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Judicial review and arbitral awards; when appropriate, and when final

Judicial review and arbitral awards; when appropriate, and when final

June 9, 2017 3:10 PM | Posted by Andrew Orford and Ben Garvey | Print this page

Mango Boulevard Pty Ltd v Mio Art Pty Ltd [2017] QSC 87

 

Significance

This case provides clarity on the status of arbitral awards under the Commercial Arbitration Act 2013 (Qld). It confirms that Queensland is in line with other jurisdictions when reviewing arbitral awards.

Read on for the analysis by Andrew Orford (see my profile) and Ben Garvey.

Facts

In 2003 the parties entered into a joint venture to purchase and develop land. The land was purchased by Kinsella Heights Developments Pty Ltd (Kinsella) (a company which was wholly owned Ms Perovich) and Mr Spencer on behalf of the Spencer Family Trust (together, the original owners). Mango Boulevard Pty Ltd (purchaser) subsequently purchased one half of the shares in Kinsella by a Share Sale Agreement (Agreement) which provided that calculation and payment of the purchase price for these shares was delayed until preliminary development approval was obtained.

The parties disputed the eventual calculation of the purchase price for shares, and the original owners sought to have this issue arbitrated under the Agreement. The parties litigated a dispute about whether the relevant arbitration clauses of the Agreement were engaged. It was held that the clauses of the Agreement were engaged, and in 2013 the calculation of the purchase price for the shares was referred to arbitration.

In June and December 2016 the arbitrator made two awards regarding the purchase price of the shares. The arbitration, however, had not been concluded as a final award on costs had not been made. Mango Boulevard applied to set aside both awards. As the second award relied on the first award, it fell to the court to consider whether the first award should be set aside.

The purchaser argued that the arbitrator's awards dealt with matters beyond the scope of the reference to arbitration, and that the arbitrator failed to accord procedural fairness and natural justice which deprived the purchaser of its ability to present its case.

The original owners requested that, if the court allowed the application to set aside the award under section 34 of the Commercial Arbitration Act 2013 (Qld) (Act), the court should suspend the setting aside of proceedings for a period to give the arbitrator an opportunity to resume the arbitral proceedings.

Decision

The court dismissed the application.

Jackson J highlighted that the issue for consideration was whether the purchaser had made a case for setting aside the awards under section 34 of the Act, and if so, whether the court should suspend the setting aside of the arbitral proceedings to give the arbitrator an opportunity to take such action as in the arbitrator's opinion would eliminate the grounds for the awards being set aside.

Jackson J held that the purchaser had not made out a case to set aside the awards. His Honour held that despite the purchaser's complaints about how the arbitrator had valued the purchase price of the shares, the arbitrator had not decided matters beyond the scope of the submission to arbitration. Further, while Jackson J accepted that notions of procedural fairness and natural justice were appropriately considered as a basis for setting aside an award under the Act, his Honour held that the arbitrator's conduct in the circumstances was not such so as to cause any real practical injustice to the purchaser.

In obiter, Jackson J stated that while section 32 of the Act made it clear that a final award terminated the arbitral proceedings and thus the mandate of the arbitral tribunal, this was not the case in respect of any 'partial' awards. Further, His Honour stated that while the provisions of the Act were such that an order to set aside an award had the effect of setting the arbitral proceedings at naught, this did not prevent the parties to the arbitration agreement referring this dispute again. There was, however, nothing in the Act which expressly provided for either a remitter or a new hearing in respect of any award that is set aside under section 34 of the Act.

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