Leave to appeal granted in the Gordian Runoff case

Andrew Robertson (Partner), Piper Alderman

The High Court of Australia (Australia's final court of appeal) has granted special leave to appeal the Gordian Runoff decision.  That decision dealt with the controversial ruling in Oil Basins Ltd v BHP Billiton Ltd [2007] VSCA 255 (Oil Basins). That case considered the standard of reasons required in an arbitral award, and, in particular, whether the standard required in a complex arbitration was comparable to that required from a judge in litigation.

In Gordian Runoff Limited v Westport Insurance Corporation [2010] NSWCA 57, the New South Wales Court of Appeal confirmed that there are only limited grounds for an appeal from an arbitral award and held that an arbitrator's standard of reasoning does not equate to that of a court judge (see Legal update, Three Australian courts rule on standard of reasons required in awards ( www.practicallaw.com/9-502-2238) ). In making that decision, the Court of Appeal departed from the Victorian Supreme Court's ruling in Oil Basins which held that an arbitrator’s reasoning should be equivalent to that of a judge in Australia. Instead, it drew a distinction between the arbitration and litigation processes.

The Oil Basins decision was not without controversy and it has now been announced that a group of Australia's leading arbitral bodies will jointly seek to intervene as an amicus curiae in the hearing before the High Court of Australia to support the approach of the Court in Gordian Runoff. The bodies seeking to jointly intervene are:

  • Australian International Disputes Centre.

  • Australian Centre for International Commercial Arbitration.

  • Institute of Arbitrators and Mediators Australia.

  • The Australian branch of the Chartered Institute of Arbitrators.

The New South Wales Attorney-General is also considering intervening.

It is hoped that the decision of the High Court will finally resolve the uncertainty regarding the standard of reasons required in an arbitral award and provide clarity as to the appropriate test to be applied. It is likely that the appeal will be heard in 2011. We will continue to report on developments.

Case: Westport Insurance Corporation & Ors v Gordian Runoff Limited [2010] HCATrans 233 ( www.practicallaw.com/2-503-8233)

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