The New South Wales Court of Appeal has held that an application for leave to appeal a decision of the Supreme Court, which concerned whether an arbitrator’s mandate had been terminated pursuant to the Commercial Arbitration Act 2010 (NSW) (Act), was incompetent since the Act did not confer jurisdiction to hear the appeal.
A dispute arose between Ku-ring-gai Council (Council) and a construction company which was referred to arbitration pursuant to an arbitration agreement. Twelve days into the arbitral hearing, the parties consented to the arbitrator acting as a mediator. The mediation failed and the arbitrator, without the parties’ written consent, continued the arbitral hearing which concluded that same day. A week later the company wrote to the Council stating that in its view the arbitrator’s mandate terminated, by operation of s 27D(4) of the Act, when, following the mediation, the company had not provided its express written consent to the arbitrator continuing to conduct the arbitration.
Section 27D(4) of the Act provides that an arbitrator who has ‘acted as a mediator in mediation proceedings that are terminated may not conduct subsequent arbitration proceedings in relation to the dispute without the written consent of all the parties to the arbitration given on or after the termination of the mediation proceedings’. Further, s 27D(6) of the Act provides that if the parties do not consent under subs 27(4), ‘the arbitrator’s mandate is taken to have been terminated under section 14’.
At first instance, McDougall J refused the Council’s application for a declaration that the arbitrator’s mandate had not terminated and a final injunction restraining the company from purporting to terminate the mandate. In so finding, his Honour commented that the requirement for express written consent to the arbitrator resuming the arbitration after a mediation could not, in this case, be overcome by arguments of conventional estoppel and estoppel by representation.
The Council sought leave to appeal.
Arguments on leave to appeal
The parties raised competing submissions as to which provision of the Act governed the exercise of power at first instance and which informed the question of jurisdiction to hear the appeal. That question, in part, turned on the relief that was sought at first instance. The Council contended that the first instance application and primary judgment was in the order of an interim measure and therefore governed by ss 9 and 17J of the Act which provide:
9 Arbitration agreement and interim measures by court
It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure of protection and for a court to grant the measure.
17J Court-ordered interim measures
(1) The Court has the same power of issuing an interim measure in relation to arbitration proceedings as it has in relation to proceedings in courts.
(2) The Court is to exercise the power in accordance with its own procedures taking into account the specific features of a domestic commercial arbitration.
The company contended that s 14(3) of the Act was the operative provision as the arbitrator’s mandate had (in law) terminated, with the effect that the relief sought and determined at first instance was final and incapable of being appealed. Section 14 of the Act provides:
14 Failure or impossibility to act
(1) If an arbitrator becomes in law or in fact unable to perform the arbitrator’s functions or for other reasons fails to act without undue delay, the arbitrator’s mandate terminates if the arbitrator withdraws from office or if the parties agree on the termination.
(2) Otherwise, if a controversy remains concerning any of these grounds, any party may request the Court to decide on the termination of the mandate.
(3) A decision of the Court under subsection (2) that is within the limits of the authority of the Court is final.
The Court of Appeal’s decision
Chief Justice Bathurst (Beazley P and Ward CJ in Eq agreeing) held that s 14(3) of the Act governed the matter and, accordingly, leave to appeal should be refused because the first instance decision was final and binding. His Honour reasoned as follows:
- First, the relief sought by the Council at first instance was final relief to quell the controversy in the form of alternative declarations that the arbitrator’s mandate ‘had not been terminated’, or a declaration that the Company had ‘consented … to the continuation’ of the arbitrator, or a declaration that ‘no mediation took place’, or an injunction ‘restraining [the company] from terminating or purporting to terminate the mandate of the arbitrator’. The first instance proceeding was not concerned with s 17J ‘interim measures’ (at ).
- Secondly, the case at first instance involved the question of whether the arbitrator had become in law ‘unable to perform’ the arbitration, in circumstances where the arbitrator had not withdrawn from the proceeding and the parties had not agreed on the arbitrator’s termination. Accordingly, those circumstances fell within s 14(1), enlivening the Court’s power under s 14(2) to determine the relevant controversy (at ).
- Thirdly, the meaning of ‘final’ in s 14(3) of the Act equated with ‘not subject to appeal’ given the purpose of s 14(2) of the Act was to resolve a specific controversy that had arisen. Here the resolution was achieved by dismissing the Council’s summons (at ).
- Fourthly, the meaning of ‘final’ in s 14(3) of the Act did not preclude the possibility of judicial review of a purported exercise of the power in s 14(2) if jurisdictional error arose (at ).
- Fifthly, if an appeal from a decision pursuant to s 14(2) was incompetent, that would achieve harmony between the Model Law for international arbitration and the domestic arbitration and otherwise achieve the paramount object of the Act of achieving a fair and final resolution of disputes without undue delay or expense (at -).
Accordingly, leave to appeal was refused.