AUSTRALIA HILARY BIRKS ALLENS

Transcription

1 AUSTRALIA HILARY BIRKS ALLENS

2 Country Report: Australia Comparative Study of '' under the New York Convention (Hilary Birks) Contents 1 How do courts in your jurisdiction define the notion of arbitrability when applying the New York Convention? 1 2 Do the courts in your jurisdiction consider that arbitrability is a condition of validity of the arbitration agreement, or rather a requirement for the jurisdiction of the arbitral tribunal? 3 3 Applicable law 3 4 Substantive content of arbitrability/non-arbitrability 4 5 Table of cases 5 Appendix 1: Extract of legislation relevant to question 4(c) 6 Appendix 2: Table of Cases 8

3 2016 Research Project: Comparative Study of '' under the New York Convention 1 How do courts in your jurisdiction define the notion of arbitrability when applying the New York Convention? (a) (b) Do they make a distinction in defining the notion for the purposes of Article II (1) of the New York Convention ( a subject matter capable of settlement by arbitration ), of Article II (3) (... unless it finds that the said agreement null and void, inoperative or incapable of being performed ) and of Article V (2) (a) ( The subject matter of the difference is not capable of settlement by arbitration under the law of that country )? Do they make a distinction between subjective arbitrability (capacity of a person to be party to an arbitration) and objective arbitrability (capacity of a subject matter to be resolved by arbitration)? Australia ratified the New York Convention on 26 March The New York Convention is given effect under Australian law pursuant to the International Arbitration Act 1974 (Cth) (the IAA), section 2D of which specifically provides that the objects of the IAA include: (d) to give effect to Australia's obligations under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted in 1958 by the United Nations Conference on International Commercial Arbitration at its twenty-fourth meeting; In particular, in relation to the 'arbitrability' of s, Articles II(1) and (3) of the New York Convention are reflected in section 7 of the IAA relating to the enforcement of arbitration agreements. Section 7 relevantly provides: 7 Enforcement of foreign arbitration agreements (2) Subject to this Part, where: (a) proceedings instituted by a party to an arbitration agreement to which this section applies against another party to the agreement are pending in a court; and (b) the proceedings involve the determination of a matter that, in pursuance of the agreement, is capable of settlement by arbitration; on the application of a party to the agreement, the court shall, by order, upon such conditions (if any) as it thinks fit, stay the proceedings or so much of the proceedings as involves the determination of that matter, as the case may be, and refer the parties to arbitration in respect of that matter. (5) A court shall not make an order under subsection (2) if the court finds that the arbitration agreement is null and void, inoperative or incapable of being performed. One notable difference between Article II(1) of the New York Convention and section 7(2) of the IAA is the ability of a court under section 7(2) of the legislation to impose 'such conditions (if any) as [the court] thinks fit '. Australian courts have recognised that such conditions should not 'detract from the integrity of the arbitration process' 1. Rather, any conditions should '.. be utilised for the purpose of promoting and enforcing the agreement of the parties to resolve their s 1 WesTrac Pty Ltd v Eastcoast OTR Tyres Pty Ltd (2008) 219 FLR 461.

4 by arbitration, rather than by making orders which wold be inconsistent with, or subversive of that agreement '. 2 For example, in some cases, courts have granted a stay of proceedings on condition that the party seeking the stay act promptly to enable the arbitration to commence so as to avoid any undue delay. 3 Article V(2)(a) of the New York Convention is reflected in section 8 of the IAA relating to the enforcement of arbitration awards. The section relevantly provides: 8 Recognition of foreign awards (7) In any proceedings in which the enforcement of a foreign award by virtue of this Part is sought, the court may refuse to enforce the award if it finds that: (a) the subject matter of the difference between the parties to the award is not capable of settlement by arbitration under the laws in force in the State or Territory in which the court is sitting; or In relation to the question of whether a 'matter' is capable of settlement by arbitration for the purposes of section 7 and section 8 of the IAA, Australian courts have recognised that the 'matter' has a wide meaning, requiring that there be some 'subject matter, some right or liability in controversy which, if not co-extensive with the subject of the controversy which falls for determination in those proceedings, is at least susceptible of settlement as a discrete controversy': Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 at 351. In WesTrac Pty Ltd v Eastcoast OTR Tyres Pty Ltd, 4 the Court held that in determining whether a matter is capable of settlement by arbitration, a court must examine the nature and scope of the proceedings and identify each matter to be determined in the proceeding. Secondly, a court must construe the relevant agreement between the parties to identify each matter that is capable of settlement by arbitration. The prospects of success of a 'matter' are not relevant to an Australian court's determination of whether it is capable of settlement by arbitration. 5 That is, a party seeking an order pursuant to section 7(2) of the IAA does not have to satisfy any threshold question regarding the merits of its case against the other party. Scope of the arbitration agreement The interpretation of the scope of an arbitration agreement between parties is an issue that has been considered in a number of Australian judicial decisions, not all of which are consistent with eachother. 6 The current position of Australian courts is not to confine the interpretation of arbitration clauses, to give them 'width, flexibility and amplitude'. 7 The Court in Ansett Australia Ltd v Malaysian Airline System Berhad 8 recognised that it is the 'duty of the court to give effect to the purpose which lies behind an arbitration agreement and to respect the intention of the parties as expressed in that agreement'. 2 Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 at [84]. 3 Holmes, M and Brown, C, The International Arbitration Act 1974, A Commentary (2015) 2 nd edition, page 55. See also Flakt Australia Ltd v Wilkins and Davies Construction Co Ltd [1979] 2 NSWLR 243 at 251; White Industries Ltd v Trammel (1983) 51 ALR 779; Recyclers of Australia Pty Ltd v Hettinga Equipment Inc (2000) 100 FCR (2008) 219 FLR Robotunits Pty Ltd v Mennel [2015] VSC 268 at [31]-[42]. 6 Holmes, M and Brown, C, The International Arbitration Act 1974, A Commentary (2015) 2 nd edition, page Incitec Ltd v Alkimos Shipping Corp (2004) 138 FCR (2008) 217 FLR 376.

5 of matters in To avoid the risk of an award ultimately being found to be unenforceable because of Article V(2)(a) of the New York Convention, the question as to whether a is 'arbitrable' is an issue for determination at the outset of the arbitration process, applying domestic legal principles. 9 Subjective v Objective Australian case law in which the arbitrability of a has been considered raises issues in relation to both subjective and objective arbitrability. In relation to subjective arbitrability, the question is whether a party to the is a party to the arbitration agreement. If not, given that the resolution of s pursuant to arbitration is based on the consent of the parties, a party is not capable of being a party to an arbitration unless that party has so consented. Subjective arbitrability may also be an issue for a court's consideration in instances in which the affects the rights of third parties. 10 Whilst these issues are not strictly relevant to the arbitrability of the subject matter of the (objective arbitrability), Australian courts do not tend to draw any distinction between subject and objective arbitrability. 2 Do the courts in your jurisdiction consider that arbitrability is a condition of validity of the arbitration agreement, or rather a requirement for the jurisdiction of the arbitral tribunal? The question of arbitrability of a relates to the jurisdiction of the arbitral tribunal. An arbitration agreement is not considered invalid in the event that a between parties to an arbitration agreement is not arbitrable. The question is whether an arbitrator has the power to hear the and grant the appropriate relief. 3 Applicable law (a) Which law do the courts in your jurisdiction apply to assess the arbitrability or non-arbitrability of a at the stage of recognizing and enforcing the arbitration agreement and referring (or not) the to arbitration (Article II NY Convention)? The lex fori (law of the deciding court)? The law of the place of arbitration? The lex contractus? Another law? Unlike section 8(7) of the IAA relating to the enforcement of arbitral awards, section 7 of the IAA does not specify the law to be applied by an Australian court when assessing the arbitrability of a in the relevant circumstances. In Hi-Fert Pty Ltd & Anor v Kiukiang Maritime Carriers Inc (No 5) & Anor, 11 the Full Federal Court noted that for the purpose of interpreting the scope of the resolution clause in the relevant contract between the parties (at page 6): Since the contract's chosen proper law is English law, that law will govern its interpretation This position has been accepted in subsequent cases, see, for example, Recyclers of Australia Pty Ltd & Anor v Hettinga Equipment Inc and Anor 12 and Nicola & Ors v Ideal Image Development Corporation Inc and Anor. 13 In the later case, it was accepted that as the relevant agreement between the parties was governed by the law of Florida, the arbitration agreement 9 Holmes, M and Brown, C, The International Arbitration Act 1974, A Commentary (2015) 2 nd edition, page Allergan Pharmaceuticals Inc & Anor v Bausch & Lomb Inc & Anor [1985] FCA [1998] 90 FCR [2000] FCA (2009) 261 ALR 1.

6 was to be interpreted in accordance with that law (at [9]). However, it was also accepted in that case that if a party fails to prove the content of the law governing the arbitration agreement, then the law of Australia applies (at [23]). (b) Is there a difference of approach when assessing subjective and objective arbitrability? To date, Australian courts have not made a distinction on the basis of subjective and objective arbitrability. 4 Substantive content of arbitrability/non-arbitrability (a) In your jurisdiction, does statutory or case law set a general standard for assessing whether a is arbitrable or not? As outlined in section 1 above, the IAA gives effect to Australia's obligations pursuant to the New York Convention, including obligations relating to the referral of s to arbitration and the enforcement of arbitral awards, subject to limited exceptions relating to the arbitrability of the. The assessment of whether a particular is arbitrable in the circumstances of each case is typically a question for the courts. There are some limited legislative restrictions on arbitrability in Australia (see response to 4(c) below). Australian courts recognise that a statute must clearly and expressly limit the arbitrability of a particular subject matter for the statute to have that affect. In the absence of such express legislation, case law sets the general standard for considering arbitrability in the context of the New York Convention. (b) If there is a statutory source for arbitrability in your jurisdiction, please indicate it below (if not, indicate non-applicable ): There is no statutory source specifying the types of s that are arbitrable in Australia. However, there are Australian statutes which expressly limit the types of s that are capable of settlement of arbitration (see response to 4(c) below). (c) Which s are held to be non-arbitrable under the statutory or case law of your jurisdiction? As a matter of contractual interpretation, a court will consider the terms of the arbitration agreement to determine whether a 'matter' is arbitrable between parties to that agreement, taking into account the express terms agreed between the parties. A will be 'non-arbitrable' if it is held that the does not fall within the scope of the arbitration agreement. In addition, under Australian law, there is legislation which clearly limits the ability of parties to an arbitration agreement to provide for the resolution of particular s by arbitration. For example: The Carriage of Goods by Sea Act 1991 (Cth), section 11 limits the effect of an agreement which precludes or limits the jurisdiction of an Australian court (including a court of a State or Territory of Australia), unless the arbitration is conducted in Australia (see extract of provision in Appendix 1). See also section 2C of the IAA in relation to the carriage of goods by sea (also extracted in Appendix 1). The Insurance Contracts Act 1984 (Cth), section 43 renders void any provision in a contract of insurance that has the effect of referring a to arbitration (see extract of provision in Appendix 1). However, parties to a contract of insurance may agree to refer a to arbitration after the arises. Note: there is an equivalent provision in New South Wales State legislation, see Insurance Act 1902 (NSW), section 19. The arbitrability of a matter may also be affected by the nature of the relief sought, being relief that only a court may grant. For example, a fine or term of imprisonment, an order that binds the

7 public (such as a divorce decree), a judgment in rem against a ship or an order for the winding up of a company. 14 However, an arbitral tribunal may still have jurisdiction to hear a even if the tribunal is unable to make an order under a relevant statutory provision. 15 Finally, s which impact upon the rights of third parties may not be arbitrable. 16 Holmes and Brown have recognised that matters which are not arbitrable on the basis of public policy considerations are 'diminishing, as there is a greater public and legislative acceptance of matters being resolved by alternate resolution mechanisms' Table of cases Please append to the report a table of cases where arbitrability was addressed in the specific context of the New York Convention. See Appendix Holmes, M and Brown, C, The International Arbitration Act 1974, A Commentary (2015) 2 nd edition, pages See also ACD Tridon Inc v Tridon Australia Pty Ltd [2002] NSWSC 896; A Best Floor Sanding Pty Ltd v Skyer Australia Pty Ltd [1999] VSC Holmes, M and Brown, C, The International Arbitration Act 1974, A Commentary (2015) 2 nd edition, page 49. See also ACD Tridon Inc v Tridon Australia Pty Ltd [2002] NSWSC 896; Re Ikon Group Ltd (No 2) [2015] NSWSC Holmes, M and Brown, C, The International Arbitration Act 1974, A Commentary (2015) 2 nd edition, page 49. See also ACD Tridon Inc v Tridon Australia Pty Ltd [2002] NSWSC Holmes, M and Brown, C, The International Arbitration Act 1974, A Commentary (2015) 2 nd edition, page 50.

8 Appendix 1: Extract of legislation relevant to question 4(c) Carriage of Goods by Sea Act 1991 (Cth) 11 Construction and Jurisdiction (1) All parties to: (a) (b) a sea carriage document relating to the carriage of goods from any place in Australia to any place outside Australia; or a non-negotiable document of a kind mentioned in subparagraph 10(1)(b)(iii), relating to such a carriage of goods; are taken to have intended to contract according to the laws in force at the place of shipment. (2) An agreement (whether made in Australia or elsewhere) has no effect so far as it purports to: (a) (b) (c) preclude or limit the effect of subsection (1) in respect of a bill of lading or a document mentioned in that subsection; or preclude or limit the jurisdiction of a court of the Commonwealth or of a State or Territory in respect of a bill of lading or a document mentioned in subsection (1); or preclude or limit the jurisdiction of a court of the Commonwealth or of a State or Territory in respect of: (i) (ii) a sea carriage document relating to the carriage of goods from any place outside Australia to any place in Australia; or a non-negotiable document of a kind mentioned in subparagraph 10(1)(b)(iii) relating to such a carriage of goods. (3) An agreement, or a provision of an agreement, that provides for the resolution of a by arbitration is not made ineffective by subsection (2) (despite the fact that it may preclude or limit the jurisdiction of a court) if, under the agreement or provision, the arbitration must be conducted in Australia. International Arbitration Act 1974 (Cth) 2C Carriage of goods by sea Nothing in this Act affects: (a) the continued operation of section 9 of the Sea-Carriage of Goods Act 1924 under subsection 20(2) of the Carriage of Goods by Sea Act 1991; or (b) the operation of section 11 or 16 of the Carriage of Goods by Sea Act Insurance Contracts Act 1984 (Cth) 43 Arbitration provisions (1) Where a provision included in a contract of insurance has the effect of: (a) requiring, authorizing or otherwise providing for differences or s in connection with the contract to be referred to arbitration; or

9 (b) limiting the rights otherwise conferred by the contract on the insured by reference to an agreement to submit a difference or to arbitration; the provision is void. (2) Subsection (1) does not affect an agreement to submit a or difference to arbitration if the agreement was made after the or difference arose.

10 Appendix 2: Table of Cases Key: ALR FCA FCAFC FCR FLR IAA NSWIRComm NSWSC NSWLR Qd R VSC VSCA WASC WASCA Australian Law Reports Federal Court of Australia Federal Court of Australia - Full Court Federal Court Reports Federal Law Reports International Arbitration Act 1974 (Cth) New South Wales Industrial Relations Commission New South Wales Supreme Court New South Wales Law Reports Queensland Reports Victorian Supreme Court Victorian Supreme Court of Appeal Supreme Court of Western Australia The Court of Appeal (Western Australia) Case designation Re Ikon Group Limited (No 2) [2015] NSWSC 981 The plaintiff submitted that the proceedings before the Court were not capable of settlement by arbitration in accordance with section 7(2) of the IAA. To the extent that the claims for relief were made against the parties to the relevant agreement, the Court the plaintiff's submissions and ordered that the claims be

11 stayed pursuant to section 7(2) of the IAA. Robotunits Pty Ltd v Mennel [2015] VSC 268 Robotunits submitted that the requirements of section 7(2)(b) of the IAA were not satisfied and therefore, the Court should refuse to grant a stay of the court proceedings. Giedo Van Der Garde BV & Anor v Sauber Motorsport [2015] VSC 80 Article V.2.a The respondent submitted that the award made by the arbitral tribunal dealt with matters not contemplated by the submission to arbitration or decided matters beyond its scope. Relevantly, the Court held that: The arbitrator's findings were not beyond the contemplation of the parties' agreement or the scope of the submission to arbitration. The phrase 'capable of settlement by arbitration' in section 8(7)(a) of the IAA was directed to s where jurisdiction was retained exclusively by national courts. It did not apply. A did not lose its arbitral quality merely because a non-party or parties had an interest in the outcome of the arbitration. Siam Steel International PLC v Compass Group (Australia) Pty Ltd (2014) 293 FLR 260 Article II.3 Siam Steel submitted, amongst other things, that the failure of either party to 'enliven' the arbitration agreement by giving a notice of rendered the agreement inoperative pursuant to section 7(5) of the IAA. The Court granted the stay, rejecting Siam Steel's argument, finding that the arbitration agreement was still capable of performance (at [46]).

12 Casaceli & Ors v Natuzzi SpA & Ors (2012) 292 ALR 143 The applicants contended that the proceeding did not involve the determination of a matter that was capable of settlement by arbitration. Relevantly, the Court held (at [50]): Although the source of the claims is Australian legislation which serves important public policy objectives, it is difficult to accept that the matter in this case is not precisely the type of matter where effect should be given to the intention of the parties to submit s between them arising out of contract regulating their overall commercial dealings, the dealership agreement, to arbitration. It is well settled that such claims are capable of settlement by arbitration Lightsource Technologies Australia Pty Ltd v Pointsec Mobile Technologies AB (2011) 250 FLR 63 Articles II.1 and II.3 The arbitration clause prohibited claims from being made more than six months after the party 'knew or ought to have known of the basis for the action or claim'. The action was brought more than six months after that date and the Court held that, as a result, the arbitration agreement was inoperative or incapable of performance pursuant to section 7(5) of the IAA. Nicola & Others v Ideal Image Development Corporation Inc & Another (2009) 261 ALR 1 The applicants submitted that, amongst other things: 1 The allegations against the respondents did not fall within the scope of the arbitration agreement. (in part) 18 (in part) 2 The proceedings did not include the determination 18 The Court held 'with some hesitation', that the allegations against the respondents in relation to post termination restraints were not within the scope of the parties' arbitration agreement and therefore were not capable of settlement by arbitration: at [44]. Further, the Court held that to the extent that the arbitration clause limited the arbitrator's powers to set aside or vary the agreement and accordingly, to the extent that the applicants' claims were for the agreement to be set aside or varied, the claims were not 'capable of settlement' within the meaning of section 7(2) of the IAA.

13 of a matter that was 'capable of settlement by arbitration'. 3 To the extent that the claims depend on issues of competition law, they are not suitable for arbitration. Seeley International Pty Ltd v Electra Air Conditioning BV (2008) 246 ALR 589 The applicant contended that, in respect of the claims made, there was no arbitration agreement and that the subject matter in issue was not capable of settlement by arbitration. The Court found that the was capable of settlement by arbitration. However, the Court held that the parties had not agreed to submit the to arbitration (as they had not expressly agreed that a party may seek injunctive or declaratory relief in relation to certain types of breaches of the agreement). Leave to appeal the decision was refused: see Electra Air Conditioning BV v Seeley International Pty Ltd ACN [2008] FCAFC 169. Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45 Articles II.1 and II.3 In response to an appeal by the appellant (Comandate Marine) from a decision of the Federal Court, the respondent (Pan Australia) relevantly submitted that: 1 Comandate Marine had waived or elected to abandon the London arbitration by its conduct. 2 The arbitration clause was not wide enough to encompass the claims pursuant to the Trade Practices Act 1974 (Cth). 3 The requirements of section 7(2) of the IAA had not been satisfied.

14 The Court upheld the appeal, rejecting all of Pan's grounds of to the arbitrability of the matter. HIH Casualty & General Insurance Ltd (in liq) v Wallace (2006) 68 NSWLR 603 Article II.3 The arbitration clause was 'inoperative' as a result of State legislation (the Insurance Act 1902, section 19). Zhang v Shanghai Wool and Jute Textile Co Ltd [2006] VSCA 133 Articles II.1 and II.3 This was an appeal from a decision of the Victorian Supreme Court in which the Court held that the appellants had waived their right to insist that the be arbitrated in accordance with clause 5 of the Sales Confirmation (and had therefore made the agreement inoperative). This was the major issue for consideration on appeal. The Court held that participation in the litigation did not amount to a 'waiver' of the arbitration agreement because the appellants had, at all times, made it clear that they wanted the to be arbitrated. Transfield Philippines Inc v Pacific Hydro Ltd [2006] VSC 175 The case was decided on other grounds but in relation to the application for a stay pursuant to section 7 of the IAA, it was argued that as there had been a settlement of an arbitration between the parties, there was no extant arbitration to which the court could refer the parties and therefore, the matter was not capable of settlement by arbitration. (in part) (in part) The Court held that: There is no requirement in section 7(2) of the IAA for an extant arbitration before a stay is ordered. The settlement of the previous arbitration did not prevent referral of future s to arbitration.

15 If there was an issue as to the tribunal's power to hear the, that was a matter for the tribunal. If the previous tribunal was unable or unwilling to hear the, it could be referred to a separate tribunal. In respect of claims for misrepresentation which had been raised in the previous arbitration, the court held that such claims and any alleged were no longer capable of settlement by arbitration. Accordingly, no stay was granted in relation to those claims. La Donna Pty Ltd v Wolford AG (2005) 194 FLR 26 Articles II.1 and II.3 The plaintiff argued that: The matter was not capable of settlement by arbitration for the purposes of section 7(2) of the IAA; and That by seeking security for costs in relation to the court proceeding, the defendant waived its right to rely on the arbitration agreement, rendering it inoperative for the purposes of section 7(5) of the IAA. The Court found that the arbitration agreement was inoperative, 'the right to insist upon arbitration having been waived by the unequivocal choice to pursue litigation, and the consequent abandonment of arbitration, which was necessarily involved in the application for security for costs' (at [30]).

16 Stericorp Ltd v Stericycle Inc [2005] VSC 203 Articles II.1 and II.3 The plaintiff submitted four grounds: 1 The Defendant had chosen to 'reject, abandon or waive arbitration'. 2 The arbitration agreement did not encompass some of the claims. 3 The arbitrator cannot give the full range of remedies open to a court and the parties cannot oust the Court's jurisdiction in that regard. 4 The parties have contracted out of the IAA. Walter Rau Neusser Oel und Fett AG v Cross Pacific Trading Ltd & Ors [2005] FCA 1102 Articles II.1 and II.3 The applicant submitted, amongst other issues, that the arbitration agreement was null and void within section 7(5) or, alternatively, the s were not within the scope of the arbitration agreement. (in part) 19 (in part) His Honour found himself bound by the decision in the Kiukiang Career in respect of claims framed noncontractually (ie, pre-contractual claims fall outside of the scope of the arbitration clause). In relation to the section 7(5) submission, His Honour held that an assertion of voidness or of the entitlement of avoidance (of a contract) 'unsupported by a pleaded claim directed at the arbitration clause, to defeat a stay under s7(2) would undermine the intent of the operation of the New York Convention and the IA Act which was intended to give it effect' (at [91]). 19 In relation to the 'non-contractually' based claims, His Honour held that, 'To the extent that the representations are said to have been made before the contract and to have induced the formation of the contract, I consider myself bound by The 'Kiukiang Career' to hold that they lie outside the arbitration agreement. To the extent that conduct which occurred after the contract and connected therewith is said to found relief, whether damages or otherwise, conformably with The 'Kiukiang Career' such can be said to arise out of the contract.' (at [71]).

17 ACD Tridon Inc v Tridon Australia Pty Ltd & Ors [2002] NSWSC 896 Articles II.1 and II.3 The plaintiff (ACD Tridon) claimed that the defendants had waived their right to apply for a stay under section 7(2) of the IAA as a result of the following conduct by one or more of the defendants: (in part) 20 (in part) 1 Consenting to directions made by the Court. 2 Objecting to jurisdiction in a related proceeding issued in New Zealand and expressing a preference for the matters in issue to be determined in the Australian proceeding. 3 Making an application for the determination of various matters arising from the proceeding. 4 Consenting to the adjournment of the New Zealand proceeding and joinder of one of the defendants to the Australian proceeding. 5 Making an application for the production of documents by the plaintiff. The Court held that none of the above conduct, on its own or in general was sufficient to amount to a waiver of the right to seek a stay of the judicial proceeding and a reference to arbitration as contemplated by section 7(5) of the IAA (Article II.3 of the New York Convention). The plaintiff also submitted that the proceedings did not involve the determination of a matter that was capable of settlement by arbitration. In this respect, the Court held that some of the issues in were not within the scope of the relevant arbitration agreements and 20 Only in relation to (section 7(2) of the IAA), finding that some of the issues in were not within the scope of the relevant arbitration agreements.

18 therefore, were not capable of settlement by arbitration. Australian Granites Limited v Eisenwerk Hensel Bayreuth Dipl.- Ing Burhardt GmbH (2001) 1 Qd R 461 Articles II.1 and II.3 The Appellant unequivocally waived its right to arbitrate. Recyclers of Australia Pty Ltd & Anor v Hettinga Equipment Inc and Anor [2000] FCA 547 The applicants submitted that their claims in negligence and under the Trade Practices Act 1974 (Cth) (which were pleaded as pre-contractual and post-contractual representations) do not fall within the scope of the arbitration clause. 21 Metrocall Inc (Successor by merger to ProNet Inc) v Electronic Tracking Systems Pty Ltd [2000] NSWIRComm 136 Articles II.1 and II.3 The appellant (ProNet Inc) submitted, amongst other things, that the Industrial Relations Commission was required to stay the proceedings and refer the matter to arbitration. The respondent submitted that: 1 The proceedings were not capable of settlement by arbitration because the operation of section 106 of the Industrial Relations Act 1996 was 'inconsistent with its exercise by anyone other than the Commission' and because the statutory right of action under section 106 existed independently of contract. 2 In the alternatively, the claims were not 'matters' for the purposes of section 7 of the IAA. 21 The Court held that the pre-contractual representations should be stayed pursuant to section 7(2) of the IAA. In relation to the post-contractual claims, the Court held that 'To the extent that those representations do not rely upon or flow from the contractual relationship they are capable of standing as independent and severable claims that do not arise "under" the sale agreement. However, at this stage the post contractual claims have not been sufficiently articulated to enable me to determine that they are truly independent of and severable from the contractual claims relating to the performance or suitability of the unit.': at [64]. The court ultimately exercised its discretion to stay the 'non arbitrable' claims arising until further order: at [71].

19 The Court held that the subject matter of the proceedings under section 106 of the Industrial Relations Act was not a matter capable of settlement by arbitration given the 'nature of the determination that must be made' under the relevant provision. 22 The Court found that of 'particular importance' were the 'grounds on which the Commission may find that a contract or arrangement is unfair and the type of considerations which must be taken into account', including contracts which are against the public interest. 23 Hi-Fert Pty Ltd & Anor v Kiukiang Maritime Carriers Inc (No 5) & Anor (1998) 90 FCR 1 (the Kiukiang Career) This was an appeal from a decision of the Federal Court in which a stay of proceedings was granted. On appeal, there were three questions for determination by the Full Federal Court: (in part) 24 (in part) 1 Is section 7 of the IAA valid? 2 Can all of the claims made by the first appellant (Hi-Fert Pty Ltd) against the second respondent (Western Bulk Carriers Australia Ltd) be characterised as s 'arising from this charter' within the meaning of clause 34 of the relevant charter party? 3 Are claims based on the Trade Practices Act 1974 (Cth) 'capable of settlement by arbitration' within 22 At [75]. 23 At [78]. 24 The claims against Western Bulk Carriers Australia Ltd (referred to in the judgment as 'WBC') for negligence and breach of duty as a carrier and breach of the charter contract were claims that 'arose from' the contract and subject to a stay. The claims that WBC had engaged in misleading and deceptive conduct, made negligence misrepresentations and breached collateral warranties did not arise from the contract accordingly, were not stayed pursuant to section 7 of the IAA.

20 the meaning of section 7(2) of the IAA? Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 This was an appeal from a decision of the New South Wales Supreme Court in which a stay of proceedings was granted (see Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd [1994] ATPR 43,392). On appeal, the appellant submitted that the claims concerning the termination or purported termination of the agency agreement (including alleged conduct in contravention of the Trade Practices Act 1974 (Cth)) did not give rise to a or difference 'arising out of' the agency agreement within the meaning of the arbitration agreement (article 19 of the agency agreement). Re Dodwell and Co (Australia) Pty Limited v Moss Security Limited; Moss Security Pty Limited (formerly Wilrac Pty Limited) and Kevin Mcdonnell [1990] FCA 110 The applicant submitted that the s were not matters capable of settlement by arbitration. The Court found that the there was no arbitration agreement between the parties (there was a draft agreement which had never been executed) and therefore, the s were not matters capable of settlement by arbitration. Allergan Pharmaceuticals Inc & Anor v Bausch & Lomb Inc & Anor [1985] FCA 369 That the matters in were not capable of settlement by arbitration. Note: the legislation considered in this case is the Arbitration (Foreign Awards and Agreements) Act 1974 (Cth) which has since been renamed the IAA. (in part) 25 (in part) Flakt Australia Ltd v Watkins & Note: the legislation considered in this case is the 25 The Court held that the statutory causes of action pleaded by the applicants exist independently of contract and that they stay would not be extended beyond the claims for breach of contract (that is, no stay was granted in respect of the allegations relating to breaches of the Trade Practices Act 1974 (Cth) or the claimed infringement of the letters patent), at [35]-[36].

21 Davies Construction Co Ltd [1979] 2 NSWLR 243 Arbitration (Foreign Awards and Agreements) Act 1974 (Cth) which has since been renamed the IAA. The plaintiff and defendant were parties to an agreement for the construction of part of a power plant. The defendant sought, amongst others, claims for rectification of the contract and damages for breach of duty. The plaintiff argued that these claims were not 'matters' capable of being determined by arbitration on the basis that the resolution of these issues would not resolve the ultimate subject matter at issue between the parties; that is, how much the defendant was entitled to be paid for the work it had done. The Supreme Court of New South Wales held that 'matter' denotes 'any claim for relief of a kind proper for determination in a court. It does not include every issue which would, or might arise for decision in the course of determination of such a claim.' The Court found that the claims for relief by the parties were matters that could be settled by arbitration pursuant to the arbitration agreement.