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New South Wales Supreme Court refuses to intervene where tribunal has ruled it has jurisdiction
Practical Law UK Legal Update Case Report 0-514-7370 (Approx. 4 pages)
New South Wales Supreme Court refuses to intervene where tribunal has ruled it has jurisdiction
by Practical Law
| Published on 01 Dec 2011 • Australia |
Andrew Robertson (Partner) and Ryan Kuss (Law Clerk), Piper Alderman
On 11 November 2011, the New South Wales Supreme Court held that Articles 5 and 16 of the UNCITRAL Model Law make it clear that no court may intervene to determine the matter of an arbitral tribunal's jurisdiction where the tribunal has itself determined that it has jurisdiction as a preliminary question, unless the court is requested to do so in the time specified.
Background
The UNCITRAL Model Law (as incorporated into the International Arbitration Act 1974 (Cth)) provides that:
- The arbitral tribunal may rule on its own jurisdiction (Article 16(1)).
- A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence (Article 16(2)).
- The arbitral tribunal may rule on such a plea either as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within 30 days after having received notice of such a ruling, the court to decide the matter (Article 16(3)).
- In matters governed by the Model Law, no court shall intervene except where so provided by the Model Law (Article 5).
Facts
The plaintiff, teleMates (an Australian telecommunications company), entered an agreement with the defendant, SoftTel (an Indian marketing and support services company), under which the defendant was to market, promote and solicit applications for the plaintiff's services. The agreement was for an initial term of 12 months with further automatic yearly renewals unless appropriate notice was given. A dispute arose as to whether the agreement had been validly terminated.
The agreement contained a dispute resolution clause under which the parties agreed to refer any dispute arising under the agreement to arbitration:
"If any dispute, difference or claim arises between the parties in connection with this agreement or the validity, interpretation or alleged breach of this agreement or anything done or committed [sic] to be done pursuant to this agreement, the parties shall refer the dispute, difference or claim for resolution for Arbitration. Both parties shall agree to appoint an Arbitrator. The Arbitral Proceedings shall be in accordance with the provisions of "The Institute of Arbitrators & Mediators Australia (IAMA)" and the laws of the state of New South Wales, Australia, shall be applicable. All proceedings in such arbitration shall be conducted in English. The venue of arbitrators shall be mutually decided within New South Wales Australia".
The defendant referred the dispute to IAMA, who appointed an arbitrator. The plaintiff contended that, under the dispute resolution clause, an arbitration could only commence by agreement and that at no time had the plaintiff consented to either the referral or the appointment of an arbitrator. The arbitrator heard the plaintiff's arguments at a preliminary conference before ruling provisionally that the arbitration should proceed. The arbitrator noted that some of the plaintiff's assertions as to jurisdictional matters could only be tested by the submission of evidence, counter-submission, and him ruling on such evidence.
After lengthy submissions from both parties, the arbitrator published an interim award on jurisdiction. The arbitrator disagreed with the plaintiff's submission that the dispute resolution clause incorporated the IAMA Rules only so far as they applied to procedures for the arbitration once the arbitral tribunal had been constituted. He agreed with the defendant's submissions that the dispute resolution clause had the effect of incorporating all of the IAMA Rules, including those which made provision for the appointment of an arbitrator in the absence of agreement between the parties. Ultimately, he determined that he had been properly appointed and that he had jurisdiction to determine the dispute.
The plaintiff took the issue to the New South Wales Supreme Court, seeking, amongst other things:
- A declaration that the arbitrator had not been appointed as the arbitral tribunal for the purposes of determining the dispute.
- An interim order, pending final determination of the proceedings, restraining the defendant from proceeding with a purported arbitration before the arbitrator.
The defendant did not appear.
Decision
Hammerschlag J held that it was not necessary to determine whether the IAMA rules applied under the dispute resolution clause. He noted that Articles 5 and 16 of the UNCITRAL Model Law (as incorporated into the International Arbitration Act 1974 (Cth)) make it clear that no court may intervene to determine the matter of an arbitral tribunal's jurisdiction where the tribunal has itself determined the matter in favour of jurisdiction as a preliminary question, unless such a request is made in the time specified. He found that the plaintiff had failed to make such a request within 30 days of receiving notice of the ruling and held that the court could therefore not intervene and the arbitrator's award must stand.
Citing the doctrine of "separability", which he said allows a tribunal to assume its own jurisdiction before it decides its own jurisdiction, Hammerschlag J rejected the argument that Article 16 did not apply because the arbitrator was not validly appointed.
Comment
The decision is important as the court demonstrates that it will not unduly interfere in the arbitral process. It is a strong statement that the courts will support the speed and independence of the arbitral tribunal to manage its own process. In approaching the legislation, the court had express reference to international jurisprudence, as reflected in texts, such as Redfern and HunterInternational Arbitration (Oxford University Press, 5th edition, 2009).