THINK BEFORE YOU ACT - WA SUPREME COURT FINDS CONSENT BY CONDUCT TO ARBITRATION APPEAL

The Supreme Court of Western Australia recently decided a rare application to appeal arbitral awards pursuant to s 34A of the Commercial Arbitration Act 2012 (WA) (CAA). Under s 34A, of the CAA a court can only grant leave to appeal if, among other things, the parties to the award consent to the appeal. The case shows that a party can give its consent to appeal an arbitral award by conduct. In this case, that consent was given by agreeing consent orders in a procedural timetable in enforcement proceedings.

Background

Golden Mile Milling Pty Ltd, EnergyOz Pty Ltd and Novus Capital Pty Ltd were parties to arbitral proceedings that took place in early June 2022. The sole arbitrator made two awards in favour of Novus.

Novus then commenced an action in the Supreme Court of Western Australia seeking to enforce the awards under s 35 of the CAA. Prior to the hearing of the case, the parties agreed consent orders to vacate the hearing. Those consent orders included an order that, within 14 days, Golden Mile and EnergyOz file and diligently prosecute any application to appeal the awards under s 34A of the CAA.

In accordance with those orders, Golden Mile and EnergyOz subsequently filed an application seeking leave to appeal the awards. They argued that:

• Novus, by agreeing the consent orders, had agreed to allow an appeal to the Court under s 34A of the CAA; and
• the arbitrator made a decision on a question of law that was obviously wrong.

Decision

The Court’s decision on the second question is fairly fact and case specific. The Court’s decision on the first question will have broader application.

The Court held that, when objectively assessed, Novus’ conduct (ie agreeing consent orders in the terms set out above) showed it had implicitly agreed to an appeal proceeding. It found that it would have been ‘pointless’ for the parties to agree consent orders programming an application for leave to appeal ‘in the absence of an agreement by Novus to that door being first opened’.

The Court acknowledged that it was a ‘rare and exceptional case’, given that Novus had received a favorable arbitral award and so it seems surprising that they would consent to an appeal by the losing parties. However, the Court stated that all that was required to satisfy s 34A of the CAA was that an agreement was reached for an avenue to appeal. The Court found that it was open to parties to agree to an appeal prior to or after the issuance of any arbitral award, whether by express words or conduct.

However, the Court ultimately refused leave to appeal on the basis that Golden Mile and EnergyOz had not established that there was an arguable case that the arbitrator had made an error of law, let alone an ‘obviously wrong’ finding.

Comment

While the Court refused leave in this case, this decision stands as authority that a party can, by its conduct after the issuance of an arbitral award, agree that an appeal from that award may be made to the court. It serves as an important reminder for parties to carefully consider their conduct following an award. Parties that have received a favourable award should be particularly mindful about agreeing to programming orders in respect of an application for leave to appeal.

For more information, please contact Elizabeth Macknay, Partner, Timothy Goyder, Senior Associate, Christopher Hicks, Senior Associate, Inigo Kwan-Parsons, Solicitor, or your usual Herbert Smith Freehills contact.