Cargill International SA v Peabody Australia Mining Ltd

The cars had to be loaded into the shipping container in preparation for sea transport . That is what the defendant undertook to do. The loading of the container was, in substance, for the sea carriage . … The agreement to load the shipping container between the arranger of the carriage and its subcontractor had a reasonably direct relationship with the carriage of goods by the ship. (my emphasis) 125 In the present case, although the coal was not being loaded into a separate sea container to be put on board the ship, it is clear that the coal was being delivered for the purpose of and in preparation for its carriage by sea. The specification standards in the agreement make clear that aspects of the loading obligations were referable to conditions relevant to the carriage of goods by sea. 126 It seems to me that this is not a case, such as Gatoil International Inc v Arkwright-Boston Manufacturers Metal Insurance Co [1985] AC 255, where the contract in question is separate from the action involved in putting the ship in readiness for goods to be carried by sea. Rather the steps to be taken under the present contract were an essential part of putting the ship in readiness for the carriage of goods by sea. In Gatoil, by contrast, there was a claim for a contract for insurance of goods that were carried by ship and the House of Lords said this was not a sufficient connection. It can be seen that in that case the contract was not entered into to make possible or to facilitate or to further the purpose of carriage of goods by sea, but rather was to deal with the financial risk attaching to such carriage. Similarly, in the Port of Geelong Authority v The "Bass Reefer" (1992) 37 FCR 374, claims in relation to a lease of a cargo assembly at the port and a licence for priority berthing at a nominated berth did not satisfy the reasonable connection test. Neither of those cases is factually similar to the present. Mr Gleeson referred also to The "Catur Samudra" [2010] SGHC 18 where the High Court of Singapore held that to satisfy the direct connection test a claim under an agreement which is collateral or ancillary to the contract of carriage must be intrinsically related to the use or hire of a vessel. 127 Mr Gleeson submitted that the distinction between the present case and the Heilbrunn case was that in the present case the claim related to a contract anterior to something which subsequently happened on a ship. It was submitted that the reasonably direct connection must be with the use of the ship itself (relying on Geelong Authority and Heilbrunn). Further, it was submitted that the only connection with a ship was that the obligation was to deliver foods over the ship rail, with title to the goods and risk of loss or damage passing progressively to Cargill as the goods passed over the rail of the vessel. 128 It was said that the mere place for delivery could not transform the subject matter of the agreement from one for the sale and delivery of goods into a charterparty or the like. (As I understand it, this argument assumes that the fact that the goods were ultimately to be transported by sea was incidental to the contract, which could just as easily (assuming that were possible logistically) have been for delivery of coal to, say, a trucking terminal for delivery by road and with no suggestion of a maritime flavour.) In that regard, the fact that there might have been a different result had Cargill chosen to carry the coal it purchased by a different means seems to me not to be relevant - it might equally be said that had the vintage Vauxhall been transported by air, the contract for the loading of it into a container for transport by plane would not have been a maritime contract. 129 Here, the connection between the agreement for the delivery of coal and the carriage of that coal by ship is obviously closer to the position in Heilbrunn than the relationship of the contracts in the Gatoil and Geelong Authority cases to the use/hire of carriage of goods by ship. 130 If the contract to load and deliver a sea container to port was sufficiently connected to the use of a ship to give rise to a maritime claim (and not construed simply as a contract for the transport by road of goods to a place of delivery for later shipment by sea), then it is by no means clear why the agreement in question (which involves the physical delivery of the goods onto the ship for subsequent transport by sea) is not also sufficient to enliven the Admiralty jurisdiction. Indeed, but for the decision in Zeus, I would find it difficult to see any reasonable basis for distinguishing between a situation where the delivery is made by way of loading goods into a container to be transported to the port and placed on a ship and the situation where the delivery is made not by loading a container but by way of loading a freight car to be transported by rail to the port and then for the goods to be placed directly into the ship. 131 Does Zeus, which (but for the fact that it seemed to involve a claim for demurrage under a guarantee or 'undertaking' of performance of the work within time, as opposed to a claim for demurrage under a contractual provision not labelled by reference to a guarantee or undertaking) seems almost on all fours with the present factual situation, require a different conclusion from that reached in the similar situation in Heilbrunn? 132 Zeus, considered without apparent disapproval in Heilbrunn and approved in Gatoil, was a very briefly reasoned judgment on appeal from the County Court of Northumberland in 1888. (It is perhaps not far from the category of case the citation of which was "strongly deprecated" by the House of Lords, as noted in Export Credits Guarantee Department v Universal Oil Products Co [1983] 2 All ER 205; [1983] 1 WLR 399.) In terms of persuasive authority, the considered analysis of Allsop J in the Heilbrunn case is, with respect, entitled to more deference than the decision in Zeus and seems to me more likely to be reflective of maritime practice in the modern business world. 133 I note that reference was also made by Mr Gleeson to Tradhol Internacional SA v Colony Sugar Mills Limited 2009 WL 3929893 (C.A.2(N.Y)) (20/11/09) as being broadly consistent with Zeus and involving an FOB contract for sale of goods. In that case, the Court of Appeals held that the seller had failed to establish a prima facie admiralty claim and was not entitled to an order of maritime attachment and garnishment. The relevant law to be applied as to whether there was a prima facie maritime claim raised issues as to whether a contract including both marine and non-marine elements could be brought within one of the two exceptions to the "mixed contracts rule" - which turned on whether the non-maritime obligations were severable or whether the non-maritime claims were merely incidental to the maritime ones, hence a different context from the question presently under consideration. The court considered that the demurrage clause in a contract for the sale and loading of goods FOB was not the focal point of the contract and that "In the context of the contracts at issue demurrage alone does not raise a claim to which the remaining claims are merely incidental so as to support the second exception to mixed contracts", and held that Tradhol had failed to explain how its demurrage and 'dead freight' claims fitted within the mixed contract prohibition. As I read the decision, the court seems to have proceeded on the assumption that a demurrage claim was a maritime claim but that the remaining claims were not merely incidental to it or severable so as to overcome the problem for Tradhol that the contract contained both maritime and non-maritime elements. If that is the proper conclusion to be drawn from the reasons then it would seem to me to support the view that a claim for demurrage could be seen as having a maritime flavour when linked with a contract for the carriage of goods by sea. 134 Applying the test enunciated in Heilbrunn, had this issue been necessary to determine, I would have held that the claims the subject of the arbitration in this case were maritime claims falling within the Admiralty jurisdiction by reference to s 4(3)(f) of the Act on the basis that the loading of the coal onto the ship was an essential step in the preparation of the vessel for the carriage of goods by sea and, hence, the maritime exception would apply. 135 In the written submissions served for Excel, Mr Gleeson next argued that the Admiralty exception did not apply in any event because the "exclusion agreement" was entered into after the commencement of the arbitration (s 41(1)(d) of the State Act). That submission was based on the arbitration proceedings having commenced on 18 March 2009 (upon receipt of the request by the ICC Secretariat) and the reliance placed by Cargill in its written submissions on the exchange of correspondence in April 2009 as amounting to the arbitration agreement in question. 136 However, in oral submissions before me, Mr Stevenson made it clear that Cargill accepted the contention (which had been made by Excel's lawyers in April 2009) that the reference to arbitration had occurred by virtue of the arbitration agreement itself (not an agreement comprised by the exchange of correspondence) (T8.8). It was conceded (as noted above) that Article 28(6) of the ICC Rules, as adopted by the parties by their arbitration agreement in clause 18.9 of the standard coal trading agreement entered into in 2005, amounted to an exclusion agreement for the purposes of s 40 of the State Act. Therefore, it was contended by Mr Stevenson that the exclusion agreement was not one entered into after the arbitration commenced and thus s 41(1)(d) did not apply. In those circumstances, I did not understand Excel's written submission to the contrary to be pressed but, if it were, it would not have succeeded. 137 Accordingly, had I been satisfied that the State Act applied, I would have determined the second jurisdictional question in favour of Cargill.

(iii) Have the threshold requirements in s 38(5) of the State Act been satisfied? 138 Having considered the jurisdictional issues, I turn then to whether (had those been found in favour of Cargill) the threshold requirements for the grant of leave to appeal would have been satisfied. As already noted, Cargill is seeking leave to appeal in relation to two issues - the first is as to the construction of clause 7.11.2 of the agreement (namely, whether laytime should have continued until the giving of a force majeure notice irrespective of whether that was a notice compliant with clause 17.2 in terms of its timing) and the second is as to whether laytime was suspended during any time that was not a "Weather Working Day". Could determination substantially affect the rights of one or more parties 139 The first threshold requirement is that the court be satisfied that the determination of the relevant question of law, having regard to all the circumstances, "could substantially affect the rights of one or more parties to the arbitration agreement". Factors relevant to the determination of this question include the quantum of the amount in issue and the relationship between the costs of the appeal and the significance of the question of law to be determined (Westport Insurance Corporation v Gordion Runoff Ltd [2009] NSWSC 245, at [15]; Natoli v Walker (1994) 217 ALR 201, at 9). 140 For Cargill, it was submitted that if its contention as to the construction of clause 7.11.2 were to be correct this would make a substantial difference to its rights as it would then have had an entitlement to demurrage from 8 June (at a rate of USD50,000 per day), rather than only from 25 June 2007. (The additional demurrage charges amount to USD850,000.) 141 Mr Gleeson contended that this submission failed to take into account the effect of the determination made by the Arbitrator as to the estoppel/waiver issues that are not now the subject of any challenge by Cargill. It is said that because of those findings, the determination of neither of the grounds of appeal could now have any substantial effect on the parties' rights. 142 As to the first ground of appeal, the findings to which Mr Gleeson refers are the findings that the force majeure notice was given as early as practicable (para 223(b) of the Partial Award); that clause 17.3 applied and had the effect that laytime was suspended during the force majeure period (in effect, para 223(a) of the Partial Award); and that Cargill was not entitled to resile from the position it had earlier adopted (in February 2008) and seek demurrage for the period from 8 to 21 June 2007 (para 223(c)). 143 As to the second ground of appeal, it is said, first, that any appeal would be futile (because the conclusion as to the weather working day issue was in the context of responding to an alternative argument) and the Arbitrator's finding as to the principal contention, ie that time did not count towards laytime by reason of the force majeure provisions, is not challenged. Thus it is said that whatever the result of an appeal by reference to the alternative "Weather Working Day" argument, the outcome will remain the same by reference to the principal finding). Secondly, it is said that it has been conceded by Cargill that there is no difference in monetary terms if an allowance was not made for wet weather but was made for force majeure. Thirdly, it is submitted that (as per the first ground of appeal) this issue could affect the parties' rights only if Cargill were to be permitted to claim demurrage for the period up to 21 June 2007 and the Arbitrator has found otherwise. 144 (Mr Stevenson concedes, as I understand it, that if leave to appeal is not granted in respect of the first ground of appeal then there is no utility in a grant of leave in relation to the weather working day point.) 145 Turning to the first ground of appeal, it is contended by Cargill that the Arbitrator should have found in all the circumstances that the Iron Bradyn went on demurrage shortly after the commencement of the force majeure period. While there is no challenge to the finding of the period over which force majeure was operative, Cargill's position is that had there been a finding that the vessel was on demurrage as at 0956 hrs on 8 June 2007 then demurrage would have been payable from that time. 146 The interaction between clauses 7 and 17 (which I consider in more detail below) is relevant when considering what would be the effect if, as Cargill contended, the time from the beginning of the interruption did count as lay time. 147 Before the Arbitrator, Excel had claimed (in its Summary of Claimant's Claims, as set out in the Arbitrator's award para 154) that clause 17.3 governed the situation and that it was not liable for damages for delay or failure to perform its primary contractual obligations in the period from 8 to 25 June 2007 (and it sought a declaration to that effect). Clause 17.3, which I set out later in these reasons, made express reference to the counting of laytime (but was subject to the proviso that the affected party had complied with the requirements of clause 17.1). The Arbitrator considered that, although they might have been better expressed, the opening words of clause 17.3 made clear that, in the counting of laytime, delay caused by a force majeure was to be taken into account (at [198]) and that this meant that the running of laytime was suspended during the force majeure period. 148 It is by no means clear, therefore, how a finding that clause 17.3 operated (as the Arbitrator seems to have found) such that laytime (and any liability for delay) was suspended during a force majeure period (provided the notice requirements of clause 17.1 were complied with), would have been reconcilable with a finding that, notwithstanding the commencement of a force majeure period, demurrage was payable for part of that period if a notice under clause 17.2 was not issued immediately the force majeure event occurred and the vessel went on demurrage during the course of the force majeure period. A finding that laytime continued to run from the commencement of the force majeure period (and demurrage was payable once laytime expired early in that period) until the giving of the force majeure notice (and therefore that the Iron Bradyn went on demurrage earlier than 25 June 2007) would seem to be inconsistent with the Arbitrator's finding (para 223(a)) that no demurrage was payable during a force majeure period. 149 Mr Gleeson contended that if leave were to be obtained by Cargill the issue whether there had been an error of law would be immaterial as its counterclaim has already been rejected and there is no attempt by Cargill to seek leave to appeal against the finding of the arbitrator rejecting the counterclaim the whole of which was dismissed (para 224(e)), there being no immediate entitlement to claim demurrage in any event. 150 Mr Stevenson's response was that the Arbitrator's findings in relation to waiver, election and the like are encapsulated in para 139 of the word (namely that Cargill was not then entitled to raise the possibility that Excel had no entitlement to rely on the force majeure provisions of the agreement at all in the relevant period) but that this said nothing as to whether Cargill could raise the question of the proper construction of the force majeure provisions. Mr Stevenson contends that nothing in the Arbitrator's findings justifies the conclusion that Cargill was not entitled to make the Alternative Argument as to the proper construction of clause 7.11.2. 151 If the two findings (ie a revised finding on clause 7.11.2 and the existing finding on 17.3) could not stand together then it would seem that the conclusion reached in relation to Excel's claim for a declaration that amounts had become payable under clause 17.3 would need to be revisited (whether or not that finding had been the subject of a separate challenge) since there would seem to be an inconsistency in saying both that a vessel goes onto demurrage during the force majeure period and that liability for demurrage is suspended in that period. Therefore I am not persuaded that the overall conclusion reached by the Arbitrator as to clause 17.3 necessarily renders futile an appeal on the first ground. 152 However, in my view (leaving aside the clause 17.3 argument) the effect of the Arbitrator's estoppel/waiver finding (which is not challenged) would seem to deprive a finding in relation to the first ground of appeal of much of its effect. At best, Cargill would in those circumstances seem to be limited to a claim for demurrage for the period from 21 to 25 June 2007 (a claim of much less than the USD850,000 figure which Cargill contended would be recoverable if it succeeded on this issue - being a claim of USD250,000 at most, assuming the first and last day of that period are both included in the calculation). 153 I have outlined above the circumstances in which Cargill did not press, as at February 2008, its claim for the so-called "undisputed" amount and reserved its position only in relation to the "disputed" amount. The Arbitrator dismissed the whole of Cargill's counterclaim on the basis that there was an agreement by Cargill to compromise its claim for demurrage and/or waived or was estopped from any claims to demurrage in the period from 8 to 21 June 2007 (paras 142-144). That counterclaim was for the "undisputed" amount referable to the period (from 8 to 21 June 2007 but also, as I understand it, for the "disputed" amount referable to the period from 21 to 25 June 2007. There seems to be nothing in the award to suggest that Cargill had waived or would be precluded from raising the claim for demurrage in that latter period. 154 Therefore, I accept the submission by Mr Gleeson that a re-consideration by way of appeal of the proper construction of clause 7.11.2 will not overcome the problem for Cargill of the estoppel/waiver finding, but that finding seems to me to be confined to any claim for demurrage for the period 8 to 21 June 2007, not the later period. 155 Balancing a claim of that lesser magnitude against what would surely be the limited cost of arguing a discrete construction point before the arbitrator, I would not accept that there could not be a substantial effect on the parties' rights arising from the determination of that discrete issues and thus would have been prepared to conclude that the first threshold requirement was met and that the determination of the question of law posed by the first ground of appeal could substantially affect the parties' rights. 156 If so, then to the extent that the second ground of appeal can be called in aid to support the argument based on the first ground of appeal (as Cargill seeks to do in the manner I consider below), the determination of that question of law may also be said to have the potential substantially to affect the parties' rights (though in an indirect way). However, if leave to appeal is not granted in relation to the first alleged error, then it is not disputed that there would be no utility in granting leave in respect of the second alleged error and thus the first threshold requirement would not be met in that case. Requirement that there be manifest error of law on the face of the record 157 Although I have summarised above the errors said to have been made by the Arbitrator, in considering this threshold requirement (and the alternative argument that there is a strong likelihood that there was an error of law) it is necessary to focus in some detail on how it is said that the Arbitrator has erred in his award. 158 Before so doing, I note that emphasis was placed by Mr Gleeson on the high hurdle confronting a party seeking to establish manifest error of law on the face of an award for the purposes of s 38(5) of the State Act. In Promenade Investments Pty Ltd v State of New South Wales (1992) 26 NSWLR 203, Sheller JA said (at 225):

The expression "error of law on the face of the award" is one of a type well-known to courts. The award having been examined the question is whether there is apparent (and such is the denotation of the word "manifest") an error of law. "Manifest error" is an expression sometimes used in reference to reasons given by judges or the approach taken by juries: see, eg, s 107(c)(iii) of the Supreme Court Act 1970 and the judgments of Kirby P in Azzopardi v Tasman UEB Industries Ltd (at 151) and Otis Elevators Pty Ltd v Zitis (1986) 5 NSWLR 171 at 181. It is used to indicate something evident or obvious rather than arguable : see generally per McHugh JA in Larkin v Parole Board (1987) 10 NSWLR 57 at 70-71. (my emphasis) 159 His Honour later went on to say (at 226), in the context of considering whether (and determining that it was not) it would be appropriate for the judge to proceed to determine whether there was manifest error without hearing adversarial argument:

… However as McHugh JA pointed out "manifest", in the context of the subsection, which contemplates the grant of leave before an appeal can be pursued, connotes an error of law that is more than arguable. There should, in my opinion, before leave is granted be powerful reasons for considering on a preliminary basis, without any prolonged adversarial argument, that there is on the face of the award an error of law . (my emphasis) 160 For there to be manifest error, the error must be evident or obvious, not something which is reasonably arguable and not something that takes prolonged adversarial argument to deduce. As is the case when considering whether a decision is plainly wrong, it is the quality that bespeaks the error. The fact that I might have come to a different conclusion on a point of construction would not be to the point (as I was reminded more than once, no doubt lest I be tempted to stray down the path of construing the relevant clauses afresh). 161 In that regard, the very fact that the argument as to the construction of the relevant clauses required careful and detailed analysis by Counsel on the hearing before me (and, I should add, has given me pause when considering whether and how the relevant submissions were put to and/or addressed by the Arbitrator) seems to me to compel the conclusion that any error of law which the Arbitrator might have made in construing the respective clauses is certainly not manifest on the face of the award. It is not the case that there was an obvious point which could be said to have been overlooked or misconstrued in the Arbitrator's analysis. Rather, the construction adopted by the Arbitrator in respect of the relevant clauses for the purpose of addressing the question whether demurrage was payable during the force majeure period seems to be one which was reasonably arguable and open for him to find. I set out below the basis on which I have come to that conclusion. Clause 7.11.2 'error' 162 As to the first error, it is said that on the natural and ordinary meaning of clause 7.11.2 the time between the beginning of an interruption for force majeure and the giving of a force majeure notice should have counted as laytime. 163 Clauses 7.11.1 and 7.11.2 provided, relevantly, (with my emphasis) that:

7.11.1 Time spent or lost on account of Force Majeure shall not count toward Laytime (unless the Vessel is on Demurrage ) provided that either: (a) Seller gives notice pursuant to clause 17.2; or …

7.11.2 If Seller does not give any notice or Statement of Facts to Buyer as required in clause 7.11.1, the time lost shall count as Laytime and any delay in giving such notice from the beginning of the interruption shall count as Laytime … 164 The giving of a force majeure notice was dealt with in clause 17 (not surprisingly headed Force Majeure):

17.1 Upon the occurrence of any event which affects or is likely to affect the ability of a Party to perform its obligations under this Agreement, that Party shall give the other Notice in Writing thereof, which shall include details of the event, and shall give further notices of any change in the situation as may be appropriate from time to time.

17.2 In the event that a Party wishes to claim Force Majeure (the "Affected Party") in accordance with clause 17.3 it shall give notice to such effect to the other Party (the "Non-Affected Party") as early as practicable which notice may be given orally and confirmed by Notice in Writing as soon as possible.

17.3 Neither Seller nor Buyer shall be liable in any way whatsoever for delay and/or failure to comply with this Agreement (other than a failure to make any payment due under it) to the extent that and for as long as such failure is caused by Force Majeure including the counting of Laytime, provided that the Affected Party;….

17.3.3 has complied in substance with the notice requirements of clause 17.1 165 I interpose to note that it seems to be accepted (and was treated as such by the Arbitrator) that the notice provided for under clause 17.1 is different from (and logically would be likely to precede) a notice of intention to make a clam in 17.2. Further, insofar as clause 7.11.2 refers to a notice "as required" in clause 17.11.1, in that clause what is required is a notice "pursuant to" clause 17.2 (which arguably might mean no more than a notice of the kind referred to in that clause - a notice of intention to claim force majeure - as opposed to a notice issued in accordance with the time specified in clauses 17.2, namely as early as practicable). 166 On a first reading of 7.11.1, it has the effect that laytime is suspended during periods of force majeure (unless the vessel is already on demurrage) provided, relevantly, that notice is given pursuant to clause 17.2. Clause 7.11.2 then deals with the consequences of there being no notice "as required under clause 7.11.1" and those consequences are, first, that time lost [on account of force majeure] shall count as laytime and, secondly, that "any delay" in giving such notice from the beginning of the interruption shall count as laytime. The second consequence (so specified) seems of itself to contemplate that a notice "as required" under clause 7.11.1 could be given albeit with some delay. In other words, if "as required" relates to the time at which a notice is issued, clause 7.11.2 seems to contemplate that there might be some delay even if the notice was given as early as practicable. 167 For completeness, I note that clause 7.11.6 provides that:

7.11.6 Notwithstanding the provisions of clauses 7.11.1, 7.11.2 and 7.11.3, once the Vessel is on Demurrage, all time lost (including time lost by reason of Force Majeure) shall continuously count as Demurrage … Cargill's submissions to the Arbitrator 168 The Outline of Submissions, dated 14 August 2009, served by Cargill in relation to the arbitration were contained volume 3 of the Court Book (Exhibit A). 169 The manner in which the clause 7.11.2 submission was put is highly relevant. At para 18 of Cargill's written submissions, Cargill pointed to the fact that the provision in clause 7.11.1 (that time spent or lost on account of force majeure did not count towards laytime) was qualified by the provision that the notice of intention to claim force majeure be given as early as practicable and went on to say that "This requirement that there be no delay in the service of this notice is reinforced by the terms of clause 7.11.2"; and that this provision applied unless the vessel was already on demurrage in which case it would continue to run and be payable by Excel notwithstanding force majeure (clause 7.11.1 and 17.8) (my emphasis). In that submission, it seems to me, the notion that notice be given as early as practicable was equated with the situation of there being 'no delay' in the service of the notice (said to have been reinforced by clause 7.11.2. 170 Cargill disputed not only that the events gave rise to force majeure but also that the notice was in compliance with clause 17.2 "in particular such that laytime would not count from 8 June 2007 or at any time prior to service of that notice" (para 21(b) submissions) and submitted that even if the events amounted to force majeure nevertheless that force majeure period (during which time would not count against laytime) commenced when Excel contended it did or ended when Excel said that it did. 171 Of the issues there identified as requiring determination, Cargill noted that one was whether there had been compliance with the requirement for a valid and effective declaration of force majeure (and, if not, the effect of non-compliance (para 34(b)) and as to whether and to what extent time did not run for the purposes of calculating laytime as a result of the events claimed to amount to force majeure (para 34(c)). 172 At para 40 of its then submissions, Cargill said:

If the seller (Excel) does not give any notice to the buyer (Cargill) in accordance with clause 17.2, the time lost shall count as laytime. Further any delay in giving such notice from the beginning of the interruption shall count as laytime (clause 7.11.2). (my emphasis) 173 There was thus a distinction there drawn by Cargill between the situation where there was no notice compliant with the timing requirements of clause 17.2 and the situation where there was a 'delay' in giving of the notice (the latter being the very submission now sought to be made and which it is said the Arbitrator did not address or properly determine). 174 Mr Gleeson submitted that the key submission put by Cargill at the arbitration was that contained in para 72 of Cargill's then submissions, namely that: In those circumstances [ie non compliance with the requirements] it is submitted that the Force Majeure notice given by Excel on 13 June 2007 was not given as early as practicable as required by clause 17.2 and is therefore not a valid and effective notice for the purposes of that clause and thereby the Agreement generally

(that being in a section headed "Whether there has been compliance with agreement in claiming force majeure" and thus the context in which it was put related to compliance with clause 17.2 from a timing point of view). 175 An alternative submission was in paragraph 79 of the submissions:

Alternatively, even if Excel's failure to give notice pursuant to clause 17.2 of the Agreement as early as practicable does not invalidate the notice completely the delay in giving that notice has the effect that time lost from the beginning of the interruption caused buy the Force Majeure event until the notice was given shall count as laytime. This is pursuant to the first sentence of clause 7.11.2 of the Agreement which provides… 176 Thus para 79 was clearly putting the proposition that there could be a notice given as early as practicable but one which also involved a delay for the purposes of clause 7.11.2. The result was said in para 80 to be that:

Accordingly in those circumstances any Force Majeure period does not commence (and time does not cease to count for the purposes of laytime) prior to the service of Excel's Force Majeure Notice on 13 June 2009 [sic] and until the time it was served. 177 In its submission as to whether and to what extent Excel is relieved from liability, Cargill again put submissions in the alternative; as to where there was no force majeure event; as to whether, if there was a force majeure event an effective notice had been given; and then, thirdly, as to whether (if the events and circumstances did amount to force majeure for the purposes of 7.11 "but the delay in giving the notice pursuant to clause 17.2 means that any time spent or lost from the Force Majeure) the delay (prior to the issue of the notice) nevertheless did not count against laytime (para 85) and in that last situation it was submitted that the force majeure period did not commence until the notice was given to Cargill on 13 June 2007. 178 Those written submissions were supplemented by the oral submissions made on behalf of Cargill by its then Counsel (Mr Nell SC). Relevantly, the transcript records as follows:

MR NELL: That is the first scenario. The second scenario, which is really the same outcome and which is picked up by the respondent's [Cargill's] submissions, is if the force majeure notice that was purportedly given was not valid or effective at all, in particular because it was not given as soon as practicable in compliance with clause 17.2, the respondent's primary submission in that regard is that the clause is then effective; therefore time spent or lost as result of the force majeure event will still count against laytime and the exception that is found in clause 7.11 would not operate in those circumstances. As a practical matter, the effect of that is the same as if there was no force majeure event and the figures should therefore be the same as the first situation.

The third situation, which is also a reflection of the claim made by Excel, is if there was a delay in giving the force majeure notice, and consistent with clause 7.11.2 … the time between the force majeure event and the giving of the notice, in effect the period of the delay, will not count for the purposes of laytime . (my emphasis) 179 Reliance was placed on the second half of the first sentence in clause 7.11.2 that "If Seller does not give any notice or Statement of Facts to Buyer as required [by the clause], the time lost shall count as Laytime". 180 Mr Nell submitted that if no notice [compliant with clause 17.2] is given, the effect of that would be that the force majeure notice was given on 13 June and that if there was found to have been a delay in the giving of the notice for the purpose of that clause, then any time lost or spent because of the force majeure event from the commencement of that event, whenever it might have been up to that time on 13 June would count again laytime (and then from 13 June onwards). The Arbitrator's response to that submission was "If you don't give the notice the time lost counts as laytime", to which Mr Nell responded: MR NELL: We read that as saying not only if you don't give a notice but in light of what is 7.11.1, if you don't give a notice, that complies with 17.2.

THE ARBITRATOR: Well, it says pursuant to 17.2. MR NELL: Yes. The point that I'm making, and perhaps I'm not making it clear enough, is that 17.2 requires not only a notice to be physically given but that it be given as early as practicable. If it is not given as early as practicable, then that notice is not a notice pursuant to 17.2 and in those circumstances the first half of 7.11.2 will say that time lost shall count as laytime. If however the notice is given and it is construed as having been given but delayed then the second part of the sentence of 7.11.2 applies, and that is that the delay in giving the notice from the beginning of the interruption up to the time the notice is given is laytime . (my emphasis) THE ARBITRATOR: But assuming that it wasn't given timeously, why wouldn't that second part of the fist sentence of 7.11.2 apply? ( my emphasis) 181 (What is said by Mr Gleeson is thus that any reference to clause 7.11.2 in the submissions made to the Arbitrator was made in the context of the overarching submission that the notice was not given as early as reasonably practicable. Mr Stevenson accepted that this was true to some extent.) 182 Cargill contends that the Arbitrator failed to deal with its argument that, by reason of clause 7.11.2, "any delay" between commencement of the force majeure period and the giving of the notice meant that laytime continued (notwithstanding the commencement of the force majeure period) until Excel gave notice of force majeure in accordance with clauses 7.11.1 and 17.2 of the agreement (and Mr Stevenson submits that, for the purposes of this argument it is irrelevant whether or not that notice was given as early as practicable). 183 Mr Gleeson submitted that the premise on which the Alternative Argument was based was that the fact that notice was not given as early as practicable did not render the notice a nullity but nevertheless still meant that there was a delay in giving of the notice. Thus Mr Gleeson submitted that the premise of both the primary and the alternative argument was that the notice had not been given as early as practicable; whereas the premise of the argument put to me (which Mr Stevenson says was also put to the Arbitrator) was that even if a notice was given as early as practicable there could still be delay for the purposes of clause 7.11.2. 184 As I read the written submissions which were before the Arbitrator, it seems to me arguable that the submission put to the Arbitrator was premised, as Mr Gleeson suggested, on there being a valid notice albeit one not given as early as practicable (as opposed to the argument that there was both a notice given as early as practicable and delay); but that the more straightforward reading of the submission was that advanced by Mr Stevenson. (However, the very fact that there is any serious debate as to how this submission was premised indicates the difficulty for Cargill is establishing any manifest error by the Arbitrator in the dealing by him with this submission.) 185 Accepting that the submission was premised as Mr Stevenson contends, that gives rise to what would seem to be a contradiction in terms - how can there have been a delay if the notice was given as early as practicable? The concept of delay, ordinarily, suggests something more than a mere lapse of time. It suggests that there has been a procrastination or putting off of something that could have happened earlier (see Macquarie Dictionary definition of the word in its usage respectively as verb and noun). It is in this sense of the word that the Arbitrator himself seemed to approach the argument during the course of the hearing, when he raised the question as to whether what was being put to him was that there had been a failure to act 'timeously' and the consequences of that. 186 The semantic argument as to whether there can be an operative concept of delay where a notice has been given as early as practicable does not appear to be one around which there was much debate before the Arbitrator (there seems to have been no suggestion, for example, that if the two concepts were mutually exclusive it might be thought that there was no work left to be done by the words in the second half of the first sentence in 7.11.2). What was not, it seems, made clear to the Arbitrator was that the alternative argument in para 79 of Cargill's written submissions was one that meant that any period of time which elapsed between the commencement of an interruption and the giving of a force majeure event amounted to 'delay' for the purposes of the clause (and the Arbitrator cannot in my view be criticised or accused of a denial of natural justice for having not dealt with that particular argument, albeit that it seems to be the logical extension of what Cargill is now and was then putting). Mr Gleeson thus contends that what has been done in the present application is to re-cast the 'delay argument' as one which means that if there was any gap in time between the occurrence of the force majeure event and the giving of the notice then that is delay and has the consequence that time continues to count towards laytime. 187 Whether or not the alternative argument was articulated as clearly before the Arbitrator as it was before me, the notion that delay could be taken into account for the purposes of laytime even if there had been a valid notice (by which Cargill seemed to be referring to one given as early as possible) seems to me to have been before the Arbitrator. 188 Mr Gleeson submitted that once it was found that notice had been given as early as practicable there could be no operative concept of delay in clause 7.11.2 - in effect that this was a contradiction in terms. (I think there is force in that submission, though the construction of these clauses is not the task before me.) The concept of delay, it was submitted, must be a reference to a notice which was not given as early as practicable (ie in respect of which there has been found to be some delay), in contrast to a notice given as early as practicable. (One might have thought that if any lapse of time was sufficient for the purposes of calculating laytime during a force majeure event then it would have been simple to provide for that expressly, without the need to employ the concept of delay - and that the failure to give a notice as early as practicable would sound in a different consequence (such as any damage resulting from the seller not having been on notice of a claim at an early enough time) rather than one linked to the calculation of laytime (which would, on Cargill's argument, be running in any event up until a notice was ultimately given).) 189 What did the Arbitrator do? 190 The Arbitrator set out the issues he had identified for determination on the reference in paras 65-66 of his reasons. 191 The first issue was the 'disputed amount' of USD 299,822.47 which related to the demurrage claimed for the period 21 to 25 June 2007. The Arbitrator expressly dealt with this on the basis (which he said accorded with the way the parties had dealt with it) of an assumption that there was a relevant event of force majeure attracting the operation of clause 17 and as to whether that had come to an end by 21 June 2007 (as Cargill contended) or 25 June 2007 (as Excel contended). Pausing there, there was no suggestion that Cargill was in any way estopped or precluded from raising its claim for demurrage for this period. If, therefore, the Arbitrator's conclusion as to the construction of clause 7.11.2 was in error, then the finding as to estoppel/waiver would not preclude recovery for that amount. (The Arbitrator found against Cargill on this first issue.) 192 The second issue was whether Cargill was entitled to re-open its claim for the undisputed amount (put by the Arbitrator as 'whether there was force majeure in terms of the Agreement in respect of the period 8 to 21 June 2007). 193 The third issue was as to when the force majeure event commenced. The Arbitrator noted that this was one that arose if the second issue was determined in favour of Cargill (which it was not) but nevertheless seemed to recognise that Cargill might contend it was entitled to raise the substance of the third issue irrespective of the finding on the second issue. (That would presumably only be the case if the commencement of the force majeure period had any relevance to the claim for demurrage in respect of the later part of the force majeure period, which would seemingly arise only when considering how laytime was to run for the purposes of that later claim ie whether, on Cargill's argument, laytime continued to run over the force majeure period such that by the commencement of the disputed period the vessel was already on demurrage. However, it was not suggested before me that there was any significance to be attributed to the Arbitrator's comment in this regard.) 194 The fourth and fifth issues related to what part of the definition of force majeure was to apply and what consequences flowed therefrom and the seventh and eighth related to an argument in relation to clause 17.7 of the agreement, none of which are relevant in the present context. 195 The issue which gave rise to the first alleged error of law was the sixth issue, namely whether Cargill was given the force majeure notice as required by clause 17.2. The Arbitrator addressed this issue from paragraph 199 of his award. He referred to the notification given by Excel under 17.1 (that being distinct from a notice of intention to make a claim of force majeure which is dealt with in clause 17.2). In paragraph 200 the Arbitrator recorded Cargill's (primary) contention, which was that the notice given on 13 June 2007 was not given as early as practicable after the alleged force majeure event occurred (there being an issue in that regard as to whether the requirement that the notice be issued as early as practicable was to be tested by reference to the alleged force majeure event or the formation of an intention to make a claim). The Arbitrator found it unnecessary to determine that issue as he was satisfied that the notice given on 13 June 2007 had been given as early as practicable. (There was no suggestion that it should, or could feasibly have been expected to, have been given simultaneously with the force majeure event.) 196 The Arbitrator noted that clause 17.3 placed importance on compliance with clause 17.1 rather than 17.2 (ie to a notice of the existence of force majeure events rather than of intention to bring a claim) and then said that the significance of that factor might be mitigated by the fact that, when clause 7.11 was applicable, reliance is placed on compliance with 17.2. The Arbitrator there seemed to contemplate that the circumstances in which a party was not liable by reason of force majeure (clause 17.3) had some connection in terms of its operation with the operation of clause 7.11 as to when and how time lost on account of force majeure was to be affected by the giving of notice in relation thereto. 197 What the Arbitrator does not seem directly to have addressed in his reasons (and this is the nub of the criticism now directed by Cargill at the award) is the submission that was put in paragraph 18 of Cargill's submissions (that even if the notice had been given as early as possible, there was nevertheless an operative delay in the issue of that notice and laytime continued during that period). 198 However, apart from the brief reference during argument to the significance of the notice not being given timeously, the manner in which Cargill's alternative submission was put seems to have been put was not expressly linked to the proposition that the lapse of any period whatsoever between happening of a force majeure event and the giving of notice would mean that laytime continued to run. 199 And, insofar as the written submissions referred to the requirement to give the notice as early as practicable being reinforced by the requirement that there be no delay, there is force in Mr Gleeson's submission that the 'delay' argument was predicated on there being a finding that notice was not given as early as practicable (the only distinction between the two arguments being said to be as to whether in that event the notice was a nullity or had some room for operation). 200 Mr Gleeson submits that what the Arbitrator did was to reject the factual premise of the alternative argument (namely that Excel had failed to give the notice as early as practicable) and thus the delay argument failed and there was no error by the Arbitrator (nor any need for him separately to articulate his conclusion in that regard). 201 As the above discussion should illustrate, there were arguments open on both sides in relation to the question as to how clause 7.11.2 should be construed. Insofar as it seems that the Arbitrator formed the view that if notice was given as early as practicable then there was no relevant delay for the purposes of clause 7.11.2, I consider that this was a conclusion reasonably arguable and open for him to find. That being the case, whether or not ultimately it might be said to have been wrong, there was no manifest error of law in the drawing of that conclusion. That disposes of the second threshold requirement for the grant of leave to appeal. Weather Working Day 'error' 202 As to the second error, it is said that the Arbitrator (in accepting the submission of Excel to the effect that the definition of Weather Working Days in the definition of Cargo Handling Rate had the effect that laytime was suspended during any period in which loading was hindered by bad weather) misconstrued the agreement (by treating an integer in the calculation of Cargo Handling Rate, which was necessary to determine the allowable period of laytime, as having a substantive negative operation) and that the Arbitrator impermissibly used the parties' post-contractual conduct as an aid to construction (contrary to Agricultural & Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570, at [35], [163]; Franklins v Metcash, at [10]-[13], [58], [306]-[329]). 203 It was conceded that if leave to appeal on the clause 7.11.2 issue were not to be given, then this issue would not arise. 204 Mr Gleeson noted, by way of background, that the Weather Working Days argument had been raised by Excel as an alternative argument in the eventuality that the Arbitrator did not find that force majeure had started at 8.15am on 8 June 2007 (but found that it had started at some later time on that day). As I understand it, Excel's argument was that if the Iron Braydn came on to demurrage at around 9 o'clock on 8 June 2007 (as Cargill contends), there was nevertheless an allowance to be made in Excel's favour for bad weather and that this operated to reduce the claim for demurrage. 205 The Arbitrator noted Excel's contention in that regard as being that the approach reflected in Cargill's earlier acceptance (that time did not count against Laytime from 7 June 2007 because of bad weather) could also justify a conclusion that Laytime did not run from at least the time from which Excel relied on force majeure. 206 "Cargo Handling Rate" was defined in clause 1.1 to mean the rate, as specified in the relevant specification schedule at which the coal was to be discharged at the Delivery Point "for the purposes of calculating Laytime". The relevant specification schedule stated that the minimum shipment size was to be 15,000 Metric Tonnes and that "the Seller shall load shipment aboard the Vessel at the following average rates per WWD being a day of twenty-four (24) consecutive hours SHINC" (Sundays and holidays included). 207 The Arbitrator noted in his award that, prima facie, the reference to WWD (Weather Working Day) appeared to be an integer in the calculation of a Cargo Handling Rate but he ultimately accepted the contention of Excel that it had a substantive negative operation in that any obligation to load, and the counting of laytime, was suspended during the period when the loading was hindered by bad weather. 208 In coming to a view on this question (which the Arbitrator noted was a difficult issue because in his view the agreement was not very clear in this respect), the Arbitrator expressly had regard, first, to the description of Cargo Handling Rate in the Schedule (which he considered was something more than simply part of a definition - perhaps because it expressed an obligation for the Seller to load the shipment at the specified average rates) and, secondly, to the conduct of the parties "before Cargill sought to resile from its earlier position" (ie their conduct before Cargill reinstated its claim to demurrage for the whole of the period) which he considered suggested that the parties understood that the agreement had the meaning for which Excel contended. 209 Mr Gleeson conceded that the second reason given by the Arbitrator was not strictly a matter referable to interpretation of the contract. Nevertheless, it was said that this was simply a recognition that the parties had acted in a particular way, the Arbitrator having observed that this was a belated submission and seemed to be a response to Excel taking the matter to arbitration. On that aspect, I have difficulty accepting that the Arbitrator's view of the parties' post-contractual conduct was no more than a recognition that the parties had acted in a particular fashion and not a factor which had (in conjunction with the other matter to which reference was made) led the Arbitrator to view the operation of the Cargo Handling Rate definition in the way he did. The Arbitrator explicitly made reference to this as the second of the reasons he had for coming to that view of the definition (para 163) and treated it almost as an admission by conduct (though explaining it in terms of an indication of the parties' understanding of the operation of the clause). In that regard, it seems to me that to the extent that the Arbitrator had regard to post-contractual conduct in construing the definition there was strong evidence of an error of law in so doing. 210 What is not clear is that but for this error the Arbitrator would not still have come to the same conclusion based on the first matter to which he said he had had regard. (Although expressed as one of the two matters to which he had regard, this part of the Arbitrator's reasoning seems to read as if the Arbitrator was drawing some comfort (from the post-contractual conduct) for the conclusion he was proposing to draw on the wording of the definition itself.) 211 If the Arbitrator's conclusion could have been sustained by reference to the first reason set out above, then the fact that one part of the Arbitrator's reasoning could not be sustained might not be to the point. However, it is not clear from the award whether the first reason advanced for treating the definition as having negative operation would have been sufficient, in the Arbitrator's eyes, to stand alone and, in any event, this does not address the issue as to whether the definition could objectively be said to be intended to have any substantive operation in relation to laytime at all. 212 It is submitted by Mr Gleeson that the finding as to the Weather Working Days issue (though apparently conceding that reliance on post contractual conduct would not strictly be correct) was not a manifest error because the approach which the Arbitrator took to the matter was reasonably arguable. Mr Gleeson pointed to the outline given by the Arbitrator of the circumstances in which this issue had arisen (Cargill having initially submitted demurrage calculations with an allowance for bad weather up to a particular time and then from that time basing the allowance on force majeure, but, by the time of the arbitration Cargill had submitted that the earlier demurrage calculation had been mistaken), the Arbitrator's view being that this was a belated attempt to resile from the earlier approach.

213 As explained by Mr Gleeson, Excel's argument was that the Cargo Handling Rate definition, which included the concept of Weather Working Days, encapsulated the concept that if there was not a usable period of time to load the coal on the ship because of bad weather, that was not taken into account when calculating at what average rate the coal had to get onto the ship. Insofar as the Arbitrator noted that he considered the argument difficult but made a finding which was reasonably open to him to do (whether or not he had acted in error in taking into account subsequent conduct) it is submitted by Mr Gleeson that this does not surmount the high hurdle for manifest error of law. In other words, it is said that if this is reasonably arguable and a question of construction, whether or not the Arbitrator in fact reached the wrong conclusion (and how he did so) is immaterial. 214 Mr Stevenson contended that the relationship between the two alleged errors was that the Arbitrator's failure to consider Cargill's alternative clause 7.11.2 argument led him into error in relation to the weather working point. It is submitted that if the Arbitrator had accepted Cargill's Alternative Argument then that would have given rise to an inconsistency with the proposition that laytime did not run on any day which was not a weather working day, i.e. for some days after 8 June. (Mr Stevenson submitted that the weather working day argument was irreconcilable with the Alternative Argument advanced by Excel.) (In that regard, the Arbitrator does seem to have had regard to the interrelationship between the respective clauses in that he saw the weather working day point as reaching the same outcome as that he had reached on the clause 7.11.2 argument.) 215 It seems to me that the proposition put by Cargill (that WWD was no more than an integer in the definition of the Cargo Handling Rate and thence a step in determining the amount of time to be allowed as laytime) has considerable force but I do not see this as a manifest error of law on the face of the award (as opposed to an issue on which there is strong evidence of error). It seems to me that there were different conclusions reasonably open as to the construction of the relevant definition and its operation in the context of the agreement as a whole. 216 At para 163 the Arbitrator makes it clear that the reliance made by him on the definition argument was as support for his primary conclusion on the construction of clause 7.11.2, saying (after having first concluded that time does not count towards delay from 8.15am on 8 June by reason of force majeure) that: "I would also accept the same result would be achieved by reliance on the concept of weather working days". Mr Gleeson submitted that the finding that loading was hindered by bad weather from 8.15am on 8 June 2007 was a finding of fact. The only question of law was whether, as a matter for construction, whether the Arbitrator should have accepted the proposition that the reference to weather working days had a substantive negative operation in the definition. Mr Gleeson says that is not a manifest error in the sense required by the authorities. I agree. 217 In any event, the Arbitrator's finding on this issue was not ultimately determinative of Cargill's claim. It was an expression of opinion that the same result could have been achieved by a different route. The Arbitrator was of the view that in the circumstances time did not count towards laytime from 8 June by reason of force majeure. The fact that he was also prepared to accept that the same result would be achieved by reliance on the concept of weather working days (paras 162/163) does not take the matter any further. (This, it seems to me, also counts heavily against the exercise of discretion to revisit the issue assuming the basis for such relief were otherwise made out.) Strong evidence of error of law and effect of determination on certainty of commercial law?

218 Again, it is noted that the test on this alternative threshold requirement is not who is ultimately right or wrong as a matter of law on the disputed question(s) of construction, but the strength of the claim that there has been an error of law on the construction issues. In the absence of a finding that there has been a manifest error of law, what is necessary is that there be "strong evidence" that the Arbitrator made an error of law and that the determination of that question is one which may add or be likely to add substantially to the certainty of commercial law.

219 In Promenade Investments, at 226, Sheller JA said:

Assuming that there is not a manifest error of law on the face of the award it may be argued that there is strong evidence that the arbitrator made an error of law and that the determination of the question may add, or may be likely to add, substantially to the certainty of commercial law. The requirement that the question be one the determination of which may add substantially to the certainty of commercial law indicates that it should be one of wider and greater importance than, for example, the construction of a one-off clause in the context of a particular agreement between the parties. One can discern here the sort of limitation which Lord Diplock had in mind. The expression "commercial law" should be given no narrow construction. The expression "strong evidence that the arbitrator … made an error of law" suggests first what might otherwise be called on the leave application a strong prima facie case and second an error of law not manifest on the face of the award and demonstrable by evidence . (my emphasis) 220 Is there a strong prima facie case that the Arbitrator made an error of law in not holding that the period of time between the occurrence of a force majeure event and the giving of a notice of intention to claim force majeure (whether or not that be as early as practicable) should be counted as laytime? The issues as framed by the Arbitrator did not require a direct determination of that question but it was thrown up by the argument in relation to the adequacy or validity of the clause 17.2 notice. 221 To my mind, both arguments were reasonably available as a matter of construction. As against that contended for by Cargill, it seems to me that had the parties intended laytime to continue after the occurrence of a force majeure event up until the time that a notice of intention to claim force majeure was given (irrespective of whether that notice was given as early as practicable) then there was a very simple way to do so and it would not have necessitated the use of any concept of delay. In that regard, there seems a contradiction in terms between the situation where the notice was given as early as practicable and that where there was in any event an operative delay for the purposes of counting laytime. However, whatever the prospects of success for Cargill's argument on that point ultimately may have been, I am not convinced that there is strong prima facie evidence that the Arbitrator erred in his construction of the clause. 222 As to the second of the alleged errors, for the reasons adverted to above, I would have been inclined to find that the weather working days point was one as to which there was strong evidence that an error of law had been made in this regard (both by reference to the use of post-contractual conduct and by reference to the application of a definition used in context for the purposes of another). On this issue I would have been satisfied that the determination of the construction of clause 7.11.2 and the extent to which it was affected by the reference to Weather Working Days in the definition of Cargo Handling Rate was one which would be likely to add certainty to commercial law. This relates to an issue of construction of clauses in a standard form agreement (not a one-off determination on the facts of this particular case.) Even if its use is not as wide as that suggested by Cargill, the construction of such a clause would in my view have potential significance beyond that of the present case. While the particular form of the agreement in use has changed, the force majeure provisions have not changed in the current version and hence I accept that the validity of the construction put by Cargill is one which would be likely to add to the certainty of commercial law.

223 However, as Mr Stevenson accepts, the alleged error as to the operation of the weather working days definition is of no moment unless Cargill obtains leave to appeal on the Alternative Argument in relation to clause 7.11.2. Therefore this is not an error that of itself would have affected the overall outcome of the dispute (and thus the first of the threshold requirements is not met in relation to this error). (iv) Has there been a denial of natural justice for the purposes of a review under the Model Law? 224 It is conceded that there is a more limited basis for review of arbitral awards under the Model Law, that being contained in article 34. The only relevant basis for review asserted in the present case is that contained in article 34(2)(b)(ii), namely that the award is in conflict with the public policy of the State. 225 By reference to s 19 of the Commonwealth Act, there is a conflict with the public policy of Australia if there has been a breach of the rules of natural justice. Mr Stevenson submitted that the Arbitrator did not deal with Cargill's clause 7.11.2 Alternative Argument and thus there has been a breach of the hearing rule of natural justice.

226 The "hearing rule" (to use the terminology adopted by Aronson, Dyer and Groves, Judicial Review of Administrative Action, 3rd ed, 2004, at 370) (or audi alteram partem rule), is one of the twin pillars of natural justice, the other being the bias rule (nemo debet judex esse sua in propria causa) (as explained in Carbotech-Australia Pty Ltd & anor v Yates & 14 ors [2008] NSWSC 540, at [46], per Brereton J). (There is no suggestion of bias in this case.) At the most basic level, the hearing rule requires a decision-maker to hear a person before making a decision affecting that person's interests. 227 The High Court in Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; (2003) 197 ALR 389, said at [24];

To fail to respond to a substantial, clearly articulated argument relying upon established facts was at least to fail to accord Mr Dranichnikov natural justice. 228 The operation of the hearing rule depends on the circumstances of the case in which it is applicable (Bread Manufacturers of NSW v Evans [1981] HCA 69; (1994) 180 CLR 404, at [18], per Gibb CJ; Durayappah v Fernando (1967) 2 AC 337, at 414). In Russell v Duke of Norfolk (1949) 1 All ER 109, at 118, Tucker LJ said:

The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth. 229 In Mobil Oil Australia Pty. Ltd. v Federal Commissioner of Taxation [1963] HCA 41; (1963) 113 CLR 475 (at 504) Kitto J stated:

What the law requires in the discharge of a quasi-judicial function is judicial fairness. This is not a label for any fixed body of rules. What is fair in a given situation depends upon the circumstances. 230 (The above passages from Mobil Oil and Russel were cited with approval in The Queen v Commonwealth Conciliation and Arbitration Commission: ex parte Angliss Group (1969) 122 CLR at 546, 552.) 231 The mere fact that a decision is made that is adverse to the interests of a party does not mean that the party has been ignored or denied natural justice in breach of the hearing rule (Carcione Nominees Pty Ltd & Anor v Western Australian Planning Commission & Ors [2005] WASCA 56, at [93]).

232 In Bread Manufacturers, whilst it was found that the hearing rule did not apply to the decision maker in question, Gibbs CJ was of the view that, even if the rule did apply, it would have been satisfied in the circumstances of that case where "the Commission had received and no doubt considered the submissions of the Association that prices should be increased, and did make an increase in prices generally" (at [18]).

233 The Alternative Argument is, I accept, an argument of substance. It cannot be said to be trifling or to have insignificant consequences if successful. The relevant facts upon which the argument was based (namely the giving of the notice on 13 June 2007 some days after the event amounting to force majeure) were established. 234 (So far as the second alleged error is concerned, it is not submitted that there was a denial of natural justice by failing to deal with the point - because the argument was clearly dealt with - rather, the submission is that the Arbitrator was led into the error by his denial of natural justice on the 7.11.2 argument. It is said that had the Arbitrator addressed the clause 7.11.2 argument and seen that it contradicted the weather working days argument (which he had found to be a difficult issue) he would not have come to the conclusion he did on weather working days. Thus it is said that if the matter were to be re-agitated, the submission would be that if the clause 7.11.2 argument was correct, then the "tentative" conclusions in relation to weather working days could not be correct.) 235 Where I have some difficulty, however, is as to whether the clause 7.11.2 argument was clearly articulated. That would be the case only insofar as the Alternative Argument as now put can be said to emerge clearly from the written submissions and the exchange extracted earlier above.

236 There is considerable doubt in my mind is as to whether what was being clearly articulated in the submissions put to the Arbitrator is the proposition for which Cargill now contends, namely that laytime continues to run unless and until a notice of intention to claim force majeure is given (irrespective of whether the notice was given as early as practicable) and that on the proper construction of clause 7.11.2, "delay" in the giving of a notice will occur whenever the notice is not given simultaneously with the force majeure event. There is no suggestion in the Arbitrator's reasons that such a proposition was clearly articulated nor does it emerge clearly from the written submissions (particularly when reference is made to the statement contained in the submissions that the requirement for notice to be given as early as practicable is reinforced by the reference to delay in clause 7.11.2). 237 Although Mr Stevenson submitted that there was no need for Mr Nell, Counsel appearing for Cargill on that application, to make any argument about whether notice was given as early as practicable in order to run the Alternative Argument, the argument was linked in the sense that it was predicated on a determination against Cargill on its principal submission that a notice which was not given as early as practicable was not valid and effective for the purposes of the agreement. 238 Mr Gleeson's submission, as I understand it, on the natural justice issue was that on the clause 7.11.2 argument, there are two possibilities: either Excel is correct in its submission that the argument was not put before the Arbitrator in exactly the way it was put to me (and accordingly Cargill cannot be heard to complain that there was a denial of natural justice by reason of any failure to deal with the argument in the way in which it was put) or, if the argument put to the Arbitrator was, as Excel contends, predicated on there being a notice which was not given as early as practicable (but nevertheless still a valid notice), then the Arbitrator dealt with it and there was no denial of natural justice (even if the Arbitrator may have been wrong). 239 I accept Mr Gleeson's submission that there is nothing in what was put to the Arbitrator which squarely raised the proposition that if the notice is valid and effective (because it was given as early as practicable) clause 7.11.2 nevertheless has the effect that time does not count on force majeure because any gap in time between the objective event of force majeure and the giving of the notice is delay. The proposition that one can satisfy a contractual obligation to do something as early as practicable but at the same time there can be an operative delay was not one that seems to me to have been clearly put to the Arbitrator. 240 If, closely read, the written submissions did go so far, is there anything to suggest that the Arbitrator did not properly consider the argument just because it was not articulated in those terms in the award? The Arbitrator clearly addressed his mind during the course of argument to the question of what consequence might flow from the fact that the notice was not given timeously. Ultimately, his finding was that the notice was given as early as practicable and, by reference to the result which followed from that, he must have considered that there was no delay for the purpose of clause 7.11.2 where there was a notice which had been given as early as practicable. 241 In the circumstances, I am not satisfied that the argument now sought to be put by Cargill was clearly articulated before the Arbitrator. That disposes of the claim that there has been a denial of natural justice. Insofar as a version of the argument was put, it seems to have been heard by the Arbitrator and what he has done is to reach a conclusion which implicitly rejected it. I am not satisfied that this amounts to a denial of natural justice.

(v) Discretionary issues 242 This issue does not arise on the application for leave to appeal under the State Act, as the jurisdictional and threshold requirements for leave under the State Act have not all been established. Had they been, then I would have approached the question of discretion cognisant of the weight evident from the legislation placed on the exercise of judicial restraint in interference with or intervention in arbitral decisions which otherwise would be final and binding. I accept that there should be only limited curial intervention. Similar issues arise when considering the exercise of discretion under the Model Law, though they do not strictly arise for determination in the present case as I have not found a denial of natural justice.

243 In its Commercial List Response, Excel raises the following matters in relation to whether the court should exercise discretion to grant leave to appeal (assuming the jurisdictional and threshold requirements have been satisfied:

(a) the one-off nature of the force majeure events giving rise to the dispute;

(b) the qualifications of the arbitrator (he being an experienced Queen's Counsel and former Federal Court Judge) appointed by agreement of the parties as sole arbitrator in order to resolve their dispute;

(c) the amount in dispute (demurrage from 8 June being calculated at USD850,000, or from 21 June as being in the order of USD300,000) weighed against the (unquantified) cost of further proceedings to review the partial award;

(d) the assertion that this is an attempt generally to re-litigate the subject matter of the arbitration;

(e) that the contentions, to the extent that they raise questions of law, are inappropriate for leave to appeal as they involve issues of fact that must be reviewed or decided in order to dispose of the alleged questions of law;

(f) that the contentions, to the extent that they raise questions of law, do not involve bare questions of law, but rather the examination of how, against the contractual structure, the parties acted in the particular case; and

(g) that, if leave is granted, the court is asked to determine the rights arising from the parties' conduct rather than to determine questions of law arising from contractual documents or referred to in the partial award or on other discrete questions of law arising out of the partial award.

244 As to the last three grounds, they were not raised in oral submissions and it is not clear to me how it is said that the determination of the construction questions as put to me would involve any need to revisit factual findings of the Arbitrator. 245 What seems to me to be more relevant is that the determination of the first alleged error would not overcome the finding in relation to estoppel/waiver in respect of the claim for demurrage for the bulk of the period claimed and the determination of the second alleged error would take the matter no further as this was no more than an alternative means of reaching a conclusion already. As to the other grounds, the most relevant seem to me to be the fact that the financial consequences to flow from any re-determination are by no means as substantial as have been asserted (and, in view of the finding as to the clause 17.3 operation, there may be little practical benefit at all from a reconsideration of the matters of which complaint is made) and the fact that Cargill has had a considered hearing (and one on far more than the usual number of issues for this kind of arbitration in the opinion of the Arbitrator).

246 In Promenade Investments, after considering the language used in the expression "manifest error", Sheller JA went on to say, at 225:

Nothing more is to be learnt from the language used but of course the discretion of the court as to whether or not it will grant leave remains and regard must be had to the requirement of subs (5)(a). The matters referred to by Lord Diplock in The Nema remain important factors in determining whether leave should be given. [His Lordship there having raised the reluctance to grant leave for a one-off question] 247 As to the discretion, in Promenade Investments, at 221, Sheller JA said: In his second reading speech the then Attorney-General said that one of the major objectives of this uniform legislation was to minimise judicial supervision and review ( New South Wales Parliamentary Debates , 22 November 1990, 10376 at 10378): "If arbitration is to be encouraged as a settlement procedure and not as a dry run before litigation, a more restrictive criterion for the granting of leave is desirable and the parties should be left to accept the decision of the arbitrator whom they have chosen to decide the matter in the first place."

The added requirements of manifest error of law on the face of the award or strong evidence that the arbitrator made an error of law and that the determination of the question may add substantially to the certainty of commercial law suggest that the draftsman was seeking to constrain the exercise of court control over arbitral awards in the manner described by the House of Lords in The Nema . A manifest error of law on the face of the award may be an error which would be apparent to the judge upon a mere perusal of the reasoned award itself without the benefit of adversarial argument. A determination which adds substantially to the certainty of commercial law may be a determination of a question of the construction of a contract in standard terms rather than the construction of a one-off clause. In such a situation, strong evidence that the arbitrator made an error of law may equate with a strong prima facie case that the arbitrator had been wrong in his construction. 248 I am not satisfied that this is a case (had the jurisdictional and threshold requirements been satisfied for the grant of relief either under the State Act or the Model Law) in which, as a matter of discretion, leave to appeal or the remission of the matter to the Arbitrator should be granted or ordered as the case may be. The complexity of the construction issues as now put, when coupled with the fact that they do not appear to have been clearly articulated in that fashion before, suggests strongly that this is an attempt to re-litigate the issues which have already been dealt with in some detail. There should be finality in that exercise, as provided for under the parties' arbitration agreement.

Conclusion 249 For the reasons outlined above, I am of the view that the parties did not opt out of the Model Law and hence the State Act does not apply. (Had I found otherwise, I would have held that the claims made in the arbitration were maritime claims for the purposes of overriding the parties' exclusion agreement and hence this Court would have had jurisdiction to entertain the application for leave to appeal.) 250 Had the State Act applied, I would not have been satisfied that the threshold requirements for the grant of leave to appeal were met. Although I consider there is strong evidence of error in relation to the conclusion drawn as to the operation of the definition of weather working days for the purposes of calculating laytime, and I accept that this question is one the determination of which is likely to add to the certainty of commercial law, it is a question which (considered in isolation of the Alternative Argument in relation to clause 7.11.2) would not substantially affect the parties' rights. In any event I would not have been satisfied that this was a case in which I should have exercised discretion to grant leave to appeal in relation to that alleged error. 251 I am not satisfied that there has been a denial of natural justice. 252 I therefore dismiss the application by Cargill. As Mr Gleeson indicated that, in that event, Excel would wish to be heard in relation to costs, I will deal with that aspect of the matter at a time convenient to Counsel. **********

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