Australia: Commercial arbitration: a proportionate liability-free zone?

Last Updated: 16 February 2013
Article by Andrew Stephenson, Jey Nandacumaran and Sarah Southwell

Most Read Contributor in Australia, October 2017

Key Points:

This case clarifies the position that the proportionate liability regime does not, by force of the relevant legislation itself, apply to commercial arbitrations.

The Western Australian Supreme Court has recently held that the proportionate liability legislation does not, by force of the legislation itself, ordinarily extend to commercial arbitrations. The Court considered, but did not finally determine, whether the implied term in arbitration agreements – that arbitrators have jurisdiction to exercise every right and discretionary remedy given to a court of law – meant that the proportionate liability regime applied to arbitrations.

The arbitration

In Curtin University of Technology v Woods Bagot Pty Ltd [2012] WASC 449, the parties' dispute arose from a construction contract, which required all disputes to be finally determined by arbitration. At the arbitration, the respondent Woods Bagot sought to invoke the proportionate liability legislation on the basis that there were other concurrent wrongdoers responsible for the losses alleged by the claimant Curtin University. Curtin University disputed that Woods Bagot could invoke the proportionate liability regime in an arbitration.

The arbitrator referred to the Court the question "does part 1F [of the CLA] apply to these [arbitral] proceedings?". The arbitrator directed the Court to limit its consideration to:

  • Part 1F of the Civil Liability Act 2002 (WA) (CLA); and
  • section 22 of the Commercial Arbitration Act 1985 (WA) (CAA),

and not consider:

  • the terms of the contract (to identify whether the parties had effectively contracted out of the legislation – which is only permitted in Western Australia, New South Wales and Tasmania); and
  • the operation of the implied term in arbitration agreements.

The Civil Liability Act 2002 (WA) and Commercial Arbitration Act 1985 (WA)

The Court found – based on the CLA and CAA alone – that the proportionate liability regime was inapplicable in arbitral proceedings.

In respect of the CLA, the Court was influenced by:

  • Section 5AN,1 which empowers a court to join any non-parties responsible for the claimant's loss. Because an arbitrator's jurisdiction springs from the agreement between the parties to the arbitration, an arbitrator cannot join other wrongdoers to an arbitration absent their consent. This, in the Court's view, was a "weighty consideration militating against" the argument that proportionate liability applied in arbitrations.
  • The use of the terms "court", "judgment", "action for damages", "defendant" and "plaintiff" throughout Part 1F. It was held, following a lengthy discussion about the principles of statutory construction, that "court" should be given its natural meaning when used in the legislation, and accordingly did not extend to arbitrations. The Court came to the same conclusion with respect to "judgment" – finding that the word could not comfortably encompass an arbitrator's award.
  • The fact that nothing in Part 1F of the CLA referred to arbitrators, which is in contrast to an earlier Western Australian Act with overlapping subject matter, the Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947 (WA).

In respect of the CAA, section 22 provides that any questioned to be answered by way of arbitration "shall be determined according to law". The Court, although expressing reservations, ultimately followed the South Australian Court of Appeal in South Australian Superannuation Fund Investment Trust v Leighton Contractors Pty Ltd (1996) 66 SASR 509, and held that "according to law" meant "according to the principles of common law" (and not statutes like the CLA).

While earlier authorities have never made a direct ruling as to the applicability of proportionate liability in arbitrations, the decisions of Justice Cavanough in Wealthcare Financial Planning v FCIS (2009) 69 ASCR 418 and the Tasmanian Court of Appeal in Aquagenics Pty Ltd v Break O'Day Council [2010] TASFC 3 strongly suggested that the proportionate liability scheme could not apply in arbitrations. The position is perhaps strongest in Victoria where, unlike all other jurisdictions, the applicable legislation prohibits courts from having regard to the comparative responsibility of non-parties (unless dead, if a natural person, or wound up, if a corporate entity).

Arbitrator's implied power to grant relief in accordance with the general law

It is well settled at common law that a term is implied into every arbitration agreement providing that the arbitrator should decide the dispute before him/her according to the existing law of the contract; and should exercise every right and discretionary remedy given to a court of law.2

By reason of the arbitrator's directive, the Court was not required to determine whether the implied term in every arbitration agreement meant that Part 1F of the CLA applied to the present arbitration. The Court simply stated that such an outcome was at least arguable. Justice Tennent in Aquagenics Pty Ltd v Break O'Day Council [2010] TASFC 3 was less equivocal, and reasoned (in obiter) that an arbitrator's inability to join non-parties meant that irrespective of the implied term in arbitration agreements, proportionate liability could not be extended to arbitrations.

What can we expect in the future?

In September 2011, the Standing Committee of Attorneys-General (now the Standing Council on Law and Justice) released a "Consultation Paper on the Proportionate Liability Model Provisions", which recommends that uniform proportionate liability legislation should be introduced across all States and Territories. The paper also recommends changing the definition of "court" to expressly include arbitrators.

This proposal, if adopted, will clarify Parliament's intention that proportionate liability is to apply in arbitrations, but will not resolve the issue that arbitrators cannot join non-parties.


This case clarifies the position that the proportionate liability regime does not, by force of the relevant legislation itself, apply to commercial arbitrations. What is left unanswered, however, is whether the implied term in arbitration agreements extends the operation of proportionate liability to commercial arbitrations. Until this issue is finally determined, parties seeking to exclude the operation of the proportionate liability legislation (in jurisdictions where contracting out is not permitted) should:

  • refer all disputes arising from, or in connection with, their contract to arbitration; and
  • include an express term in their contract limiting the jurisdiction of the arbitrator (which would otherwise arise pursuant to the implied term).

You might also be interested in...


1 This provision is mirrored in all jurisdictions except South Australia.

2 Government Insurance Office of NSW v Atkinson-Leighton Joint Venture (1981) 146 CLR 206 (particularly Stephens J at pages 234 to 237); IBM Australia Ltd v National Distributors Services Ltd (1991) 22 NSWLR 466; and Frances Travel Marketing Pty Ltd v Virgin Atlantic Ltd (1996) 39 NSWLR 160.

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. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.