COMMERCIAL ARBITRATION — stay of proceedings — s 7(2), International Arbitration Act 1974 (Cth) — first defendant manufactures water meters on-sold by plaintiff to local councils — plaintiff seeks indemnity in respect of $10 million sought by council in related proceedings — contracts for sale of goods between plaintiff and first defendant do not include arbitration clause — plaintiff later enters into Distributor Agreement with second defendant — defendants seek stay on basis of arbitration clause in Distributor Agreement — whether first defendant a party to Distributor Agreement — whether arbitration clause incorporated into contracts for sale of goods — whether defendants entitled to stay proceedings on the basis of arbitration clause in separate contract between plaintiff and defendants’ related entity.
COMMERCIAL ARBITRATION — kompetenz-kompetenz — whether Court should consider contractual arrangements or leave it to arbitral tribunal — principles at [9]-[15] — contractual arrangements a “hot mess” — absent some investigation as to existence and scope of arbitration agreement, application would be dismissed for failure to discharge onus.
COMMERCIAL ARBITRATION — whether first defendant a party to the Distributor Agreement — Distributor Agreement entered into by second defendant “acting by and through” a business unit — whether inconsistency between arbitration clause in Distributor Agreement and choice of law clause in contracts for sale of goods in favour of New South Wales — construction of arbitration agreements, principles at [50]-[51] — no inconsistency — first defendant not party to an arbitration agreement — whether arbitration agreement applies to events that pre-date the agreement, at [54]-[55].
COMMERCIAL ARBITRATION — s 7(4), International Arbitration Act 1974 (Cth) — whether defendants claiming “through or under” party to arbitration agreement — principles at [70]-[73] — plaintiff signed Strategic Alliance Agreement with defendants’ related entity — defendants propose to rely on features of this contractual arrangement as informing plaintiff’s duty to take reasonable care and contributory negligence — defendants not taking stand on a ground available to related entity.
Quick Take
1Where the existence and scope of an arbitration agreement are unclear on the face of the contractual arrangements, and the documents are in evidence and of short compass, the court may and should examine the contractual questions rather than defer to the arbitral tribunal under the kompetenz-kompetenz principle, at least to the point of being satisfied that an arbitration agreement exists and covers the matters in dispute; absent such investigation, the application must be dismissed for failure to discharge the onus under s 7(2) of the International Arbitration Act 1974 (Cth).
2A person is not claiming 'through or under' a party to an arbitration agreement within s 7(4) of the International Arbitration Act 1974 (Cth) merely because they propose to rely on features of that party's contractual arrangement as informing the content of a duty of care or contributory negligence defence; the person must be taking a stand on a ground that is available to the arbitral party itself, such as suing on or defending under that contract.
3Where only a small portion of the proceedings potentially falls within an arbitration agreement and the non-arbitrable claims are the primary and substantial claims, the court may exercise its discretion under s 7(2) to impose a condition that the reference to arbitration not proceed until after the final determination of the non-arbitrable matters in the court proceedings.
