John Holland Pty Limited v Kellogg Brown & Root Pty Ltd

[2015] NSWSC 451

Supreme Court of NSW

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Interrogate

Catchwords

1. Commercial Arbitration
2. › Referral to arbitration
3. › Scope of arbitration agreement
4. › Whether dispute arising out of or relating to contract
5. › Whether existence of related disputes with third parties takes dispute outside arbitration agreement
6. › Commercial Arbitration Act 2010 (NSW), ss 5, 7(1), 8(1)
1. Commercial Arbitration
2. › Referral to arbitration
3. › Agreement inoperative
4. › Condition precedent to arbitration
5. › Whether unfulfilled contractual preconditions of negotiation and expert determination render arbitration agreement presently inoperative
6. › Commercial Arbitration Act 2010 (NSW), s 8(1)
1. Commercial Arbitration
2. › Referral to arbitration
3. › No discretion to refuse referral
4. › Shift from predecessor legislation
5. › Whether court retains discretion to refuse referral where related disputes with third parties exist
6. › Commercial Arbitration Act 2010 (NSW), s 8(1)
1. Contract
2. › Formation
3. › Oral agreement
4. › Whether binding oral agreement established to resolve dispute by litigation rather than arbitration
5. › Standard of proof for oral agreements
6. › Whether words used conveyed assent to binding agreement

Quick Take

Under s 8(1) of the Commercial Arbitration Act 2010 (NSW), the existence of related disputes with third parties who are not parties to the arbitration agreement does not take a dispute between the contracting parties outside the scope of their arbitration agreement, and the court has no discretion to refuse referral on grounds of potential fragmentation. Where an arbitration agreement contains conditions precedent such as negotiation and expert determination that have not been fulfilled, the agreement is 'inoperative' within s 8(1) and the court cannot refer the parties to arbitration, but may stay the proceedings to enforce the contractual dispute resolution provisions. Court proceedings are not an 'alternative dispute resolution process' within the meaning of a contractual clause listing conciliation, mediation and appraisal as examples of such processes.