This recent case considered an argument that an arbitral award be set aside on the grounds that the arbitrator failed to afford the appellant procedural fairness. McMurdo JA (Fraser JA agreeing) observed that procedural fairness is not an express ground to set aside an arbitral award under s 34 of the Commercial Arbitration Act 2013, but that it may engage the ground that a party was unable to fairly put their case, or that the award is in conflict with public policy. Adopting the observations of the Full Federal Court in TCL Air Conditioner, McMurdo JA found that it could not be said that the appellant was practically denied an opportunity to argue its case.
Fraser and Morrison and McMurdo JJA
20 March 2018
This matter concerned an appeal from the decision of the primary judge, in which the primary judge refused to set aside two arbitral awards under s 34 of the Commercial Arbitration Act 2013. –.
The appellant argued before the primary judge that the arbitrator’s reasoning was inconsistent with the requirements of a Share Sale Agreement (“SSA”), which contained a formula by which the price for the shares was to be fixed, and that it “departed so far from them, that the arbitrator dealt with a dispute which was not contemplated by or within the terms of the submission to arbitration”. . The primary judge held that there had not been a departure from the requirements of the SSA and that, in any event, it would not be an error of a kind that would have amounted to an excess of jurisdiction of the kind that engages s 34(2)(a)(iii) Commercial Arbitration Act. .
Before the Court of Appeal, the appellant did not pursue this argument. . Rather, relying on ss 34(2)(a)(ii) and 34(2)(b)(ii) Commercial Arbitration Act, the appellant contended that the arbitrator had failed to accord procedural fairness, or acted in breach of the rules of natural justice, such that the appellant was unable to present its case or the award was in conflict with the public policy of the State. .
McMurdo JA (with whom Fraser JA agreed) agreed with the primary judge’s observations that “[p]rocedural fairness, as such, is not an express ground to set aside an arbitral award under s 34” but that “it is considered to be a factor that may engage the ground that a party was unable fairly to present their case or the ground that an award is in conflict with the public policy of the State”. . However, as the primary judge observed, “those statutory grounds under s 34 are not satisfied, per se, by a failure to accord procedural fairness or any breach of the rules of natural justice”. .
McMurdo JA referred to TCL Air Conditioner (Zhongshan) Company Ltd v Castel Electronics Pty Ltd (2014) 232 FCR 361 in which the Full Court of the Federal Court (Allsop CJ, Middleton and Foster JJ) said “that an award should not be set aside under article 34 of the Model Law unless there was ‘demonstrated real unfairness or real practical injustice in how the international litigation or dispute resolution was conducted or resolved, by reference to established principles of natural justice or procedural fairness’”. .
His Honour explained that, in the present case, “the appellant’s complaint [was] that it was not given an opportunity to present a case in respect of the reasoning of the arbitrator”. . However, McMurdo JA stated that “the arbitrator clearly raised the possibility of this reasoning during the final addresses and it could not be said that ultimately, the appellant was denied an opportunity to argue a case in response to it”. .
Further, although McMurdo JA recognised that “this reasoning was not put to the appellant’s witnesses”, his Honour said that “it does not follow that there was such a denial of procedural fairness that a ground is established for setting aside the award”. .
In the result, his Honour considered that the appellant was able to present its case and that no ground was established under s 34(2)(a)(ii) or under s 34(2)(b)(iii). . The appeal was dismissed. .