Lee v Lin

In this significant appeal, the Court considered whether a clause which referred a dispute to the Australian Commercial Disputes Centre “‘for final settlement by an arbitrator … or by another dispute resolution process … accepted by the parties’’ could constitute an arbitration agreement. The Court found that it was an arbitration agreement.

Morrison and Dalton JJA and Kelly J

5 August 2022

The parties to this appeal entered into a contract, under which the appellant agreed to provide services as a migration agent to the respondents. [2]. Clause 11(c) of the contract relevantly provides: [2]

“If the parties cannot reach an agreement within 21 days, the parties agree to refer the dispute to the Australian Commercial Disputes Centre (ACDC) for final settlement by a single arbitrator appointed in accordance with the Rules of the ACDC, or by another dispute resolution process suggested by ACDC and accepted by the parties.”

Clause 11(d) then provides that, if the parties are unable to resolve their dispute through the ACDC, they may commence Court proceedings. [2]. The primary judge determined that cl 11(c) was not an arbitration agreement within the meaning of s 7 Commercial Arbitration Act 2013 because it does not require that the parties submit to an arbitration, or that the “‘arbitrator”‘ appointed by the ACDC conduct an arbitration. [3]. Further, cl 11(c) contemplates other dispute resolution methods being agreed upon by the parties, including, in cl 11(d), through litigation. [3].

Justice Dalton, with whom Morrison JA and Kelly J agreed, disagreed with the primary judge’s assessment, and found that cl 11(c) constitutes an arbitration agreement. [4]. In her Honour’s view, the reference in cl 11(c) to “settlement” rather than “determination” by an arbitrator was not material in determining whether the clause constituted an arbitration agreement, because the Courts should adopt a business-like interpretation, rather than looking to fine differences in wording. [4]. Further, the fact that cl 11(c) contemplates the parties agreeing to use another dispute resolution mechanism does not detract from the fact that, absent such agreement being made, the parties agreed to refer any disputes to the ACDC for arbitration. [5]. Rather, her Honour considered that the words of cl 11(c) oblige the parties to have a dispute determined by the award of a single arbitrator appointed in accordance with the ACDC’s Rules. [8]. Justice Dalton considered that cl 11(d) operated where the parties agreed on another dispute resolution mechanism under cl 11(c), rather than if the arbitration did not resolve their disputes. [9].

In the event, the Court allowed the appeal and referred the parties to arbitration. [10].

M Paterson