Tesseract International Pty Ltd v Pascale Construction Pty Ltd

The High Court of Australia considered an appeal concerning the applicability of proportionate liability laws within a commercial arbitration. The dispute arose from an engineering consultancy contract, where one party (the respondent) claimed damages for breach of contract, negligence, and misleading or deceptive conduct. The other party (the appellant) denied liability and, in the alternative, argued that its liability should be reduced by reference to the alleged concurrent wrongdoing of a third party, pursuant to proportionate liability provisions in South Australian and Commonwealth legislation. A key issue was that the third party could not be compelled to participate in the arbitration.

The central legal question before the High Court was whether the proportionate liability provisions contained in Part 3 of the *Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001* (SA) and Part VIA of the *Competition and Consumer Act 2010* (Cth) applied to a commercial arbitration conducted under the *Commercial Arbitration Act 2011* (SA). The respondent contended that these laws did not apply in arbitration, while the appellant argued they did.

The High Court determined that the proportionate liability regimes in question do apply to arbitrations, even though the legislation does not expressly state this. The Court reasoned that the absence of explicit mention does not preclude their application. It noted that while the statutes refer to "the court" and contemplate court judgments, this language does not prevent the principles of proportionate liability from being applied by an arbitral tribunal. The Court found that the *Commercial Arbitration Act 2011* (SA) and its Commonwealth equivalent allow for the determination of such questions of law within the arbitration framework.

Consequently, the High Court allowed the appeal, set aside the order of the Court of Appeal of the Supreme Court of South Australia, and answered the reserved question of law in the affirmative. The Court declared that 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) do apply to the commercial arbitration proceeding.