Even in the context of a broader dispute that could involve
many parties, where there is a dispute between two parties inter
se, the court will strive to uphold an arbitration agreement
between those parties.
Where parties are referred to arbitration under the Commercial
Arbitration Act, it will usually be appropriate for the proceeding
to be stayed, not dismissed.
This case arose out of the Waratah train project in New South
Wales. John Holland was engaged to design and construct the Auburn
Maintenance Centre for the new trains. In turn, and relevantly,
John Holland entered into two contracts:
a consultancy agreement with KBR for design and documentation
services relating to stormwater detention
an agreement with Atlantis to design, manufacture, supply and
certify the stormwater detention facilities.
Aa modular tank system was installed under the car park. But
subsidence was observed. John Holland commenced Supreme Court
proceedings against both KBR and Atlantis for breach of contract,
negligence, misleading conduct, and under contractual indemnities.
But as both contracts contained arbitration agreements, each of KBR
and Atlantis sought orders staying the proceedings against
In relation to the KBR dispute, Hammerschlag J rejected an
argument by John Holland that the dispute ought not be arbitrated
because it could involve multiple parties. Hammerschlag J held that
the parties ought to be held to their bargain (at , ). Even
if other parties were involved in a broader dispute, there were
disputes between John Holland and KBR that could be arbitrated (at
–). Hammerschlag J noted that, while a court had a
discretion under the old arbitration legislation to decline to
refer the parties to arbitration if there was sufficient reason to
take that course, that is not available under the new legislation
(at , , ).
Hammerschlag J made orders referring the parties to arbitration,
as required by the Commercial Arbitration Act 2010 (NSW). But
Hammerschlag J noted that the Commercial Arbitration Act was silent
about what was to occur with the proceedings. After a subsequent
hearing, he considered that staying (and not dismissing) the
proceeding so far as it involved KBR was preferable as:
the arbitration agreement could subsequently become incapable
of being performed (therefore requiring court proceedings);
keeping the proceedings on foot could prevent a limitation
period from expiring; and
a stay would be a result under the International Arbitration
Act 1974 (Cth) and given the uniformity of the legislation,
congruent outcomes should be preferred where possible.
In relation to the Atlantis dispute, there were some stages in
the dispute resolution clause that had not been completed (namely
negotiation and expert determination): so the arbitration agreement
was presently inoperative (at –). Hammerschlag J
stayed the proceeding so far as it involved Atlantis.
Solicitors should think carefully before disclosing sensitive information to experts in a letter of instruction.
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