by Michael Moryosef*
AUSTRALIA
Limited scope to appeal security of payment decisions: Probuild Constructions v Shade Systems[1]
This recent Australian High Court decision held that an adjudication determination made under the Building and Construction Industry Security of Payment Act 1999 NSW (SOP Act) may not be overturned on the basis that the determination contained a non-jurisdictional error.
The decision found that the Court of Appeal of the Supreme Court of NSW did not have jurisdiction to overturn an arbitrated decision on the basis that the arbitrator had misinterpreted a contractual clause. The High Court based its analysis on statutory construction.
This case has ended the debate surrounding review of arbitrated decisions under the SOP Act. The position is now clear that arbitrated decisions based on erroneous application of legal principles will not be overturned. The High Court’s decision confirms that the scope of a Court’s review jurisdiction of adjudicated determinations made under the SOP Act is confined to circumstances of jurisdictional error only.
The debate continues regarding the broad interpretation of arbitration agreements: Hancock Prospecting Pty Ltd v Rinehart[2]
The Full Federal Court of Australia determined that arbitration agreements are to be interpreted broadly based on the presumption that parties do not intend that disputes be divided between courts and tribunals. For this reason, the Court held that the words “any dispute under this deed” should be interpreted liberally so that all disputed issues may be heard by Tribunals. This decision overturned the NSW Court of Appeal approach in Rinehart v Welker [2012] NSWCA 95. However, on 18 May 2018, the High Court granted special leave to appeal this decision on the basis of the Full Court Federal Court’s broad interpretation of “any dispute under this deed”.
ENGLAND
Arbitrator’s duty of disclosure and impartiality: Halliburton Company v Chubb Bermuda[3]
The factual background to this judgment, delivered in April 2018, is the Deepwater Horizon disaster which led to a group of plaintiffs suing Halliburton and Transocean who had liability insurance from Chubb. Both Halliburton and Transocean reached settlements and made claims under their policies, but Chubb rejected both claims on the basis that the settlements were unreasonable.
When Halliburton commenced arbitration against Chubb, M was appointed to chair the Tribunal. M had disclosed that he was then sitting in two (unrelated) cases to which Chubb was also a party. Transocean later commenced arbitration and Chubb named M as its party-appointed arbitrator. M disclosed that he was already sitting in the Halliburton case, and Transocean did not object. But, M did not disclose to Halliburton that Chubb had appointed him in the Transocean case and he also did not disclose that he was appointed in yet another Deepwater Horizon case Transocean brought against a different insurer. Halliburton applied to the Court to remove M as an arbitrator.
The Court of Appeal determined that an arbitrator should be trusted to decide the case solely on the material adduced in the proceedings in question and therefore held that an arbitrator accepting appointments in multiple references concerning the same or overlapping subject matter will not, of itself, give rise to a finding of apparent bias.
The Court went on to determine that arbitrators should disclose those circumstances which might lead the fair-minded and informed observer to conclude that there was a real possibility of bias. Notwithstanding, the Court concluded that non-disclosure of a fact or circumstance that should have been disclosed but does not of itself give rise to justifiable doubts as to the arbitrator’s impartiality.
UNITED STATES OF AMERICA
The victory of class action waivers: Epic Systems Corp. v. Lewis[4]
In this case, employees bought class action suits against their employer for unpaid wages despite the application of mandatory individual arbitration employment agreements. The US Supreme Court, in a since hotly debated 5-4 decision, found that employers had authority to prevent collective class action by implementing individual arbitration provisions within employment contracts. Critics argue that this decision allows for employers to systematically underpay small amounts of wages as the cost of implementing individual arbitrations would outweigh the loss of wages for individual employees.
In Australia, parties are able to prohibit class action arbitration by selecting or modifying procedural rules to prevent consolidation. However, the fact that winners in the Australian arbitration context, in contrast to the US approach, usually recover costs, alleviates some of the concerns regarding class action waivers.
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[1] Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4.
[2] [2017] FCAFC 170.
[3] Halliburton Company v Chubb Bermuda [2018] EWCA Civ 817.
[4] Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018).
* Interning at ADC and ACICA in 2018, Michael Moryosef is a Law/International Studies student, with a major in International Relations and a minor in Mandarin, at the University of New South Wales.