The parties entered into an agreement whereby the defendant would design, construct and operate a research facility. The agreement provided for specific completion dates but allowed the defendant to claim and be awarded an extension of time in certain circumstances.

The defendant submitted three claims for an extension of time, purportedly in accordance with the agreement. The plaintiff rejected these claims and in response the defendant served a notice of dispute on the plaintiff under a dispute resolution clause in the contract.

The contract contained two dispute resolution options:

Sub-clause 26.16 of the agreement provided:

Clause 26 provided a comprehensive code dealing with, among other things, delays in the progress of the works. The dispute resolution clauses appeared later in the agreement.

The plaintiff claimed that it had referred the dispute for resolution in accordance with option 2 by exercising its rights under sub-clause 26.16 of the agreement. The plaintiff argued that such a referral triggered and mandated the application of the Accelerated Dispute Resolution Procedures. However, the defendant argued that such a referral under sub-clause 26.16 merely indicated a party's position, which may or may not form the basis of an agreement for the purposes of option 1. The defendant argued that the dispute resolution clauses later in the agreement provided the exclusive dispute resolution regime under the agreement.

The issue before the court was whether, on its true construction, sub-clause 26.16 triggered and required the Accelerated Dispute Resolution Procedures to be followed once a party had referred a dispute to an expert.

Croft J held that the Accelerated Dispute Resolution Procedures were appropriate for this dispute and made a declaration along the lines sought by the plaintiff.

Croft J considered that the defendant's interpretation of sub-clause 26.16 would render it superfluous because the parties could, under option 1, reach the kind of agreement suggested by the defendant whether or not sub-clause 26.16 existed. That interpretation would therefore offend a basic rule of the construction of contracts, which is to give meaning to all provisions of a document. Further, it would not give business efficacy to the provisions of the agreement.

The judge agreed with the plaintiff that the word "may" in sub-clause 26.16 gave either party the choice whether or not to seek to invoke the provision, but that once properly invoked, sub-clause 26.16 required that the dispute be resolved in accordance with option 2. In coming to this decision, Croft J was influenced by a decision interpreting the word "may" in an arbitration clause, He also considered cases referred to by the defendant regarding whether particular clauses constituted arbitration agreements. However, these only served to emphasise that the provisions of the agreement must be viewed as a whole and read together.

The judge disagreed with the defendant's argument that it remained entitled to proceed to arbitration under option 1, even though the plaintiff had engaged sub-clause 26.16, on the basis that no agreement had been reached. On a proper construction of the relevant provisions, option 1 was closed off where sub-clause 26.16 had been properly engaged (and was therefore operating mandatorily).

Croft J also rejected the argument that the operation of sub-clause 26.16 could be defeated by the giving of a notice of dispute before its provisions were revoked. First, there was nothing in the agreement to support such an interpretation. Second, if the issue of a notice could defeat the operation of sub-clause 26.16, it would encourage a party to trigger the operation of that sub-clause before a dispute even arose, just so that it would not lose the benefit of the sub-clause once a notice of dispute was issued. This would be an absurd result which would only serve to create a dispute even though the parties may have wished to "let sleeping dogs lie".

The defendant had also argued that if the court considered sub-clause 26.16 to be ambiguous, it was open to the court to consider what was just, reasonable and convenient in determining whether the dispute ought to be referred for resolution by an independent expert or by arbitration. It referred to a decision that suggested that some legal questions may not be appropriate for informal dispute resolution procedures and that would be a relevant factor if the court was exercising its discretion in deciding whether a dispute would be better suited to arbitration than expert determination, whatever the agreement provided for. The defendant relied on that authority to argue that, in this case, the Accelerated Dispute Resolution Procedures were not appropriate for this dispute.

Croft J disagreed and stressed that the judicial comment cited by the defendant must be considered in the broader context of the decision in question, which emphasised that these questions must be determined on the basis of the proper construction of the agreement in question. He held that, as the parties in this case had clearly contemplated that extension of time disputes might be referred to expert determination, no unreasonable or unjust result would flow from interpreting sub-clause 26.16 as requiring such expert determination.

Croft J also rejected the argument that the expert would not have authority under the agreement to resolve the substantive issues that arise with an extension of time claim. Those issues must have been within the contemplation of the parties when they were negotiating the terms of sub-clause 26.16.

Croft J noted the benefits of expert determination as a means of dispute resolution and agreed with the plaintiff's submission that he should take a positive and expansive approach to expert determination and to the construction of referring the dispute under sub-clause 26.16.

A motivation for the recent and ongoing domestic commercial arbitration reforms is to encourage arbitration as a dispute resolution mechanism. However, despite efforts to increase its popularity, arbitration has been losing ground to both litigation and expert determination over the last 20 years. This means that Australia does not have the depth of arbitration experience and expertise for domestic arbitrations as might be expected.

Decisions such as this are, therefore, significant in that they emphasise that expert determination is indeed a genuine competitor to arbitration in the domestic environment and that it has the support of the courts. It is clear from this particular decision that the courts take a positive view of expert determination and will interpret agreements in favour of referring disputes to it.

Such developments raise questions about the long term attractiveness of arbitration as a potential alternative dispute resolution mechanism. Disputing parties increasingly turn to the seemingly less formal option of expert determination which is perceived as being less likely to suffer from unwarranted judicial interference.

The decision also provides yet another reminder of the need for clarity and precision when drafting dispute resolution clauses. Indeed, it is particularly important to pay careful attention when using notoriously contentious terms such as "may".