Resources

Agree to disagree: when has an agreement for the right to appeal an arbitral award been made?

Paul Rawson Investments Pty Ltd v James Boon Corporation Pty Ltd [2022] NSWSC 613

One of the advantages to arbitration is its finality. In most instances, awards made by an arbitrator or an Arbitral Tribunal are not subject to the usual appeal process. However, section 34A of the Commercial Arbitration Act 2010 (NSW) (the CAA) provides that an appeal lies to the New South Wales Supreme Court on a question of law: if the parties agree that an appeal can be made under that section and the Court grants leave to appeal.

The decision of Black J in Paul Rawson Investments Pty Ltd v James Boon Corporation Pty Ltd [2022] makes it clear that, should parties wish to have the right to appeal on questions of law under section 34A of the CAA, a clear and precise agreement to that effect must be reached. And, importantly, must be evidenced as having been reached.

Background to the dispute

The Plaintiffs, Paul Rawson Investments Pty Limited (PRI Pty Ltd) and Paul Anthony Rawson (Mr Rawson), in March 2022 sought leave to appeal two out of three arbitral awards in relation to a dispute with the Defendants, James Boon Corporation Pty Ltd (JBC Pty Ltd) and James Matthew Boon (Mr Boon).

The underlying dispute related to the termination of a business relationship between the parties which was governed by a Finance Control Partnerships Agreement. That agreement contained an arbitration clause requiring certain disputes to be resolved by way of arbitration (the Arbitration Clause). Notably, while the Arbitration Clause referred to provisions of the Commercial Arbitration Act 1984 (NSW) or comparable legislation in force at the time of the dispute, being the CAA (i.e. the Commercial Arbitration Act 2010 (NSW)), it did not contain an express agreement that there was a right to appeal as to a question of law under the CAA.

Was an agreement made?

As there was no express agreement in terms of the specific question at hand, PRI Pty Ltd and Mr Rawson argued that an ad-hoc agreement had been reached by the parties' solicitors in two ways.

The first agreement was said to arise by virtue of an exchange between the arbitrator and the parties' solicitors, in which PRI Pty Ltd and Mr Rawson submitted the arbitrator asked if the parties consented to the arbitration being governed by the CAA "subject to any right of appeal"; an approach to which both parties' solicitors were said to have consented.

PRI Pty Ltd and Mr Rawson argued that, by JBC Pty Ltd and Mr Boon consenting to the question posed by the arbitrator, and in particular, the consent to the words "subject to any right of appeal" the parties had agreed to a right to appeal under the CAA. JBC Pty Ltd and Mr Boon opposed that submission, both in terms of the facts and the alleged legal ramifications.

Black J found that, even if the arbitrator had said the words "subject to any right of appeal", that would not amount to an agreement between the parties as:

  1. the statement, when viewed objectively, was simply the arbitrator recognising the possibility that there may or may not be a right to appeal;
  2. the quick agreement to the arbitrator's question demonstrated the response was in relation to the application of the CAA and there was no indication that the parties' solicitors understood they were agreeing, on behalf of their clients, to any different right to appeal; and
  3. even if an agreement had been made by the exchange between the arbitrator and solicitors at the point in time alleged, it did not address the nature of the appeal and the requirements identified by the Court of Appeal in Inghams Enterprise Pty Ltd v Southern Cross Farms Australia Pty Ltd (2022) 398 ALR 562 (being an objective intention that an appeal may be made and that appeal is of the type contemplated by section 34A of the CAA).

The second agreement was said to arise by way of correspondence exchanged between the parties by which JBC Pty Ltd's and Mr Boon's solicitors accepted service of the appeal notice and consented to the expedition of any appeal. Again, Black J found that it could not be expected that JBC Pty Ltd's and Mr Boon's solicitors had turned their mind to the substantive question of whether a right of appeal on a question of law would be available to the parties. As such, it could not be said that by accepting service and consenting to the expedition of the appeal that JBC Pty Ltd's and Mr Boon's solicitors had also agreed that a right to appeal existed.

Against that background, and on the facts presented to his Honour in this case, Black J found there was no agreement between the parties for a right to appeal under section 34A of the CAA and ordered that the arbitral awards be recognised as binding and enforceable by the Court.

Implication

The above decision makes it clear that, where an arbitration is to be governed by the CAA (or equivalent legislation), should parties wish to have a right to appeal to the Court on a question of law, they should make an express agreement to that effect — ideally in writing.[1]


[1] [Note: The above material provides a summary only of the subject matter covered, without an assumption of a duty of care by Resolution Institute or Clayton Utz. The material is not intended to be nor should it be relied upon as a substitute for legal or other professional advice. Copyright in the material is owned by Clayton Utz.]