability Act 2003 (Qld); Civil Law (Wrongs) Act 2002 (ACT); Proportionate Liability Act 2005 (NT). See also Competition and Consumer Act 2010 (Cth), Pt VIA; Corporations Act 2001 (Cth), Pt 7.10 Div 2A; Australian Securities and Investments Commission Act 2001 (Cth), Pt 2 Div 2 Subdiv GA.

    The correct approach

12. Neither Pt VIA of the CCA nor the Law Reform Act expressly states that it does or does not apply in an arbitration. The legislation imposes duties on "the court".[362] The other language in the statutes also contemplates orders by and judgments of a court.[363] This does not mean, however, that the proportionate liability regimes do not apply in arbitration.

    [362]eg, Competition and Consumer Act 2010 (Cth), s 87CD; Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA), s 8(4).

    [363]eg, Competition and Consumer Act 2010 (Cth), ss 87CE(1), 87CE(2), 87CF, 87CG(1); Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA), ss 7(2), 9, 11.

13. As Finkelstein J has explained:[364]

    "Proportionate liability was introduced into state and federal legislation following an inquiry into the law of joint and several liability established by the Commonwealth and the New South Wales Attorneys‑General in 1994. The impetus for the inquiry was the growing number of actions against professionals, particularly auditors, who were being singled out as targets for negligence actions not because of their culpability (which might be small) but because they were insured and had the capacity to pay large damages awards. One consequence was a sharp rise in insurance premiums payable by professionals."

    [364]BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd [No 2] [2008] FCA 1656 at [4].

14. If the substantive provisions of the proportionate liability regimes did not apply in an arbitration, the common objective of both the Commonwealth and South Australian Parliaments to ensure the viability of Australia's insurance market for professional services would conflict with their common object of ensuring effective arbitration systems for commercial disputes to facilitate trade and commerce. The legislative intention to be inferred is that both objects should be achieved. Effect must be given to that legislative intention.

    The incorrect approach

15. Pascale's approach to the ascertainment of statutory intention involves the wrong focus. Statutory intention is relevant only to the extent it can inform the question whether an award resulting from the arbitration will be liable to be set aside or not recognised or enforced as being in conflict with or contrary to the public policy of South Australia.

16. Pascale's premise is that it is unable to require all potential concurrent wrongdoers (including Mr Penhall) to be joined as a party to the arbitration, with the consequence being that the proportionate liability regimes are not "expressed in terms appropriate to, and capable of being exercised in, an arbitration".[365] The consequence does not follow from the premise. At the same time, moreover, Pascale accepted that if all potential wrongdoers in respect of a claim could be joined to an arbitration, then the proportionate liability regimes are "expressed in terms appropriate to, and capable of being exercised in, an arbitration".[366] Both propositions cannot be right.

    [365]Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 369.

    [366]Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 369.

17. Pascale's submissions also wrongly assume that the Commonwealth and South Australian Parliaments gave greater weight to the protection of a party from the risk of not being able to recover a part of its loss from the other party in an arbitration than to the confining of a party's recoverable loss from another party to the loss for which the other party was responsible in order to ensure the continuing viability in Australia of professional indemnity insurance against economic loss and loss from property damage. That assumption is irreconcilable with the context in which the proportionate liability regimes were enacted.

18. That assumption is also inconsistent with the substance of the proportionate liability regimes. Neither Pt VIA of the CCA nor the Law Reform Act ensures (or could ensure) that a plaintiff in a court proceeding is able to join all potential concurrent wrongdoers in the proceeding in order to maximise the plaintiff's chance of recovering 100 percent of its loss. There are many reasons why a plaintiff may not be able to or may choose not to join all potential concurrent wrongdoers in a court proceeding. The potential concurrent wrongdoer may be dead, not identifiable, not locatable, bankrupt, insolvent, or uninsured. Yet the proportionate liability regimes apply nevertheless, and the plaintiff carries the risk of not being able to recover 100 percent of its loss. While the legislation facilitates the prospect of a joinder,[367] the legislation does not provide, for example, that the relevant proportionate liability regime does not apply if a plaintiff is unable to join all potential concurrent wrongdoers in the proceeding. Rather, the legislation expressly contemplates that a plaintiff may not be able to join all potential concurrent wrongdoers in the proceeding and, in that event, regulates the outcome of any future proceeding involving different parties.[368]

    [367]Competition and Consumer Act 2010 (Cth), ss 87CD(5), 87CH; Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA), s 10.

    [368]Competition and Consumer Act 2010 (Cth), s 87CD(4); Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA), s 12.

19. Accordingly, to characterise a plaintiff as having a "right" or "opportunity" to join all potential concurrent wrongdoers in a court proceeding – as Pascale does – is inaccurate. A plaintiff's "right" and "opportunity" to do so are constrained by many legal and practical contingencies over which the plaintiff has no control. The difference in an arbitration is not so fundamental or even so material that it can justify ascribing to the Commonwealth and South Australian Parliaments an intention that the proportionate liability regimes not apply if a party is unable to join all potential concurrent wrongdoers in the arbitration.

20. To the contrary, the manifest policy choice made by the Commonwealth and South Australian Parliaments in enacting their proportionate liability regimes was that the regimes would apply whether a plaintiff could join all potential wrongdoers as parties or not, irrespective of the forum for dispute resolution. The choice is unsurprising given that the public interest at stake – the ongoing viability of professional indemnity insurance for economic loss and property damage in Australia – had been assessed by all legislatures in Australia to require protection at the expense of the capacity for plaintiffs to recover 100 percent of their loss from a single defendant who could afford to pay.

21. Contrary also to Pascale's arguments, s 11 of the Law Reform Act does not present any intractable difficulty for an arbitration. The focus of s 11 is the effect of a "judgment first given". There is no reason to conclude that a "judgment first given" is not assimilable to an "arbitral award first given" if it is enforceable as a judgment. This is achieved by obtaining an order for recognition of the arbitral award in accordance with s 35 of the Domestic Arbitration Act. Once recognised, the arbitral award is binding and enforceable, as s 35(1) states. Further, once the first arbitral award is recognised in this way, there is no reason to suggest that an arbitrator should not be bound by s 11 of the Law Reform Act in any subsequent arbitration in precisely the same way in which a court would be so bound in any subsequent proceeding. This reasoning applies equally to s 87CF of the CCA.

22. The only aspect of the arbitration in the present case which is not assimilable to a court proceeding in respect of the same dispute is the inability of the parties or the arbitrator to require the joinder of a third party to the arbitration against their will. On analysis, however, this is a product of the terms of the arbitration agreement between Pascale and Tesseract, not the terms of the proportionate liability regimes. If, for example, Pascale had used a contract that included a further agreement by all its consultants to agree to arbitrate any dispute arising in connection with the contract in a joint or single arbitration with any other consultant who may be liable for loss caused by the same harm, Pascale could then have required Mr Penhall and Tesseract to arbitrate Pascale's claims in the one (or effectively the one) arbitration, if necessary, by an application for consolidation of the arbitral proceedings as contemplated by s 27C of the Domestic Arbitration Act (the substance of which is also in equivalent legislation throughout Australia).[369] In other words, the problem perceived by Pascale, that it cannot join Mr Penhall in its arbitration with Tesseract, is ultimately of Pascale's own contractual making.

    [369]See also International Arbitration Act 1974 (Cth), s 24; Commercial Arbitration Act 2010 (NSW), s 27C; Commercial Arbitration Act 2011 (Tas), s 27C; Commercial Arbitration Act 2011 (Vic), s 27C; Commercial Arbitration Act 2012 (WA), s 27C; Commercial Arbitration Act 2013 (Qld), s 27C; Commercial Arbitration Act 2017 (ACT), s 27C; Commercial Arbitration (National Uniform Legislation) Act 2011 (NT), s 27C.

23. Moreover, we agree with Gageler CJ[370] that some provisions of the proportionate liability regimes (ss 10 and 11 of the Law Reform Act and ss 87CE, 87CH and 87CG of the CCA) are not rules of law applicable to the substance of the dispute and, consequently, are not within s 28 of the Domestic Arbitration Act, but, in any event, as explained above, can be given effect in an arbitration. As a matter of legal characterisation, however, they are procedural rules subject to s 19(1) of the Domestic Arbitration Act. Even if these provisions were not assimilable to arbitration at all, that fact would not result in either the subject‑matter of the dispute being non‑arbitrable under, or the conduct of the arbitration or recognition or enforcement of any award made in the arbitration being in conflict with or contrary to, the law of South Australia.

    [370]Reasons of Gageler CJ at [61]-[62].

1. It follows that the only available inference from the text, context, and purpose of the proportionate liability regimes is that the Commonwealth and South Australian Parliaments intended that their legislation would apply in arbitration subject only to the capacity of the parties to agree to the contrary.[371]

   [371]TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia (2013) 251 CLR 533 at 549‑550 [14]‑[17].

2. For these reasons, the appeal is not to be determined on the basis that either Pt VIA of the CCA or the Law Reform Act evinces a statutory intention that the legislation is not to apply in an arbitration if a party claiming damages is unable to join all potential concurrent wrongdoers in the arbitration. More relevantly, the application of that legislation in an arbitration insofar as it can apply does not give rise to any conflict with the public policy of South Australia.

   Contractual intention

3. Nothing in the text, context, or commercial purpose of the contract supports Pascale's argument that the objectively ascertainable intention of Pascale and Tesseract at the time of entry into the contract was that the arbitrator would determine a dispute between them arising in connection with the contract by applying, to the extent relevant, the law of the Commonwealth and the law of South Australia but, in both cases, excluding the proportionate liability regimes of the Commonwealth and of South Australia.

4. An agreement to arbitrate disputes should be liberally construed on the basis that parties who have agreed to arbitrate are "unlikely to have intended that different disputes should be resolved before different tribunals".[372] Avoiding fragmentation of an arbitrable dispute to the extent of the involvement in the dispute of a non‑party does not provide a good reason to adopt a narrow construction of an otherwise amply expressed arbitration agreement.[373]

   [372]Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 at 165. See also Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45 at 87‑88 [164]‑[165].

   [373]cf Paharpur Cooling Towers Ltd v Paramount (WA) Ltd [2008] WASCA 110 at [42]‑[48]; Aquagenics Pty Ltd v Break O'Day Council (2010) 20 Tas R 239 at 253‑255 [27]‑[33], 272‑273 [90]‑[93]; Curtin University of Technology v Woods Bagot Pty Ltd [2012] WASC 449 at [62]. See also John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 at [73]‑[89].

5. First, arbitration agreements are liberally construed to ensure that full effect is given to the contractual intention of the parties, who have entered into an arbitration agreement to resolve all disputes between them in arbitration. In the world of modern commerce, a dispute between the parties to an arbitration agreement may well encompass disputes with non‑parties. The appropriate liberal construction of the scope of an arbitration agreement is not to be abandoned merely by reason of a routine commercial likelihood of the dispute also extending to non‑parties.

6. Second, and as observed by Hammerschlag J in John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd,[374] the abandonment of the liberal construction of the scope of an arbitration agreement apparent in some cases[375] results from hindsight about the actual dispute which has arisen involving non‑parties (that is, by reasoning backward), which is impermissible.[376]

   [374][2015] NSWSC 451.

   [375]See fn 373.

   [376]John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 at [82]‑[84].

7. Third, the involvement of a non‑party in a dispute within the scope of an arbitration agreement between two or more parties merely gives those two or more parties another choice. Their choice is either to resolve all rights between them as parties to the arbitration agreement in accordance with the rules of law they are taken to have chosen to apply in the arbitration or, alternatively, to agree that the arbitration agreement should not apply to the dispute because of the inability to join the non‑parties and their relevance to the dispute. Pascale, however, wants to have its cake and to eat it too. Pascale wants to have its dispute with Tesseract resolved in an arbitration in which, by reason of the mere agreement to arbitrate, the rules of law that would ordinarily apply to limit Pascale's "rights" as against Tesseract and Tesseract's "liability" to Pascale would not apply.

8. That Pascale and Tesseract are the parties to the contract, and, thereby, the arbitration agreement, does not mean that Pascale and Tesseract are to be taken to have agreed that any arbitration between them would exclude the otherwise applicable proportionate liability regimes. Pascale's contrary argument assumes that, in entering into an arbitration agreement confined to disputes between them, Pascale and Tesseract agreed further that the arbitration would determine their respective rights and liabilities as if the acts or omissions of any other person could not be relevant to those rights and liabilities. That assumption is untenable.

9. In the ordinary course, an agreement to arbitrate is taken only to "give the arbitrator authority to provide the claimant with the relief available to it in a court of law of competent jurisdiction dealing with the dispute".[377] If Pascale's argument is correct, Pascale would be able to obtain from an arbitrator far more extensive relief than it would be able to obtain from a court of law of competent jurisdiction dealing with the dispute. An agreement between parties to give an arbitrator authority of that kind would not readily be inferred from a mere agreement to arbitrate given that it would be both contrary to the law of the land and significantly different from the relief available to a claimant in a court.

   [377]IBM Australia Ltd v National Distribution Services Ltd (1991) 22 NSWLR 466 at 481.

10. Pascale's argument also overlooks the fundamental difference between an arbitrator not being able to give a party all the relief that the party might obtain from a court and an arbitrator being able to give a party relief that it could never obtain in a court. The former involves nothing more than the law of the land not being amenable to application in an arbitration. The latter involves rewriting the law of the land. If parties wish to rewrite the law of the land for an arbitration in respect of arbitrable subject‑matter then, subject to any conflict with applicable public policy, they may do so. In the ordinary course, however, Pascale's "rights" and Tesseract's "liabilities" do not stand free from the proportionate liability regimes forming part of the law of the land. It would not be inferred that parties intended to rewrite the law of the land and to create different "rights" and "liabilities" between themselves by doing nothing more than agreeing that a dispute between them arising from a contract was to be referred to arbitration. A reasonably clear expression of intention to modify the law of the land would be required.

11. Pascale's submission that the parties to an arbitration agreement are aware of the limits of arbitration works against it in this appeal. It would be odd to attribute to parties a knowledge of the law of the land sufficient to support the existence of an inferred objective intention between them that the proportionate liability regimes which would otherwise dictate their rights and liabilities against each other would not apply in an arbitration.[378] Rather, the limitation the parties would be taken to accept in the ordinary course is that, to the extent either or both of them have rights against non‑parties, they will not be resolved in the arbitration between them, unless the non‑party agrees to participate in the arbitration or an order for consolidation of arbitration proceedings involving the non‑party can be and is made.

    [378]See, by analogy, Mastrobuono v Shearson Lehman Hutton Inc (1995) 514 US 52 at 63.

12. The proposed contractual intention becomes even more dubious in this case once it is acknowledged that, while the contract is between Pascale and Tesseract alone, the Works contemplated by the contract involved multiple parties with different but interacting responsibilities. In providing the Consulting Work, moreover, Tesseract was contractually bound to cooperate with all other personnel involved in the Works and to comply with numerous requirements defined by reference to the work of people other than Tesseract.

13. In these circumstances, it approaches commercial nonsense to infer that, merely by entering into an arbitration agreement in respect of disputes between them in connection with their contract, Pascale and Tesseract agreed that Tesseract would be liable for 100 percent of any loss of Pascale caused by harm for which Tesseract was only responsible in part. If Pascale and Tesseract had intended their dispute to be so determined in arbitration, considerably more than their mere agreement to arbitrate all disputes arising in connection with the contract would have been required to embody that intention.

14. Insofar as a statement of Lord Hoffmann in Fiona Trust & Holding Corporation v Privalov[379] was the subject of the further submissions the Court requested, the relevant issue in that case was whether the arbitration clause covered a dispute about the validity of one party's rescission of the contract on account of the contract having allegedly been procured through bribery.[380] In that context, Lord Hoffmann posed the question: "[c]ould [the parties] have intended that the question of whether the contract was repudiated should be decided by arbitration but the question of whether it was induced by misrepresentation should be decided by a court?"[381] It was that question Lord Hoffmann answered in the negative, saying that "the construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal. The clause should be construed in accordance with this presumption unless the language makes it clear that certain questions were intended to be excluded from the arbitrator's jurisdiction. As Longmore LJ remarked [below in the Court of Appeal]: '[i]f any businessman did want to exclude disputes about the validity of a contract, it would be comparatively easy to say so.'"[382]

    [379][2007] 4 All ER 951.

    [380][2007] 4 All ER 951 at 955 [2].

    [381][2007] 4 All ER 951 at 957 [7].

    [382][2007] 4 All ER 951 at 958 [13].

15. Section 28(1) of the Domestic Arbitration Act – in referring to "such rules of law as are chosen by the parties as applicable to the substance of the dispute" – contemplates a capacity for parties to choose those applicable rules (albeit, as discussed, subject to any such choice rendering the dispute non‑arbitrable or the award being in conflict with or contrary to applicable public policy). Given this, it cannot be assumed that a common contractual intention between parties that all disputes between them be resolved in arbitration carries with it a further common contractual intention between those parties that the substance of the dispute between them would not be resolved in arbitration in accordance with the substantive provisions of any otherwise applicable proportionate liability regimes.

16. As a contract is an agreement between at least two parties, a common intention will only be common if it is properly attributable to all parties. The validity of the attribution of the further common intention identified above, by reason of nothing more than an agreement of parties to arbitrate their disputes and their assumed or inferred common intention to resolve all disputes between them in arbitration, can be tested in the following way. If party A suffers loss by the wrongs of two or more other parties (party B and party C) and party A has agreed with only, say, party B and not party C to submit disputes to arbitration, and the proportionate liability regimes do not apply in the arbitration, party A may obtain full recovery from party B in the arbitration. The burden then would be on party B to seek contribution from party C in a court proceeding. If, however, the proportionate liability regimes apply in the arbitration, the effect would be to place the burden of seeking recovery of the balance of the loss on party A rather than party B. From the perspective of party A, the effect of the proportionate liability regimes applying in an arbitration is that only its dispute with party B (with whom it has entered into an arbitration agreement) is able to be fully resolved in the arbitration in accordance with the law of the land, whereas its dispute with party C (with whom it has not entered into an arbitration agreement) may only be resolved in a court proceeding. However, from the perspective of party B, if the proportionate liability regimes do not apply in the arbitration, its rights against party A to have the dispute between them resolved in the arbitration in accordance with the law of the land are curtailed. And, either way, subject to subsequent agreement with party C, one or other party to the arbitration agreement is left to seek contribution or recovery in a court. In these circumstances, where there is nothing more than an agreement that disputes between party A and party B be subject to arbitration, there is no foundation for attributing to party A and party B a common intention that the arbitration between them exclude any otherwise applicable proportionate liability regimes, enabling party A to recover more from party B than party B would be liable for under the law of the land. That is, more than a mere agreement to arbitrate all disputes between the parties to an arbitration agreement is required to support an inference of a common intention that otherwise applicable proportionate liability regimes not apply in an arbitration.

17. Accordingly, even if the presumption which Lord Hoffmann identified in Fiona Trust were to be adopted in Australia,[383] it would not operate to support an inference of a mutual contractual intention to exclude the proportionate liability regimes from an arbitration to be conducted in accordance with the laws of South Australia.

    [383]Which it has not: see Rinehart v Hancock Prospecting Pty Ltd (2019) 267 CLR 514 at 527-529 [18]-[25]; Inghams Enterprises Pty Ltd v Hannigan (2020) 379 ALR 196 at 212-213 [64]-[66].

    The position of non‑parties

18. Section 87CD(1) of the CCA and s 11 of the Law Reform Act apply to any subsequent action (that is, subsequent to the giving of a first judgment or first arbitral award enforceable as a judgment) in accordance with their terms. Those provisions address, to the extent the Parliaments have considered necessary, the risk of conflicting determinations (in arbitration and in a court).[384]

    [384]cf CurtinUniversity of Technology v Woods Bagot Pty Ltd [2012] WASC 449 at [85]‑[89].

19. Those provisions also address the risk to non‑parties (be it in respect of a proceeding in a court or an arbitration) in the manner the Commonwealth and South Australian Parliaments considered appropriate. That apparent risk arises most acutely in the case of s 11 of the Law Reform Act. By s 11, the "judgment first given" (be it a judgment of a court or an arbitral award that has been recognised by a court) determines the plaintiff's notional damages, the proportionate liability of the parties to that judgment, and the plaintiff's contributory negligence. This means that a wrongdoer who was not a party to the earlier court proceeding or arbitration cannot challenge those matters in any subsequent court proceedings or arbitration. This incapacity, however, applies equally in a court or in an arbitral tribunal. The only difference from the perspective of a non‑party is that a non‑party aware of their status as a potential wrongdoer exposed to proportionate liability can apply to be joined to a court proceeding and the court can join that person without the existing parties' agreement. In contrast, if a non‑party wishes to participate in an arbitration, an arbitral tribunal cannot join that non‑party unless the existing parties agree. Throughout Australia a non‑party who apprehends that an arbitral award has been procured by, say, fraud or collusion could apply to set aside the award under s 34(2)(b)(ii) of the Domestic Arbitration Act (or its equivalents) or for the court to refuse to recognise or enforce the award under s 36(1)(b)(ii) (or its equivalents). Unlike ss 34(2)(a) and 36(1)(a) (which depend on action by a party), those provisions operate by reference to the condition "if the Court finds". If such an application succeeded, then s 87CD(1) (and s 87CF) of the CCA and s 11 of the Law Reform Act would not be engaged.

    Conclusion and orders

20. The Court of Appeal erred in answering the agreed question of law as to whether the proportionate liability regimes apply in the arbitration in the negative. That agreed question of law should have been answered "yes".

21. Accordingly, the orders which should be made are:

    (1)       The appeal be allowed with costs.

    (2)Set aside order 1 of the orders made by the Court of Appeal of the Supreme Court of South Australia on 21 October 2022 and, in lieu thereof, order that:

    The question of law reserved, "[d]oes Part 3 of [the Law Reform Act] and/or Part VIA of [the CCA] apply to this commercial arbitration proceeding conducted pursuant to the legislation and [the Domestic Arbitration Act]?", be answered "yes".