There is no automatic bar to maintaining proceedings
merely because there is an arbitration on foot between some related
The High Court of Australia has delivered a judgment which
clarifies general principles of international arbitration law,
abuse of process and inconsistent determinations. The judgment,
delivered in favour of Clayton Utz client Michael Wilson &
Partners Limited (MWP), represents a maturing of international
arbitration law in Australia and coincides with a significant
movement in Australia to promote international arbitration.
The trial, which was heard in 2009, related to the alleged
diversion of profits and business opportunities by three
Australians employed by MWP to work on energy and resources
projects in Kazakhstan. The trial judge awarded MWP more than $8
million against two of the Australians, partly on the basis that
they were accessories to breaches of fiduciary duties by the third
man whom the judge found to be the backbone of the conspiracy. They
were also found to be liable for procuring breach of contract and
the tort of conspiracy. MWP pursued the third Australian separately
in an arbitration in London, where he was later found liable, but
on a more limited basis than the two Australians in NSW.
In 2010, the Court of Appeal found that it would be an abuse of
process and would bring the administration of justice into
disrepute if the accessories bore a greater liability in Court
proceedings than the "principal" would bear in the
arbitration. The Court of Appeal also found that there was an
apprehension that the senior NSW judge who heard the trial was
biased and ordered that the matter be sent for a retrial.
The High Court unanimously determined that it was not an abuse
of process for a litigant to hold a judgment which was inconsistent
with a foreign arbitral award delivered in an arbitration between
different parties, regardless of whether there is an principal and
accessory relationship involved. The majority (Acting Chief Justice
Gummow, and Justices Hayne, Crennan and Bell) said:
"Neither the institution nor the prosecution to judgment of
the proceedings was an abuse of process of the Supreme Court of
NSW. No abuse of that process emerged for the first time when the
arbitrators reached conclusions that differed from those reached by
Einstein J... The claims against Mr Slater and Mr Nicholls, as
knowing assistants, were not dependent upon the claims made against
The Court's judgment recognises that the use of arbitration
clauses can necessarily result in multiple proceedings on similar
issues and that those proceedings may be determined differently by
the arbitrator or judge in each case. It fills the previous vacuum
in Australian law on the interrelationship between arbitration and
court proceedings. There is no automatic bar to maintaining
proceedings merely because there is an arbitration on foot between
some related parties. Any inconsistencies in results may need to be
dealt with later if there are issues of double recovery or the
conspirators have rights of contribution against each other.
Clayton Utz partner Sid Wang and senior associate James Robinson
acted for MWP.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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