ReSolution Issue 13, May 2017 - Page 8

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7 ReSolution | May 2017

Arbitration: when a final award is not final

By Albert Monichino QC

Arbitrator rendered an award styled “Final Award” that failed to deal with an issue referred to arbitration. Aggrieved party applied to have the issue determined by the Supreme Court. Other party sought a stay relying on the parties’ arbitration agreement. Held that the award was not a final award and that the arbitrator’s mandate continued to resolve the remaining issue.

Blanalko Pty Ltd v Lysaght Building Solutions Pty Ltd [2017] VSC 97

Facts

In 2012, B commenced Supreme Court proceedings alleging L had breached a design and construct contract. A partial settlement was reached on 21 April 2016. Under the deed of settlement, the remaining issues were referred to arbitration. An arbitrator was appointed and delivered an interim award on 15 June 2016 resolving the majority of the remaining issues. However, the arbitrator did not, by his interim award, resolve the question of the costs of the Supreme Court proceeding. B sought all of those costs. The settlement deed envisaged that the parties could put on short evidence as to costs of the proceeding. The arbitrator gave the parties an opportunity to make written submissions, including a round of reply written submissions. There was no oral hearing. In its reply written submissions, L submitted that B had not provided the arbitral tribunal with an evidentiary basis on which to determine the claim for costs and accordingly the claim should be dismissed.

On 9 August 2016, the arbitrator rendered an award styled “Final Award”. He declined to determine the issue of the Supreme Court costs on the basis that there was insufficient information for him to do so. The dispositive part of the final award provided that “the issue of the payment of costs of the Supreme Court proceedings between the Claimant and the Respondent is not decided, without prejudice to the rights of the parties to apply for the costs in the Supreme Court of Victoria.

L contended that the arbitrator was functus officio as he had delivered a Final Award. B did not request the arbitrator to render an additional award under s 33(5) of the Commercial Arbitration Act 2011 (Vic) (‘CAA’) (reflecting Article 33(3) of the UNCITRAL Model Law) in respect of the remaining issue. Instead, on 4 November 2016, B applied by summons (in the earlier Supreme Court proceeding) to the Court to set aside the award under s 34 of the CAA (reflecting Article 34 of the Model Law) “to the extent that the arbitrator had declined to determine the Supreme Court costs issue, or had sought to refer that issue to the Supreme Court for determination”. L applied to stay the summons pursuant to s 8 of the CAA (reflecting Article 8 of the Model Law).

Decision

The crux of B’s complaint was that the arbitrator did not decide the Supreme Court costs claim, notwithstanding that it fell within the scope of the reference to arbitration.

According to Croft J, the arbitrator decided, expressly, not to determine the Supreme Court costs claim “at that time on the then available evidence” ([48]), but there was no indication that the arbitrator was not prepared to deal with the costs claim if and when the requisite evidence was provided: [26]. His Honour did not accept that the arbitrator attempted to direct the parties to apply to the Court to deal with the remaining issue, and thus did not

delegate any part of his decision making duties to a third party: [48]. Clearly, the arbitrator did not have this power. While the arbitrator expressed a view in the award that the parties may find determination elsewhere, “the arbitrator’s view in