Savvy Vineyards 4334 Limited v Weta Estate Limited
-by Sarah Redding
Recent High Court decision confirms effect of clause 8(1), of the First Schedule of the Arbitration Act 1996: arbitration agreements will remain operative and binding following cancellation of main contract unless proved otherwise.
Background Savvy Vineyards 4334 Limited and Savvy Vineyards 3552 Limited (together, the Plaintiffs) had entered into contracts with Weta Estate Limited and Tirosh Estate Limited (together, the Defendants). Litigation between the Plaintiffs and Defendants over the contracts, specifically vineyard management agreements (VMAs) and grape supply agreements (GSAs), has been ongoing for some eight years. Earlier litigation determined that the Defendants had invalidly terminated the VMAs and GSAs and their notices of termination were of no effect. The Defendants were required to continue to perform their obligations pursuant to those agreements. The present proceeding relates to the Plaintiffs’ claims for damages under the GSAs for various harvest years, and claims for management fees and operations charges under the VMAs for breach of agreement and in quantum meruit. Decision The Defendants sought an order staying the Plaintiffs’ causes of action relating to the VMAs and referring those claims to arbitration. In particular, the Defendants relied on clause 8(1) of Schedule 1 of the Arbitration Act 1996 (Act) and Article 16(1) of Schedule 1(1) of the Act, which provide as follows: 8 Arbitration agreement and substantive claim before court (1) A court before which proceedings are brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting that party’s first statement on the substance of the dispute, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative, or incapable of being performed, or that there is not in fact any dispute between the parties with regard to the matters agreed to be referred. 16 Competence of arbitral tribunal to rule on its jurisdiction (1) The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure (necessarily) the invalidity of the arbitration clause. (emphasis added)