Illawarra Basketball Club Pty Ltd v National Basketball League Pty Ltd

[2026] NSWCA 182

NSW Court of Appeal

Built by Barristers,
For Australian Law.

1. APPEALS — Application for leave — Principles governing — need to establish a reasonably clear injustice beyond that which was merely arguable — where primary judge ordered permanent stay of proceedings — whether arguable case that promise not to sue other than in the Court of Arbitration for Sport applied to application for preliminary discovery where no equivalent procedure available in Court of Arbitration for Sport
1. CIVIL PROCEDURE — Preliminary discovery — To identify potential cause of action — whether, although held to fall outside the scope of an arbitration clause, application was within scope of promise not to sue other than in Court of Arbitration for Sport — stay ordered notwithstanding that preliminary discovery not available in Court of Arbitration for Sport
1. COMMERCIAL ARBITRATION — Arbitration agreement — where primary judge stayed application for preliminary discovery on basis that promise not to sue other than in the Court of Arbitration for Sport applied to that application — whether primary judge erred — whether scope of negative covenant exceeded scope of arbitration agreement

A contractual negative covenant not to institute or maintain proceedings other than in a chosen arbitral forum (here, the CAS) may be broader in scope than the accompanying arbitration clause, particularly where the covenant is introduced as a 'further' agreement and employs expansive language such as 'regarding … any other matter regarding this Agreement or their participation' in the relevant activity.
The broad and liberal approach to interpreting dispute resolution clauses endorsed in Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd applies not only to arbitration clauses but also to associated covenants not to sue other than in the chosen forum, and the unavailability of a particular court procedure (such as preliminary discovery) in the chosen forum does not, without more, constitute 'strong reasons' warranting refusal of a stay.
A permanent stay of an application for preliminary discovery is an interlocutory decision of a procedural character attracting the higher threshold for leave to appeal, requiring demonstration of reasonably clear injustice beyond something merely arguable.