Plaintiff v Defendants

1 This is an application by the first to third defendants (Applicants or the Producers) for:

(1) an order under s 7 of the International Arbitration Act 1974 (Cth) (IAA) staying the whole of this proceeding (save for the taxation of any costs of the defendants); and

(2) that the plaintiff (Respondent or OBL) pay the costs of the First to Third Defendants in relation to this application on an indemnity basis, such costs to be taxed immediately pursuant to order 63.20.1 of the Supreme Court (General Civil Procedure) Rules 2015 (Rules).

2 Orders were made on 14 June 2024 following a directions hearing on 31 May 2024 for the fixing of both the proceeding itself and the Applicants' stay application for hearing in November for an estimated five days, together with directions to ensure that both matters were ready to proceed at that time. The Applicants sought leave to appeal from these orders and, on 17 October 2024, the Court of Appeal refused leave to appeal.[1] In its reasons for refusing leave to appeal, the Court of Appeal made the following observations which are particularly relevant for the approach to the present application:[2]

We accept that, once a stay application under s 7(2) of the IAA is made, the application must be heard and determined as soon as practicable and before the proceeding to which it relates. In Hancock the Full Federal Court described s 8 of the Commercial Arbitration Act 2010 (NSW), which is equivalent to s 7(2) of the IAA, as 'an important power the purpose of which is to protect the practical legitimacy and authority of the arbitration process'.[3] In this context too, it must be borne in mind that ss 39(2)(a) and 39(2)(b)(i) of the IAA require the Court, in performing functions and powers under the IAA, to have regard to the objects of the IAA[4] and to the fact that 'arbitration is an efficient, impartial, enforceable and timely method by which to resolve commercial disputes'.[5] To postpone the hearing and determination of a stay application until after the hearing of the proceeding to which it related would be to defeat the evident purpose of s 7(2) of the IAA. It would also be to disregard this statutory fact and the objects of the IAA.

3 The background to this application is most helpfully set out in the reasons on appeal as follows:[6]

1. The applicants and BHP Group Limited ('the Producers') are obliged to make royalty payments to OBL under a Royalty Agreement made over 60 years ago. Under the Royalty Agreement, OBL acquired the right to receive an overriding royalty of two and a half per cent of the gross value of all hydrocarbons produced and recovered within a designated area in Bass Strait. Related contractual arrangements changed over time with the result that today the royalty to which OBL is entitled is payable by the Producers.
2. From time to time, the Producers and OBL have been in dispute as to the proper amount of royalty payable to OBL under the Royalty Agreement. There have been numerous arbitral awards addressing the various disputes. Following a dispute about the calculation of royalty from 1 July 1990, OBL and the Producers entered into the 17 March 1994 Settlement Agreement. In due course this Settlement Agreement underwent numerous amendments. The Settlement Agreement provides for a methodology derived by a special referee to calculate royalties and, in several places, for the modification of that methodology. At the hearing of this matter, the Court was referred to a version of the Settlement Agreement, which consolidated the amendments ('Amended Settlement Agreement').
3. For present purposes, it suffices to say that, in September 2023, OBL served a notice of dispute on the first and second applicants stating that a dispute had arisen between them with respect to the treatment of GST in the calculation of the overriding royalty. The following month, the first and second applicants served notices of dispute on OBL stating that disputes had arisen with respect to the treatment of GST in the calculation of the overriding royalty and issues relating to depreciation and decommissioning ('the D&D Issues').
4. The parties executed an Arbitrator Appointment Agreement in March 2024 appointing arbitrators pursuant to the Amended Settlement Agreement. They agreed to refer the dispute concerning the treatment of GST in the calculation of royalty payable to OBL to them. Further, they agreed that the arbitrators should determine the D&D Issues 'subject to the resolution of OBL's objection to the competency of the Producers' Notices of Dispute insofar as they related to [them]'. Relevantly, though, they disagreed as to whether the disputes about the proper treatment of the D&D Issues were arbitrable under the Amended Settlement Agreement.
5. On 22 April 2024, OBL commenced proceedings in the Trial Division of the Court seeking declarations, including that the D&D Issues were not capable of being arbitrated under the Amended Settlement Agreement, and injunctive relief restraining the Producers from taking steps to progress the arbitration of the D&D Issues ('OBL Proceeding'). In substance, OBL maintained that the D&D Issues did not constitute an arbitrable dispute, because:

(a) by reason of clauses 5(b) and 6B(f) of the Amended Settlement Agreement, no modification may be made to the special referee's modified methodology by arbitration under the Amended Settlement Agreement; and

(b) the Producers have failed to identify any item in relation to Depreciation and Decommissioning Costs which the special referee's modified methodology does not accommodate, or to which it is not applicable, or for which it is not appropriate.

4 As indicated, the critical or central provision under which this application is made is s 7 of the IAA:

1. Enforcement of foreign arbitration agreements

(1) Where:

(a) the procedure in relation to arbitration under an arbitration agreement is governed, whether by virtue of the express terms of the agreement or otherwise, by the law of a Convention country;

(b) the procedure in relation to arbitration under an arbitration agreement is governed, whether by virtue of the express terms of the agreement or otherwise, by the law of a country not being Australia or a Convention country, and a party to the agreement is Australia or a State or a person who was, at the time when the agreement was made, domiciled or ordinarily resident in Australia;

(c) a party to an arbitration agreement is the Government of a Convention country or of part of a Convention country or the Government of a territory of a Convention country, being a territory to which the Convention extends; or

(d) a party to an arbitration agreement is a person who was, at the time when the agreement was made, domiciled or ordinarily resident in a country that is a Convention country;

(2) Subject to this Part, where:

(a) proceedings instituted by a party to an arbitration agreement to which this section applies against another party to the agreement are pending in a court; and

(b) the proceedings involve the determination of a matter that, in pursuance of the agreement, is capable of settlement by arbitration;

on the application of a party to the agreement, the court shall, by order, upon such conditions (if any) as it thinks fit, stay the proceedings or so much of the proceedings as involves the determination of that matter, as the case may be, and refer the parties to arbitration in respect of that matter.

(3) Where a court makes an order under subsection (2), it may, for the purpose of preserving the rights of the parties, make such interim or supplementary orders as it thinks fit in relation to any property that is the subject of the matter to which the first‑mentioned order relates.

(4) For the purposes of subsections (2) and (3), a reference to a party includes a reference to a person claiming through or under a party.

(5) A court shall not make an order under subsection (2) if the court finds that the arbitration agreement is null and void, inoperative or incapable of being performed.

5 Critical to the operation of s 7 of the IAA is s 16 of that Act which applies the UNCITRAL Model Law on International Commercial Arbitration 1985 (as with amendments as adopted in 2006) (Model Law), as follows:

(1) Subject to this Part, the Model Law has the force of law in Australia.

(2) In the Model Law:

arbitration agreement has the meaning given in Option 1 of Article 7 of the Model Law.

State means Australia (including the external Territories) and any foreign country.

this State means Australia (including the external Territories).

(1) "Arbitration agreement" is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

(2) The arbitration agreement shall be in writing.

(3) An arbitration agreement is in writing if its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means.

(4) The requirement that an arbitration agreement be in writing is met by an electronic communication if the information contained therein is accessible so as to be useable for subsequent reference; "electronic communication" means any communication that the parties make by means of data messages; "data message" means information generated, sent, received or stored by electronic, magnetic, optical or similar means, including, but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy.

(5) Furthermore, an arbitration agreement is in writing if it is contained in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other.

(6) The reference in a contract to any document containing an arbitration clause constitutes an arbitration agreement in writing, provided that the reference is such as to make that clause part of the contract.

Within the provisions of the Model Law, of critical importance in the current context is Article 16, which is the provision appearing under the heading 'Chapter IV - Jurisdiction of Arbitral Tribunal', as follows:

Article 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 the invalidity of the arbitration clause.

(2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence. A party is not precluded from raising such a plea by the fact that he has appointed, or participated in the appointment of, an arbitrator. A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. The arbitral tribunal may, in either case, admit a later plea if it considers the delay justified.

(3) The arbitral tribunal may rule on a plea referred to in paragraph (2) of this article either as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within thirty days after having received notice of that ruling, the court specified in article 6 to decide the matter, which decision shall be subject to no appeal; while such a request is pending, the arbitral tribunal may continue the arbitral proceedings and make an award.

Reference should also be made to Articles 35 and 36 of the Model Law which provide for Recognition and enforcement and Grounds for refusing recognition or enforcement, respectively. Reference should also be made to Article 5 which provides:

Article 5. Extent of court intervention

In matters governed by this Law, no court shall intervene except where so provided in this Law.

6 Finally, reference should be made to s 39 of the IAA which relevantly provides:

(1) This section applies where:

(a) a court is considering:

...

(vi) performing any other functions or exercising any other powers under this Act, or the Model Law as in force under subsection 16(1) of this Act; or

(vii) performing any function or exercising any power under an agreement or award to which this Act applies; or

(b) a court is interpreting this Act, or the Model Law as in force under subsection 16(1) of this Act; or

(c) a court is interpreting an agreement or award to which this Act applies; or

...

(2) The court or authority must, in doing so, have regard to:

(a) the objects of the Act; and

(b) the fact that:

(i) arbitration is an efficient, impartial, enforceable and timely method by which to resolve commercial disputes; and

(ii) awards are intended to provide certainty and finality.

(3) In this section:

arbitral award has the same meaning as in the Model Law.

foreign award has the same meaning as in Part II.

Model Law has the same meaning as in Part III.

It is common ground between the parties that the provisions of the IAA, hence the Model Law, apply to the relevant arbitration agreements.

7 The critical set of documents which make up what I now conveniently refer to as the Settlement Agreement is made up of the Consolidated Settlement Agreement, the Settlement Agreement dated 17 March 1994 as amended by Deed of Agreement dated 14 March 1997 and by Kipper - Deed of Amendment dated 30 October 2018.

8 The arbitration agreement is contained in cl 19 of the Settlement Agreement in the following terms (with the track changes showing amendments made in 1994, 1997 and 2018 in the further agreements to which reference has been made):

ARBITRATION

1. (a) Any dispute (other than a dispute required to be determined under clause 12) in any way arising out of or related to or connected with this Agreement shall be determined by arbitration in Melbourne, Victoria, Australia in accordance with the Commercial Arbitration Act 1984 (Vic).

(b) For the purposes of clause 19(a) and subject to clause 5(b), a dispute means a dispute, difference or question in any way arising out of or related to or connected with this Agreement, including as to:

(i) its termination or breach; and

(ii) any further modification of the Special Referee's modified methodology.

(c) In the event of any such dispute:

(i) written notice of such dispute shall be given;

(ii) save in relation to any adjustment made pursuant to clauses 6(a)(iii) and 6(j) clauses 6(a)(iii), 6(j), 6A(a)(iii) and 6A(h) clauses 6(a)(iii), 6(j), 6A(a)(iii), 6A(h), 6B(a)(iii) and 6B(h) of this Agreement, no notice of dispute may be given later than three (3) years following the date of payment of overriding royalty (including any payment made under clause 10) which the Producers bona fide calculate to be due under this Agreement in respect of the quarter to which the dispute relates and subject to clauses 6(a)(iii) and 6(j) clauses 6(a)(iii), 6(j), 6A(a)(iii) and 6A(h) clauses 6(a)(iii), 6(j), 6A(a)(iii), 6A(h), 6B(a)(iii) and 6B(h) payments made for which a notice of dispute has not been given within that three year period shall be payments in full and final discharge of the obligation to pay overriding royalty to OBL under the Royalty Agreement for the relevant quarter provided that this clause shall not apply to a dispute which arises as a result of conduct of the Producers which is misleading or deceptive or is likely to mislead or deceive in relation to the provision of information under this Agreement;

(iii) in relation to any adjustment made pursuant to clauses 6(a)(iii) or 6(j) clauses 6(a)(iii), 6(j), 6A(a)(iii) and 6A(h) clauses 6(a)(iii), 6(j), 6A(a)(iii), 6A(h), 6B(a)(iii) or 6B(h) of this Agreement, no notice of dispute may be given later than three (3) years following the making of the adjustment and adjustments made for which a notice of dispute has not been given within that three (3) year period shall be payments in full and final discharge of the obligation in relation to the adjustment provided that this clause shall not apply to a dispute which arises as a result of conduct of the Producers which is misleading or deceptive or is likely to mislead or deceive in relation to the provision of information in relation to the adjustment;

(iv) upon the giving of a notice of dispute the parties will confer with a view to resolution of the dispute, but if the dispute is not settled by the parties within sixty (60) days of such notification, it shall then proceed to arbitration.

9 The Producers and OBL are in dispute as to whether the Special Referee's modified methodology (referred to in cl 19(b)(ii)) may be further modified by arbitration because it does not accommodate, is not applicable to or appropriate for 'Depreciation' and 'Decommissioning' costs, which may affect the gross value of the hydrocarbons for the purpose of a royalty calculation. The Producers have referred the 'Depreciation' and 'Decommissioning' costs, together with the dispute about the treatment of GST, to arbitration. It follows that cls 5 and 12 of the Settlement Agreement are said to be critical provisions:

1. (a) Subject to clause 5 (b), the gross value of hydrocarbons for the past quarters and future quarters and the overriding royalty payable in respect thereof together with any interest thereon shall be determined in accordance with the Special Referee's modified methodology.

(b) No further modification may be made by arbitration under this Agreement to, or which is inconsistent with, the modifications to the Special Referee's methodology referred to in any of clauses 6(a), 6(b)(i)(aa), 6(b)(i)(bb), 6(b)(ii), 6(b)(iii) and 6(h)clauses 6(a), 6(b)(i)(aa), 6(b)(i)(bb), 6(b)(ii), 6(b)(iii), 6(h), 6A(a), 6A(b)(i)(aa), 6A(b)(i)(bb), 6A(b)(ii), 6A(b)(iii) and 6A(f) clauses 6(a), 6(b)(i)(aa), 6(b)(i)(bb), 6(b)(ii), 6(b)(iii), 6(h), 6A(a), 6A(b)(i)(aa), 6A(b)(i)(bb), 6A(b)(ii), 6A(b)(iii), 6A(f), 6B(a), 6B(b)(i)(aa), 6B(b)(i)(bb), 6B(b)(ii), 6B(b)(iii), 6B(b)(iv) and 6B(f) and the application of any of clauses 7, 8 and 9 of this Agreement.

(c) In the event that the Special Referee's modified methodology or any part thereof does not accommodate, is not applicable to or appropriate for any item which may affect the gross value of hydrocarbons for the purposes of clause 3 of the Royalty Agreement, then, subject to clause 5(b), the Special Referee's modified methodology may be further modified by arbitration under this Agreement.

...

1. (a) Any dispute as to whether, the Special Referee's modified methodology has been correctly applied which, in the opinion of the Referee, will or is likely to affect the computation of the quantum of deductions allowed in the determination of gross value by A$10 million or less in any quarter shall be resolved by the Referee in accordance with this clause.

(b) In the event of dispute under sub‑clause 12(a):

(i) written notice of the dispute shall be given;

(ii) save in relation to any adjustment made pursuant to clauses 6(a)(iii) and 6(j) clauses 6(a)(iii), 6(j), 6A(a)(iii) and 6A(h) clauses 6(a)(iii), 6(j), 6A(a)(iii), 6A(h), 6B(a)(iii) and 6B(h) of this Agreement, no notice of dispute may be given later than three (3) years following the date of payment of overriding royalty (including any payment made under clause 10) which the Producers bona fide calculate to be due under this Agreement in respect of the quarter to which the dispute relates and subject to clauses 6(a)(iii) and 6(j) clauses 6(a)(iii), 6(j), 6A(a)(iii) and 6A(h) clauses 6(a)(iii), 6(j), 6A(a)(iii), 6A(h), 6B(a)(iii) and 6B(h) payments made for which a notice of dispute has not been given within that three year period shall be payments in full and final discharge of the obligation to pay overriding royalty to OBL under the Royalty Agreement for the relevant quarter provided that this clause shall not apply to a dispute which arises as a result of conduct of the Producers which is misleading or deceptive or is likely to mislead or deceive in relation to the provision of information under this Agreement;

(iii) in relation to any adjustment made pursuant to clauses 6(a)(iii) or 6(j) clauses 6(a)(iii), 6(j), 6A(a)(iii) and 6A(h) clauses 6(a)(iii), 6(j), 6A(a)(iii), 6A(h), 6B(a)(iii) or 6B(h) of this Agreement, no notice of dispute may be given later than three (3) years following the making of the adjustment and adjustments made for which a notice of dispute has not been given within that three (3) year period shall be payments in full and final discharge of the obligation in relation to the adjustment provided that this clause shall not apply to a dispute which arises as a result of conduct of the Producers which is misleading or deceptive or is likely to mislead or deceive in relation to the provision of information in relation to the adjustment;

(iv) upon the giving of a notice of dispute the parties will confer with a view to resolution of the dispute, but if the dispute is not settled by the parties within sixty (60) days of such notification, it shall then proceed to the Referee for determination;

(v) the Referee shall determine the dispute applying the Special Referee's modified methodology, and shall have the power to order interest and costs; and

(vi) the Referee shall act as an expert and not as an arbitrator and his decision shall be final and binding upon the parties only in respect of the quarters to which the dispute and his decision relates and shall not be subject to appeal or review.

10 Also of importance in the present context is the governing law provision contained in cl 18 of the Settlement Agreement:

1. Except as otherwise required by the law of the place where the hydrocarbons are produced or as otherwise herein provided this Agreement shall be interpreted and applied in accordance with the law of the State of New York, United States of America.

11 Following notices of dispute issued by the parties in the arbitration,[7] the parties entered into an agreement dated 12 March 2024 (Ad Hoc Arbitration Agreement), appointing the Honourable James Allsop AC, as president, and the Honourable Patrick A Keane AC KC and the Honourable Wayne Martin AC KC as his co‑arbitrators (collectively, Arbitrators).[8] By cl 8 of the Ad Hoc Arbitration Agreement, the parties agreed that the law governing the arbitration is the 'International Arbitration Act 1974 (Cth)' and that 'This Agreement is governed by and must be construed in accordance with the laws in force in Victoria'.[9]

12 Clause 1(c) of the Ad Hoc Arbitrator Agreement provides:[10]

Subject to the resolution of OBL's objection to the competency of the Producers' Notices of Dispute insofar as they relate to Depreciation and Decommissioning Costs ... the Depreciation and Decommissioning Costs disputes are to be heard and determined by the Arbitral Panel.

13 By letter to the Arbitrators dated 22 April 2024, the Respondent:[11]

(a) affirmed (and the Applicants say correctly) acknowledged the competency of the Arbitrators to determine the Depreciations Dispute and the Decommissioning Costs Disputes:

Article 16 of the Model Law permits the Arbitral Panel to rule on its own jurisdiction as a preliminary matter. OBL also acknowledge that, if the Arbitral Panel decides to rule on its jurisdiction as a preliminary matter, the party that is unsuccessful on the preliminary ruling is likely to appeal to the Supreme Court of Victoria, in accordance with its legal right to do so. Obviously, this means that regardless of the result of the preliminary ruling, a subsequent Supreme Court hearing is at least reasonably likely. OBL therefore feels that it would be most efficient to "short cut" that process and approach the Supreme Court for declarations (and related relief) as to the scope of the arbitration agreement between the parties.

OBL has taken the view that it is likely most efficient to have the arbitrability of the Depreciation and Decommissioning Costs issues (as those are defined in the Arbitrator Appointment Agreement) determined by the Supreme Court of Victoria.

14 By way of further background it is helpful to understand some of the long history of the present dispute, a history which goes back to arbitration proceedings in 1985. This history is the product of a major resource project extracting hydrocarbons from under the seabed in Bass Strait off the south east coast of Victoria.

15 The fountainhead of the dispute between the parties, as described by the plaintiff (the Respondent in this application), is a royalty agreement entered into between the second respondent (BHP) and Oil Basins Inc (the plaintiff's predecessor in interest), by which BHP grants an overriding royalty of 2.5% of the gross value of hydrocarbons produced and recovered by BHP and its successors within a specified area of Bass Strait (Royalty Agreement).

16 Under cl 1 of the Royalty Agreement, BHP granted the overriding royalty in the following terms:

The Company doth hereby bargain sell grant and assign to the Royaltyholder and its successors and assigns an overriding royalty of two and one half per centum (2½%) of the gross value of all hydrocarbons produced and recovered by the Company its successors and assigns within the area.

The expression 'the area' is defined as a specified area within the Bass Strait (Area). The manner in which the overriding royalty is to be calculated is provided for in cl 3:

Royalty shall be payable in cash unless the Royaltyholder by written notice elects to receive the same in kind in the form of hydrocarbons and the value for the purposes of calculating royalty whether payable in cash or in kind shall be the same as that on which royalty to the State is based or if no royalty be payable to the State the value at the place of production as determined by mutual agreement or failing mutual agreement as determined by arbitration as hereinafter provided PROVIDED that the value shall be the gross value without deduction of any costs amortisation royalty rental or taxes.

17 Production in the Area commenced in 1969, soon after, disputes arose as to the calculation of the overriding royalty. On 2 October 1985, this Court ordered, by consent, that the parties should proceed to arbitration. The First Tribunal was thus convened. The arbitration at the hands of that tribunal proceeded through a number of awards and reports of a Special Referee, culminating in a final award dated 8 May 1992.

18 The first arbitration settled disputes between the parties relating to a period ending on 31 December 1988.[12] Following the first arbitration, further disputes arose and on 17 March 1994, the parties entered into a settlement agreement. That agreement was amended on 14 March 1997 and 30 October 2018 which, as amended, is, as indicated previously, the Settlement Agreement.

19 On 5 September 2023, the plaintiff (the Respondent in this application) served a notice of dispute on the first to third defendants, the Applicants, stating that a dispute had arisen between the parties with respect to the treatment of goods and services tax in the calculation of the overriding royalty.

20 On 8 October 2023, the Applicants served a notice of dispute on the Respondent said to be under cl 19 of the Settlement Agreement stating that disputes had arisen between the parties with respect to the treatment of GST and also with respect to depreciation and decommissioning costs. Specifically, the notice of dispute stated that disputes had arisen with respect to:

Depreciation, being the issue of whether or not there ought to be further modification of the Special Referee's modified methodology as provided for in the Settlement Agreement so that the deduction for depreciation of eligible downstream assets is altered to ensure that the cost of those assets is fully recovered by the end of the productive life of the fields that are within "the area" as defined in the Royalty Agreement (EOAL),[[13]] currently estimated to be in 2033 (being the year in which the Producers currently forecast production and recovery of hydrocarbons from the area the subject of the Royalty Agreement will cease).

Decommissioning Costs, being the issue of whether or not there ought to be further modification of the Special Referee's modified methodology as provided for in the Settlement Agreement so that the costs of decommissioning the eligible downstream assets and rehabilitating the sites on which those assets were located are fully recovered by EOAL and an appropriate cost of capital allowance in respect of those costs is permitted regardless of whether those costs are incurred before or after EOAL.

On 9 October 2023, the Applicants served a second notice of dispute on the Respondent in substantially the same terms as the first notice of dispute.

21 On 24 October 2023, the Respondent sent a letter to the Applicants stating, among other things, that their claims in respect of depreciation and decommissioning costs were not capable of being arbitrated under cl 19 of the Settlement Agreement.[14]

22 On 12 March 2024, as set out previously, the parties executed the Ad Hoc Arbitration Agreement to arbitrate the GST dispute and make further provision in relation to the depreciation and decommissioning costs (D&D Disputes).

23 In relation to this agreement, the Respondent does not accept that by entering into this agreement that it conceded its objection the D&D Disputes are excluded from the arbitration agreements. In this respect, reference is made to cl 1(c) of the Ad Hoc Arbitration Agreement, which has been set out previously.[15]

24 On 22 April 2024, the Respondent wrote to the arbitral tribunal stating that it would shortly be commencing court proceedings seeking declarations and related relief as to the scope of the arbitration agreement between the parties. Also, on 22 April 2024, before the arbitral tribunal made any orders and before any procedural hearing occurred in the arbitration, the Respondent commenced the current proceeding in this Court in which it seeks, among other things, declarations that the Applicants' notices of dispute, insofar as they relate to the D&D Disputes, do not raise a dispute that is capable of being arbitrated under the Settlement Agreement, as well as an injunction restraining them from 'taking any steps to progress the arbitration of any purported disputes in relation to Depreciation and Decommissioning Costs'.[16]

25 On 20 May 2024, the Applicants filed the present application.

26 On 18 July 2024, the Applicants filed their Points of Claim in the arbitration. On 19 July 2024, the first procedural hearing was held in the arbitration and, following that hearing, the arbitral tribunal made its first procedural order that, among other things, required the completion of pleadings by 23 October 2024. On 30 July 2024, the Applicants filed Annexure B to their Points of Claim. Following an extension of the pleadings timetable by the arbitral tribunal the Respondent, on 30 September 2024, filed its Points of Defence and Counterclaim, maintaining that the arbitral tribunal does not have jurisdiction to hear and determine the Applicants' claims in respect of Depreciation and Decommissioning Costs.[17] Following a further extension of the pleadings timetable, on 11 November 2024, the Applicants filed their Reply and Defence to Counterclaim. No further steps appear to have been taken in the arbitration proceedings since that date.

27 At the outset the Applicants submit that there is no dispute that there is a valid arbitration agreement subsisting between the parties, that an arbitral tribunal has been validly convened; the difference between the parties being whether the Depreciation Claim and the Decommissioning Claim are matters within the competence of the arbitral tribunal to determine. It is the Applicants' position that these claims are within the competence of the arbitral tribunal to determine rather than the Court at least prior to any recognition and enforcement proceedings under Article 35 or 36 of the Model Law. Reference has already been made to the pleading of these claims before the arbitral tribunal together with responsive oppositional pleadings filed by the Respondent.

28 The Applicants submit that the Ad Hoc Arbitration Agreement, being the instrument of conferral of jurisdiction on the arbitral tribunal, puts to rest any argument that the arbitration is not governed by the IAA, having made provision of this effect in cl 8(a) of that agreement. It follows, the Applicants contend, that the effect of s 16 of the IAA and its adoption of the Model Law, including its Article 5, is to otherwise oust the Court's powers in relation to matters governed by the IAA.[18] In any event, it is said that, properly construed, the reference in cl 19(a) of the Settlement Agreement, prescribing the hearing of any arbitrations to be in Melbourne and to be governed by Victoria's procedural law,[19] is to the same effect given the operation of ss 12 and 14 of the IAA. Thus, it is said that the effect of the IAA and the imposition of the Model Law is to confirm the Kompetenz‑Kompetenz principle[20] applies to the scope of the authority of the arbitral tribunal in the arbitration.[21]

29 The Kompetenz‑Kompetenz principle is wide enough, it is contended, to permit the arbitral tribunal to decide any question of jurisdiction;[22] particularly as supported by the procedural powers conferred on the tribunal by the Model Law. The role of the Court[23] is then confined to that provided for by Articles 16(3), 34(2)(a)(iii) and 36(1)(a)(iii) of the Model Law following the Arbitrators' own jurisdictional determination.[24] In my view, what may follow from a ruling by the arbitral tribunal, exercising its jurisdiction under Article 16, does not detract from the conferral and extent of its jurisdiction under these provisions; as appears to be suggested by the Respondent, particularly with respect to Article 16. Moreover, it is observed that ss 39(2)(a) and 39(2)(b)(i) of the IAA prescribe that, in performing its functions and powers under and when interpreting the Act, the Court must have regard to the objects of the Act and the fact that arbitration is stated to be an efficient, impartial, enforceable and timely method by which to resolve commercial disputes. Hence it is said that, in circumstances in which there is no issue as to the validity of the arbitration agreement which is not otherwise said to be unenforceable, a stay under s 7 of the IAA is to be granted.

30 In Hancock Prospecting Pty Ltd v Rinehart (Hancock), the Full Federal Court held that only if there is 'no sustainable argument that a matter or dispute can be characterised as falling within the agreement, [then] it should not be referred to arbitration'.[25] However, it is said, that characterisation is not 'one directed to the strength of the case raised by the issue or matter' as '[t]hat would be to usurp the role of the arbitrator'.[26] 'The Court's role [under s 7 of IAA] is not to act as a court of summary disposal filtering the matters that are suitable for arbitration'.[27] Having regard to the casting of cl 19 of the Settlement Agreement as an 'all' disputes type arbitration agreement, it is contended by the Applicants that, absent a relevant finding of no sustainable argument, there are no exceptions to the Court's obligation to stay its proceeding. Nevertheless, the Applicants accept that this Court must follow the Full Federal Court's decision in Hancock, including its reference to the possible exception for an issue which is solely on a question of law[28] insofar as it relevantly applies to the issues on a stay application. This position, and other submissions by the Applicants with respect to Hancock, are further strengthened by consideration of Hancock and related decisions in the reasons which follow.[29]

31 In Hancock, when answering the question as to whether the arbitration agreement there was 'null and void, inoperative or incapable of being performed' within the meaning of s 8(1) of the Commercial Arbitration Act 2010 (NSW), the Full Court admitted the potential of an exception to the Court's obligation to stay that proceeding in other circumstances. That exception was when the jurisdictional challenge was strictly confined to a short question of law that, once determined, would be dispositive.[30] In that case, the Full Court said, in those circumstances, 'it might be less than useful for the Court not to deal with [that question]'[31] (Hancock Discretion).

32 Returning to the possible exception referred to by the Full Court arising out of the decision in Dell, that exception was explained by Deschamps J speaking for the majority of the Supreme Court of Canada (McLachlin CJ, Binnie, Abella, Charron and Rothstein JJ) in Dell which was cited with approval in Hancock:[32]

First of all, I would lay down a general rule that in any case involving an arbitration clause, a challenge to the arbitrator's jurisdiction must be resolved first by the arbitrator. A court should depart from the rule of systematic referral to arbitration only if the challenge to the arbitrator's jurisdiction is based solely on a question of law. This exception is justified by the courts' expertise in resolving such questions, by the fact that the court is the forum to which the parties apply first when requesting referral and by the rule that an arbitrator's decision regarding his or her jurisdiction can be reviewed by a court. It allows a legal argument relating to the arbitrator's jurisdiction to be resolved once and for all, and also allows the parties to avoid duplication of a strictly legal debate. In addition, the danger that a party will obstruct the process by manipulating procedural rules will be reduced, since the court must not, in ruling on the arbitrator's jurisdiction, consider the facts leading to the application of the arbitration clause.

If the challenge requires the production and review of factual evidence, the court should normally refer the case to arbitration, as arbitrators have, for this purpose, the same resources and expertise as courts. Where questions of mixed law and fact are concerned, the court hearing the referral application must refer the case to arbitration unless the questions of fact require only superficial consideration of the documentary evidence in the record.

Before departing from the general rule of referral, the court must be satisfied that the challenge to the arbitrator's jurisdiction is not a delaying tactic and that it will not unduly impair the conduct of the arbitration proceeding. This means that even when considering one of the exceptions, the court might decide that to allow the arbitrator to rule first on his or her competence would be best for the arbitration process.

Thus it is said that only in those very limited circumstances as highlighted by Dell is the Court vested with any discretion, but not an obligation, to finally hear and determine a jurisdictional question as to whether the arbitration agreement is 'null and void, inoperative or incapable of being performed' rather than stay the proceeding.[33] Further, it is said that even if that discretion could be said to be relevantly enlivened, it would still ordinarily be exercised in favour of a stay when '[t]he parties to the litigation have displayed an intensity of application to every matter in dispute that makes ... the prospect of holding the parties to a short hearing [on that strictly legal question] centred upon [the] issues ... unlikely'.[34] Nevertheless, it is said that when the resolution of the objection to the stay being granted raises questions of fact or mixed questions of fact and law, then there is no discretion and the court must grant the stay.

33 Moreover, it is submitted that insofar as the application of s 7(2) of the IAA is conditioned by reference to the matter being 'capable of settlement by arbitration', that collocation is to be understood, at least under Australian law, not as involving an exploration of the intent of the parties as to the scope of the disputes they had agreed could be referred to arbitration. Rather, arbitrability is a recognition by the legislature that even when the parties intend that a particular dispute to be referred to arbitration, that agreement will not be enforced in Australia if to do so would offend public policy grounds.[35]

34 It is contended that the Respondent's opposition of the stay application is not based on a proposition that the parties' agreement to arbitrate the Depreciation Claim and the Decommissioning Claim is 'null and void, inoperative or incapable of being performed'. To the contrary, the Applicants submit that the Respondent has both expressly agreed, by the terms of the Ad Hoc Arbitration Agreement,[36] and affirmed and acknowledged in its correspondence with the Arbitrators,[37] that, not only is the arbitration validly constituted, but that the scope of the matters referred to for determination in that arbitration includes the resolution of any jurisdictional issues associated with the Depreciation Claim and the Decommissioning Claim. This assertion is, as has been observed, challenged by the Respondent.

35 Rather, it is submitted that the Respondent's contention appears to be that the Hancock Discretion to not grant a stay under s 7 of IAA extends to issues of the scope of disputes that can unilaterally be referred to arbitration by a party to an arbitration agreement. The Applicants deny that the scope of the Hancock Discretion extends to a scope question when the opposing party accepts that the agreement to arbitration is otherwise enforceable. It is contended that such a proposition would involve a determination by this Court which would mean that the Full Federal Court decision was plainly wrong, at least in the context of an arbitration governed by the IAA.

Hancock Discretion precluded by reasons of contested factual questions

36 The Applicants submit that it appears that the Respondent wishes to contend that the stay application should be refused because of the operation of cl 19(b) of the Settlement Agreement which is said to be 'subject to clause 5(b)', which, in turn, references a prohibition of modification of the 'applicable cost of capital rate' specified by cl 6B(f). It is said that the Respondent does not contend that either the Depreciation Claim or the Decommissioning Claim seeks to modify the cl 6B(f) rate. Rather, it is contended that the Respondent is asking the Court to find that the 'concepts of deductions' for 'cost of capital' and 'depreciation' are 'rationally connected' and, therefore, an award given in respect of the Depreciation Claim or the Decommissioning Claim would be inconsistent with the terms of cl 6B(f).[38] Moreover, it is said that in seeking to make good that asserted connection, the Respondent relies on some 930 pages of evidence.[39] Not only do the Applicants contest the relevance of that evidence, they also contest the correctness of the asserted connection.[40] As noted,[41] the existence of a factual conflict, including one of mixed questions of fact and law, on an issue of the agreed scope of matters that can be referred to arbitration requires resolution by arbitration and not by the Court. Such is clear from the authorities to which reference is made in the reasons which follow.[42]

37 Further, consistent with the observations of Lyons J in Transurban WGT Co Pty Ltd v CPB Contractors Pty Ltd (Transurban WGT),[43] referring to Hancock,[44] when it is plain, as it is said to be here, that the parties' arguments 'raise issues of some legal and factual complexity' and the context indicates 'every issue is in dispute and is hard‑fought between the parties', the Court should decline to seek even to attempt to embark on the task of weighing the competing positions and simply refer the matter to the arbitral tribunal to decide.[45]

Sustainable argument as to the construction of cl 19 of the Settlement Agreement

38 The Applicants contend that two necessary propositions must be accepted for the Respondent's opposition to the stay even to be considered. These are:

(a) that the words 'subject to clause 5(b)' in cl 19(b) is a carve out of disputes that can be referred to arbitration under the Amended Settlement Agreement; and

(b) an award in respect of the Depreciation Claim and the Decommissioning Claim would constitute a modification of, or would be inconsistent with, the modifications to the Special Referee's methodology referred to in cl 6B(f) of the Settlement Agreement.

The Applicants submit that neither proposition is correct.

39 As to the first proposition, the Applicants contend that the collocation of 'subject to clause 5(b)' in cl 19(b) does not constitute a carve out from the scope of disputes that may be referred to arbitration under cl 19. Rather, it is said, the proper construction of cl 19 is that the reference in cl 19(b) to a dispute being 'subject to clause 5(b)' merely limits the remedies that the Arbitrators can award when determining any particular 'dispute' within the meaning of that clause. It is said that this construction is plain from the terms of cl 19, when read as a whole. Emphasising this point, it is said that when the drafters of cl 19 wanted to carve out of its broad definition of a dispute, being 'a dispute, difference or question in any way arising out of or related to or connected with this Agreement' that 'in any way [was] arising out of or related to or connected with this Agreement', they did so in very clear and express terms. That is, they did so by carving out the 'disputes' that fell within the meaning of cl 12 of the Settlement Agreement:[46]

Any dispute (other than a dispute required to be determined under clause 12) in any way arising out of or related to or connected with this Agreement shall be determined by arbitration.

Moreover, it is said that the utilisation of the different language in cl 19(b) of being 'subject to' confirms a different purpose, namely limiting the remedies available to the arbitral tribunal, and not limiting a class of dispute that can be referred to them for arbitration.

40 Secondly, it is said to be plain from the Applicants' Points of Claim in the arbitration proceedings that neither the Depreciation Claim nor the Decommissioning Claim seeks relief to modify the 'applicable cost of capital rate' agreed by cl 6B(f). Thus it is said that the proposition advanced by the Respondent depends on a conclusion that an award in favour of the Applicants in respect of each of the Depreciation Claim and the Decommissioning Claim will necessarily result in a modification to the Special Referee's modified methodology that is 'inconsistent' with cl 6B(f). It is submitted that even if that were the case, that would provide a substantive defence to the Respondent to the extent of that demonstrated inconsistency. In any event, it is stressed that such inconsistency, if it existed, is not a matter of jurisdiction for the purposes of Articles 16, 34 or 36 of the Model Law or relevant to relief under s 7 of the IAA.

41 Thirdly, it is submitted that there is no inconsistency, necessary or otherwise, between an award in favour of the Applicants in respect of either of the Depreciation Claim and the Decommissioning Claim and the Special Referee's modified methodology as modified by cl 6B(f). In this respect, the Applicants put their positions and reasoning as follows:[47]

38. Clause 5(c) of the Amended Settlement Agreement[48] provides:

In the event that the Special Referee's modified methodology or any part thereof does not accommodate, is not applicable to or appropriate for any item which may affect the gross value of hydrocarbons for the purposes of clause 3 of the Royalty Agreement, then, subject to clause 5(b), the Special Referee's modified methodology may be further modified by arbitration under this Agreement.

39. Clause 5(b) of the Amended Settlement Agreement relevantly provides:

No further modification may be made by arbitration under this Agreement to, or which is inconsistent with, the modifications to the Special Referee's methodology referred to in any of clauses ... 6B(f) ... of this Agreement.

40. Clause 6B(f)(i) of the Amended Settlement Agreement provides:

The deduction for the cost of capital of eligible post LVO assets to which commitment to investment was made on or after 1 July 1990 shall be calculated in accordance with the Special Referee's methodology applying the applicable cost of capital rate provided in sub‑clause (f)(i) [emphasis added]

1. However, clause 6B(e)(i), which is not a provision of the Amended Settlement Agreement enumerated by clause 5(b) and therefore is able to be modified by arbitration, provides:

The deduction or additional revenue, as appropriate, in respect of each quarter for:

(aa) depreciation of;

(bb) costs of capital on; and

(cc) the profit or loss on the sale or disposal of,

assets which support solely post LVO activities shall be calculated in accordance with the Special Referee's methodology as modified by this clause 6B

1. Neither the Depreciation Claim nor the Decommissioning Claim, as alleged in the Points of Claim, seek any further modification to the applicable cost of capital rate the subject of clause 6B(f). It is that rate provided for in clause 6B(f)(ii) that is applied in the same way to determine the amount of the deduction in future quarters for Cost of Capital as prescribed by clause 6B(e) of the Amended Settlement Agreement once the Special Referee's methodology has been further modified to take into account the End of Area Life of 2033 and to bring to account Decommissioning Costs.
2. Simply put, as was confirmed by the arbitrators in the First Arbitration,[49] as determined by the report of Mr Maniatis[50] and also confirmed in OBL's own expert's report from Mr Ali,[51] there is no inconsistency between clause 6B(f) of the Amended Settlement Agreement and the Depreciation Claim or the Decommissioning Claim. Rather, the purported inconsistency referred to in the Ali Report is the product of OBL's erroneous instruction given to Mr Ali as to OBL's erroneous construction of the effect of the Producers' Depreciation Claim or the Decommissioning Claim on the allowance to be made for Costs of Capital.[52]

42 Lastly and perhaps most importantly, as was made plain in Hancock, the existence of contest as to the proper construction of an arbitration agreement does not, of itself, deny the applicant a right to a stay under s 7 of the IAA, not, at least, unless it can be said that the applicant's construction is not 'sustainable'.[53] Thus it is said that even if the Applicants' construction of the arbitration agreement could be properly said to be contestable, in assessing the sustainability of that construction, the Court 'is not to act as a court of summary disposal filtering the matters that are suitable for arbitration'[54] nor is the task 'one directed to the strength of the case raised by the issue or matter' as '[t]hat would be to usurp the role of the arbitrator'.[55]

43 On this basis, the Applicants contend that these issues should be referred to the arbitral tribunal to determine, with the Court staying its proceeding. More particularly, the Applicants submit:[56]

1. OBL accepts (correctly) that the Stay Application is to be determined first.[57] It would only be if the stay was not then granted, that the matters the subject of the proceeding would need to be timetabled for a trial. Further, this is not a case where the Producers have actively submitted to the Court's jurisdiction for it to determine the merits of Depreciation Claim or the Decommissioning Claim, participating without objection in the Court's case management procedures and interlocutory applications along the way to a trial of the merits of an otherwise justiciable claim and then only belatedly raised the issue of the effect of an arbitration agreement.[58] To the contrary, the Ad Hoc Arbitration Agreement was agreed to by OBL before it issued this proceeding.[59] This is also not a case where the scope of the stay sought is confined to only some of the claims the subject of the judicial proceeding, leaving the balance to be prosecuted in the Court.[60] The only step taken by the Producers was, at the first opportunity, to issue its Stay Application in respect of the whole of the proceeding[61] and only thereafter, to take steps to facilitate the hearing of that application. On no basis can be it said that the Producers have waived their rights to have the Depreciation Claim or the Decommissioning Claim determined by arbitration.[62] No attack is made on the validity and enforceability of either the terms of the Amended Settlement Agreement or the Ad Hoc Arbitration Agreement based on ss.21 (unconscionability) or 23 (void because it is unfair) of the Australian Consumer Law, that would otherwise need to be construed and applied by a foreign arbitral panel.[63] Lastly, there is no suggestion that if the matter was referred to arbitration, OBL would be denied a defence that would have been available to it only in the Court.[64] Accordingly, there is nothing in the 'issues and the context'[65] in which the Stay Application has been made that even suggests, let alone, requires an approach to be adopted that is otherwise than conventional. Accordingly, the Court should follow the approach adopted in Transurban referred to above,[66] which was similarly applied by the Federal Court in Degroma.[67]
2. Insofar as the decision in Dialogue took into account issues of efficiency[68] in deciding to depart from the conventional approach, it is plainly wrong and should not be followed.[69] It is not the role of the Court on a stay application to resolve contested question of fact (and the Producers would also say questions of pure law); that is the role of the arbitrators.[70] Far from declining to do so being characterised as 'limp,'[71] that course is mandated by the authorities.

44 The Respondent made detailed oral and written submissions both with respect to the stay application and the substantive issues in the proceedings. As the Court of Appeal emphasised in its reasons for judgment in the appeal with respect to these proceedings, the stay application must be heard and determined before the proceeding to which it relates.[72] Accordingly, reference is made to the Respondent's submissions only in so far as they are relevant to the stay application. It follows that, as indicated in these reasons, any evidence with respect to New York law as to the construction of arbitration agreements or otherwise is entirely irrelevant to the present application. No reference is, therefore, made to evidence or submissions as to its content or possible effect.

45 The approach of the Respondent with respect to the stay application is that the Court should first consider the arbitration agreement and then consider whether the disputes fall within the arbitration agreement, thus construed. More particularly, it contends:[73]

1. All that is required on the stay application is, consistently with authority,[74] to construe the arbitration agreement and to characterise the underlying claims, to decide whether they fall within it. The Court is in a position to, and should, decide these matters.
2. Although the Producers make limited reference to the requirements of International Arbitration Act 1974 (Cth) ("IAA") s 7, it appears to be common ground that the central dispute on this application is whether IAA s 7(2)(b) is satisfied. Section 7(2)(b) requires that:

"the proceedings [in a court] involve the determination of a matter that, in pursuance of the [arbitration] agreement, is capable of settlement by arbitration".

1. It is well‑established that this requires consideration of whether the disputes fall within the arbitration agreement. Neither the Depreciation Dispute nor the Decommissioning Costs Dispute is within the scope of the arbitration agreement. Accordingly, s 7(2)(b) is not satisfied, because there is no matter in these court proceedings that is capable of settlement by arbitration in pursuance of the arbitration agreement.
2. An alternative way of analysing s 7 and its application may be to conclude that the dispute falls within an exclusion from the arbitration agreement, and consequently the arbitration agreement is "inoperative" within the meaning of IAA s 7(5).

46 More particularly, the Respondent submits that it is well established that s 7(2)(b) of the IAA requires, inter alia, that the matters in issue in the court proceedings are capable of settlement by arbitration 'in pursuance of the [arbitration] agreement', which is to say that they are within the scope of the arbitration agreement. In this respect, reference is made to Robotunits Pty Ltd v Mennel (Robotunits):[75]

As indicated above, whether the requirements of s 7(2)(b) of the Act are met depends upon the answers to the following three questions:

(1) What is the matter (or matters) for determination in the present proceeding?

(2) Is the matter (or matters) capable of settlement by arbitration in pursuance of the agreement? Or, in other words, what is the scope of the arbitration agreement?

(3) Is the matter (or matters) capable of settlement by arbitration?

The elements of these questions are somewhat intertwined; however, in my view, setting them out in this way helps focus attention on the distinct requirements imposed by the statutory language in issue.

The second question to be answered in order to determine whether the requirements of s 7(2)(b) of the Act have been met is whether the matters that have been identified are capable of settlement by arbitration in pursuance of the agreement. That is, whether the determination of those matters falls within the scope of the arbitration agreement; or, in other words, whether the parties intended those matters to be settled by arbitration. [emphasis in original]

47 This approach in Robotunits is said to be consistent with previous and subsequent authority and, as the Respondent submits, ought to be uncontroversial.[77] For example, it is said, in Recyclers of Australia Pty Ltd v Hettinga Equipment Inc (Recyclers), Merkel J explained:[78]

The question arising under s 7(2) is whether the proceeding involves the determination of a 'matter' that, under the arbitration clause, is capable of settlement by arbitration. As the arbitration clause and the sale agreement are to be governed, construed and interpreted 'under the law of the State of Iowa', the issue of whether any of the matters involved in the proceeding are arbitrable under the clause is to be determined in accordance with the law of Iowa.

Merkel J considered Iowa law (including US federal law), and made findings as to the contested issues of Iowa law,[79] and considered 'whether, applying the above principles, the entitlement of the applicants to damages by reason of the representations [i.e. the matter in the court proceedings] is a dispute that falls within the arbitration clause in the sale agreement',[80] and concluded that it did.[81] The Respondent contends that this approach is consistent with the purpose of s 7 in implementing Article II(3) of the New York Convention,[82] which focuses on the effect of the agreement of the parties, in turn reflecting that party consent is the essential basis of international arbitration.[83] In light of the authorities, including in Hancock, which are considered further in the reasons which follow,[84] I do not accept that the cases relied upon in the preceding paragraphs, or more generally,[85] by the Respondent support its position. Robounits and Recyclers, in particular, are not on point in the present context as they did not raise or consider the effect of application of the doctrine of Kompetenz‑Kompetenz as applied by the provisions of the IAA, in its application of the Model Law as was considered fully by the Full Court of the Federal Court in Hancock.

48 The Respondent submits that it is not clear whether the Applicants contend that the approach should be otherwise but appear to do so in so far as it has suggested that a court may refuse a stay only if there is 'no sustainable argument' that a dispute falls within the scope of the arbitration agreement. The Respondent contends that this is contrary to the reasoning and approach of the authorities to which reference has been made in its submissions and proceeds from a misreading of the decision in Hancock.[86] The Respondent seeks to emphasise that Hancock identified this as one but not the only circumstance in which a court might refuse a stay. But, it is said, the Full Court of the Federal Court made plain that there is no rigid manner in which to approach an application under s 8 of the relevant State arbitration legislation.[87] Moreover, it says that Hancock says nothing as to circumstances where the parties have selected a foreign law and agreed that certain matters are not within the authority of the arbitral panel. In my view, these matters do not assist the Respondent having regard to the position which follows from the authorities, including Hancock, which are considered further in the reasons which follow.[88]

49 The Respondent submits that the correct approach in a case of this kind, where the issues presented are construction of the arbitration clause and the characterisation of the claims made, is that described by the Victorian Court of Appeal in Great Union Pty Ltd v Sportsgirl Pty Ltd (Great Union),[89] by reference to Hancock, as follows:

(h) [sic] the proper construction of [the arbitration clause] so as to determine what disputes are the subject of that clause; and

(i) [sic] the characterisation of the nature of the dispute in this case to determine whether it involved the 'matter' which was the subject of the arbitration agreement, as properly construed.

It is said that this approach is consistent with Robotunits and Recyclers, and the other authorities to which the Respondent made reference, including Samsung C&T Corporation v Duro Felguera Australia Pty Ltd.[90] It is submitted that the Court of Appeal in Great Union considered the approach consistent with and to follow from Hancock. Moreover, the Respondent contends that this case is unusual in that the substantive proceeding here is directed only to the scope of the arbitration agreement and a contention that the claims which the Applicants seek to have arbitrated do not fall within that agreement. These issues, it is said, turn upon the proper construction and application of the Settlement Agreement, including, in particular, cls 5, 18 and 19. In my view, none of these matters assist the Respondent's position, particularly as the Great Union decision is not on point in the present context and is, rather, a case concerning the construction and operation of what are commonly known as 'cascading' dispute resolution provisions.

50 The Respondent submits there is nothing in the arbitration agreement, or the Settlement Agreement otherwise, that suggests any objective intention on the part of the parties that the arbitrators would determine scope‑of‑dispute arbitrability. Moreover, it is contended that the provisions of the IAA do not assist the Applicants in support of the stay application.

51 More particularly, it is submitted that the reference in cl 19(a) of the Settlement Agreement to the Commercial Arbitration Act 1984 (Vic) is an express choice to the contrary. In this context, it is submitted that, as at 17 March 1994, when the Settlement Agreement was made, the Commercial Arbitration Act 1984 (Vic) did not provide for the arbitrators to determine their own jurisdiction. It did not make any provision on the subject. Conversely, as at 17 March 1994, the IAA gave effect to the 1985 version of the Model Law, including Article 16(1), which provided that an arbitral tribunal 'may rule on its own jurisdiction'.[91] However, at that time, the IAA also provided in s 21:

Settlement of dispute otherwise than in accordance with Model Law

If the parties to an arbitration agreement have (whether in the agreement or in any other document in writing) agreed that any dispute that has arisen or may arise between them is to be settled otherwise than in accordance with the Model Law, the Model Law does not apply in relation to the settlement of that dispute.

52 On this basis, it is contended that the parties, by referring to the Commercial Arbitration Act 1984 (Vic), took advantage of the liberty conferred by s 21 of the IAA (as it then stood) to agree that any dispute between them was to be settled otherwise than in accordance with the Model Law, but rather under the Victorian Act. This is the effect of cl 19(a) of the Settlement Agreement, which is apparent from the decision of Giles CJ Comm D in American Diagnostica Ltd v Gradipore Ltd, where it was held that an arbitration clause providing for arbitration 'in accordance with the Arbitration Act current in New South Wales, Australia at the time of such dispute' had the effect of providing that 'disputes falling within the arbitration clause were to be settled otherwise than in accordance with the Model Law' for the purposes of s 21 of the IAA.[92] Accordingly, it is contended that by cl 19(a) of the Settlement Agreement, the parties opted out of a legislative regime which, had it applied (as it would have done but for the express reference to the Victorian Act), would have contained a provision that the arbitrators may determine their jurisdiction. Further, it is said that nothing in the subsequent amendments to the Settlement Agreement evince any different objective intention regarding who decides whether a dispute falls within the arbitration agreement. Clause 19 has not been amended at any point.[93] In my view, there is no substance in any of the Respondent's contentions with respect to the application of the Commercial Arbitration Act 1984 having regard to the provisions of s 43 of the Commercial Arbitration Act 2011 (Vic) and the fact that the arbitration in question in these proceedings commenced after 1 May 2013, the commencement date of the 2011 Act.[94]

53 The Respondent also makes submissions in relation to the effect of Article 16 of the Model Law as follows:[95]

1. Finally, P Subs [19] asserts that "[t]he competence principle is wide enough to permit the Arbitrators to decide any question of jurisdiction" (emphasis in original) and says that "[t]he effect of the IAA and the imposition of the Model Law is to confirm the Kompetenz‑Kompetenz principle applies to the scope of the Arbitrators' authority in the arbitration" (P Subs [18]). The suggestion appears to be that one need look no further than Article 16 of the Model Law to conclude that the arbitral tribunal may determine whether the D&D Disputes fall within scope of the arbitration agreement.
2. If this is what the Producers are saying, the submission is incorrect for at least two reasons:

106.1 First, this overlooks the requirement under s 7(2)(b) that, before any stay can be granted the matters in the court proceedings must be capable of settlement by arbitration in pursuance of the arbitration agreement, that is, within its scope. The scope of the arbitration agreement is determined by interpreting that agreement under its applicable law (here, New York law). As explained above:

(a) the Settlement Agreement on its true construction provides that a court, and not the arbitrators, will determine whether the D&D Dispute falls within the arbitration clause, because there is no "clear and unmistakable evidence" of a contrary intention (see paragraphs 76-89 above);

(b) further, even assuming, contrary to the fact, that the parties had expressly adopted the IAA including Article 16 as the curial law,[96] the result of the interpretation under New York law of the parties' agreement does not change: the exclusions from the arbitration agreement mean there is no clear and unmistakable intent that the arbitrators should decide scope‑of‑dispute arbitrability (see paragraphs 98-99 above).

106.2 Secondly, Article 16 does not permit or require the arbitral tribunal to decide a matter that the parties have agreed it will not decide. Were the arbitral tribunal to do so, its award would "deal[] with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contain[] decisions on matters beyond the scope of the submission to arbitration" within the meaning of Article V(1)(c) of the New York Convention. In consequence, the award would be liable not to be recognised or enforced in Convention states and within Australia (under Model Law Article 36(1)(a)(iii)),[97] and would be liable to be set aside in Victoria under Model Law Article 34(1)(b)(ii). The Model Law should not be construed so as to lead to that result.[98] None of that is surprising: the Model Law exists to give effect to the parties' agreement (which Article 7 permits to be a submission of "certain disputes"), rather than to force the parties to arbitrate matters they have not agreed to arbitrate.

1. On any view, simply pointing to Article 16 does not demonstrate the satisfaction of the requirements of IAA s 7(2).[99]

54 In summary, the Respondent submits that this is a case like Recyclers[100] and Robotunits,[101] where the Court can and should find that the arbitration agreement should be interpreted under the relevant law, namely New York law, on the s 7(2) IAA stay application. This is not a case, it is said, where any prima facie or other approach is warranted,[102] given that: (i) the necessary evidence and materials are before the Court; (ii) the issue is a confined one of contractual interpretation; and (iii) the Respondent's contention is that, properly construed under New York law, the parties have in the Settlement Agreement agreed that the Arbitrators may not determine whether the dispute falls within the scope of the arbitration agreement and so the Court cannot assume the Arbitrators would decide that matter were it referred to them.[103] In any event, as indicated previously, I am of the view that neither Recyclers nor the Robounits cases, or other cases relied upon more generally,[104] assist the Respondent's position. Moreover, Hancock is now the determinative principal authority on the issues raised in this application, as discussed in the reasons which follow.

55 Concluding, it is submitted that this is a case where there is no sustainable argument that the matters in issue in the Court proceedings fall within the arbitration agreement.[105] It is common ground that, if the Court reaches that conclusion, no stay should be granted.[106]

56 In my opinion, the position put by the Applicants in their submissions correctly reflects the current state of the authorities with respect to the operation of s 7 and other relevant provisions of the IAA and the Model Law. Moreover, I accept their submissions in the current context for the reasons advanced on the basis of the material relied upon. The Respondent's submissions, on the other hand, put a position which is, in my view, at odds with the current state of the authorities in the present context and would see the courts significantly usurping party autonomy so intrinsic in the arbitral process and, significantly, negating the application of the Kompetenz‑Kompetenz principle enshrined in the IAA and the Model Law.

57 As the party submissions indicate, there have been different approaches in the cases on stay applications, whether under the provisions of s 7 of the IAA or Article 8 of the Model Law. This is clear from a broad international perspective, as indicated in the following commentary:[107]

3.36 A vexed question that has arisen across Model Law jurisdictions is precisely what level of proof of the validity of the arbitration agreement should the court require or allow before referring parties to arbitration. An alternative way of phrasing this, is what kinds of reviews or attack on the arbitration agreement should be allowed? In theory, this can range from a mere prima facie satisfaction of a valid arbitration agreement through to a full merits review. The Model Law Case Digest summarises the divergent jurisprudence:

29. Whether courts seized of referral applications should review the validity, operativeness, performability and applicability of the arbitration agreement fully or merely on a prima facie standard is a question that has not been answered in a consistent manner.

30. In several jurisdictions, including Croatia, Spain, Mexico, Australia [Electra Air Conditioning BV v Seeley International Pty Ltd, Federal Court, Australia [2008] FCAFC 169; Paharpur Cooling Towers Ltd v Paramount (WA) Ltd [2008] WAS CA 110; Hi‑Pert Pty Ltd v Kiukiang Maritime Carriers Inc [1998] FCA 1485; Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd [1996] NSWSC 104; Wes Trac Pty Ltd v Eastcoast OTR Tyres Pty Ltd [2008] NSWSC 894; APC Logistics Pty Ltd v CJ Nutracon Pty Ltd [2007] FCA 136], Uganda, and Kenya, the cases show that courts have either not considered this issue or not considered it in detail, and have adopted the view that a full review would be required. Issues of validity, operativeness, performability and applicability would thus be analysed fully, and decisions relating thereto should be final. In Ireland, a court that analysed the issue in detail said to be inclined to favour that standard.

31. However, courts in other jurisdictions have preferred to apply a prima facie standard on the ground that, as arbitrators are empowered to rule on their own jurisdiction (article 16 (1)), they normally ought to rule first on issues of validity, operativeness, performability and applicability, subject to subsequent review by courts (see below, section on article 16, para. 3). For example, Hong Kong courts seized of referral applications have in most cases adopted the prima facie approach, but they have also occasionally assumed that they were empowered to deal fully with issues of validity, operativeness, performability and applicability. The prima facie approach was also adopted by the Supreme Court of India.

3.37 The issue has been settled determinatively in some jurisdictions, for example, in Singapore, under s 6 of the Singaporean IAA. This is demonstrated by the summary of authorities presented by the Singaporean High Court in Nippon Catalyst Pte Ltd v PT Trans‑Pacific Petrochemical lndotama [2018] SGHC 126:

General principles on staying in favour of arbitration

14. ... the law on whether a stay should be granted under s 6 of the [Singaporean] IAA is well‑established. The Court of Appeal in Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appeals [2015] SGCA 57; [2016] 1 SLR 373 ("Tomolugen") at [63] (and more recently reiterated in Wilson Taylor Asia Pacific Pte Ltd v Dyna‑Jet Pte Ltd [2017] 2 SLR 362 ("Dyna‑Jet") at [11]) held that the court should grant a stay in favour of arbitration if the applicant can establish a prima facie case that:

(a) there is a valid arbitration agreement between the parties to the court proceedings;

(b) the dispute in the court proceedings (or any part thereof) falls within the scope of the arbitration agreement; and

(c) the arbitration agreement is not null and void, inoperative or incapable of being performed.

15. It should be emphasised that the court applies only a prima facie standard of review at this stage of proceedings. This does not mean that the court turns a "blind eye to obvious drawbacks in [an applicant's] case" (Dyna‑Jet at [15]). But this also means that the court does not go into the full merits of the parties' cases. This flows from the "recognition and enforcement of the kompetenz‑kompetenz principle", and the court will "stay the proceedings in favour of arbitration except in cases where the arbitration clause is clearly invalid or inapplicable" [emphasis in original] (Tomolugen at [68]).

58 The issue was considered by the Full Federal Court in Hancock[108] in the context of the provisions of s 8 of the Commercial Arbitration Act 2010 (NSW) (which enacts Article 8 of the Model Law):

The proper approach to an application under s 8

141. The terms of question 7 and the reference to "standard of proof" were and was prompted by debate in the cases concerning provisions such as s 8 as to how the Court should approach the task. Broadly, there have been said to be two approaches. The first approach taken largely by courts in what might be called "Model Law jurisdictions" is to give significant weight to the authority of the arbitrator and to the principle of Kompetenz‑Kompetenz recognised by s 16 of the CA Act. Under this approach, the Court does not reach a final view on the balance of probabilities in respect of the matters in s 8, including the scope of the arbitration agreement. If there appears to be a valid arbitration agreement which prima face covers the matters in dispute, the matter should be referred to the arbitrator to deal with questions of jurisdiction, including the scope of the arbitration agreement. With one important qualification, one sees this approach most fully discussed in the comprehensive reasons of Menon CJ writing for the Singapore Court of Appeal in Tomolugen Holdings Ltd v Silica Investors Ltd [2015] SGCA 57, in Hong Kong: Star (Universal) Co Ltd v Private Company "Triple V" Inc [1995] 2 HKLR 62 at 65 (Court of Appeal) and PCCW Global Ltd v Interactive Communication Service Ltd [2006] HKCA 434; [2007] 1 HKLRD 309, at 320-321 [60] (Court of Appeal) and in first instance courts there: T v TS [2014] 4 HKLRD 772 at 778 [16] and Ling Yan Temple Ltd v Ng Yook Mau [2010] HKEL·734, in Canada in the British Columbia, Ontario and New Brunswick Courts of Appeal: Gulf Canada Resources Ltd v Arochem International Ltd (1992) 66 BCLR (2d) 113, Dalimpex v Janicki (2003) 228 DLR (4th) 179, and Harrison v UBS Holding Canada Ltd (2014) 418 NBR (2d) 328. Gulf Canada and Dalimpex were specifically approved by the majority of the Supreme Court of Canada in Dell Computer Corp. v Union des consommateurs [2007] SCC, 34; 2 SCR 801. There was a caveat in the judgment of the majority in Dell as to the general applicability of the so‑called prima facie approach to which we will come and which is of importance to this case. The prima facie approach has also been adopted in New Zealand and Ireland: Ursem v Chung [2014] NZHC 436; NZAR 1123 per Abbott AsJ and P Elliot & Company Ltd (In receivership and liquidation) v FCC Elliot Constructions Ltd [2012] IEHC 361 per Mac Eochaidh J, but cf The 'Lisheen Mine' v Mullock & Sons (Shipbrokers) Ltd [2015] IEHC 50 at [114]-[135] per Cregan J.

142. The second and contrasting approach is that adopted by the English Courts that a full merits hearing will be undertaken as to the existence and scope of the arbitration agreement and that the disputes fall within it: Joint Stock Company "Aerofiot Russian Airlines" v Berezovsky [2013] EWCA Civ 784; [2013] 2 Lloyd's Rep 242 at 258 [72]-[74].

143. In dealing with the application of the CA Act the primary judge appeared in one part of her Honour's judgment to favour the prima facie approach, when her Honour said at [86]:

In my view, the language of ss 8(1) and 16 and the authorities set out above lead to the conclusion that the existence of an apparently valid arbitration agreement is sufficient to satisfy the first of the factual requirements for the general applicability of the commercial arbitration legislation in this case. This will generally be established by the tender of an executed agreement containing a clause which, properly construed, is an arbitration agreement within the meaning of s 7(1).

144. In dealing, however, with agreed questions 6 and 7, the primary judge expressed herself as applying the balance of probability approach reflected in the views of Aikens LJ for the Court of Appeal in Berezovsky. Her Honour said at [115]:

In my view, the approach in Robotunits is consistent with the approach articulated in Berezovsky, which I respectfully consider to be correct for the reasons given by Aitkens LJ. Thus, in my view, the correct approach is to decide on the balance of probabilities whether, on the proper interpretation of the relevant arbitration agreement, a matter arising in the proceeding falls within the scope of the agreement. This will generally involve a characterisation of the matter, without an assessment of the merits of the disputes arising from the matter. However, in some cases, it may be necessary to consider the merits of a claim or defence said to be the subject of an arbitration agreement in order to be satisfied that there is a relevant "matter". For example, if the application of the release is a matter which falls within the scope of an arbitration agreement, the mere fact that the release's application is asserted will not justify a finding as to the existence of a matter the subject of the arbitration agreement if there is no sustainable argument that the release potentially operates to bar or preclude the claims the subject of the dispute.

145. We think that any rigid taxonomy of approach is unhelpful, as are the labels "prima facie" and "merits" approach. How a judge deals with an application under s 8 of the CA Act will depend significantly upon the issues and the context. Broadly speaking, however, and with some qualification, aspects of the prima facie approach have much to commend them as an approach that gives support to the jurisdiction of the arbitrator and his or her competence, as recognised by the common law and by s 16 of the CA Act_, whilst preserving the role of the Court as the ultimate arbiter on questions of jurisdiction conferred by ss 16(9) and (10), 34(2)(a)(iii) and 36(1)(a)(iii) of the_ CA Act_. Broadly, the approach is consonant with the structure of the_ CA Act and the Model Law. However, it is difficult to see how the Court can exercise its power under s 8 without forming a view as to the meaning of the arbitration agreement. Further, it may be that if there is a question of law otherwise affecting the answer to the question of jurisdiction, especially one that is confined, which might be dispositive, it might be less than useful for the Court not to deal with it. In Dell, Deschamps J speaking for the majority (McLachlin CJ, Binnie, Abella, Charron and Rothstein JJ) reflecting this approach said at (2007) 2 SCR 848-849 [84]:

... [t]he court's expertise in resolving such questions, ... the fact that the court is the forum to which the parties apply first when requesting referral and ... the rule that an arbitrator's decision regarding his or her jurisdiction can be reviewed by a court. It allows a legal argument relating to the arbitrator's jurisdiction to be resolved once and for all, and also allows the parties to avoid duplication of a strictly legal debate. In addition, the danger that a party will obstruct the process by manipulating procedural rules will be reduced, since the court must not, in ruling on the arbitrator's jurisdiction, consider the facts leading to the application of the arbitration clause.

59 Whilst the Full Court in Hancock eschewed a rigid taxonomy or 'labels' with respect to this issue, indicating that the approach in particular cases is dependent on issues and context, it is made clear that the jurisdiction and competence of the arbitral tribunal is to be respected and supported. This indicates a fundamental aspect of that jurisdiction, namely the application of the Kompetenz‑Kompetenz principle as recognised at common law and in Article 16 of the Model Law; provisions which have the force of law in Australia under s 16 of the IAA. This approach is also consistent with Article 5 of the Model Law which prohibits a court from intervening except where so provided in the Model Law. There is no basis in the present proceeding for the Article 5 exception to arise.

60 Without wanting to oversimplify the decision of the Supreme Court of Canada in Dell, the practical common sense in a court resolving a relatively straightforward question of law with respect to the construction of an arbitration agreement where no issues of fact arise is readily apparent. This may expedite the arbitral process and avoid subsequent recognition and enforcement issues. I do not, however, take the Dell decision to be an authority supporting a broad based 'merits' consideration or review approach on the part of the courts. In my view, this is made very clear in a subsequent decision of the Supreme Court of Canada where Dell was considered. In Uber Technologies Inc v Heller the majority (Abella and Rowe JJ) said:[109]

32. Under the Dell framework, the degree to which courts are permitted to analyse the evidentiary record depends on the nature of the jurisdictional challenge. Where pure questions of law are in dispute, the court is free to resolve the issue of jurisdiction (para. 84). Where questions of fact alone are in dispute, the court must "normally" refer the case to arbitration (para. 85). Where questions of mixed fact and law are in dispute, the court must refer the case to arbitration the relevant factual questions require "only superficial consideration of the documentary evidence in the record" (para. 85).

33. In setting out this framework, Dell adopted an approach to the exercise of discretion that was designed to be faithful to what the international arbitration literature calls the "prima facie" analysis test as regards questions of fact and questions of mixed fact and law (para. 83). Under this test, the court must "refer the parties to arbitration unless the arbitration agreement is manifestly tainted by a defect rendering it invalid or inapplicable" (para. 75). To be so manifestly tainted, the invalidity must be "incontestable", such that no serious debate can arise about the validity (para. 76, quoting Éric Loquin, "Competence arbitrale", in Juris‑classeur Procedure civile (loose‑leaf), fasc. 1034, at No. 105). Rather than adopting these standards literally, Dell gave practical effect to what was set out in the arbitration literature by creating a test whereby a court refers all challenges of an arbitrator's jurisdiction to the arbitrator unless they raise pure questions of law, or questions of mixed fact and law that require only superficial consideration of the evidence in the record (paras. 84-85).

34. The doctrine established in Dell is neatly summarized in its companion case, Rogers Wireless Inc. v. Muroff, 2007 SCC 35 (CanLII), [2007] 2 S.C.R. 921, at para. 11:

The majority of the Court held that, when an arbitration clause exists, any challenges to the jurisdiction of the arbitrator must first be referred to the arbitrator. Courts should derogate from this general rule and decide the question first only where the challenge to the arbitrator's jurisdiction concerns a question of law alone. Where a question concerning jurisdiction of an arbitrator requires the admission and examination of factual proof, normally courts must refer such questions to arbitration. For questions of mixed law and fact, courts must also favour referral to arbitration, and the only exception occurs where answering questions of fact entails a superficial examination of the documentary proof in the record and where the court is convinced that the challenge is not a delaying tactic or will not prejudice the recourse to arbitration.

61 Although there may be controversy generally and difficulty in delimiting the boundaries of any Dell exception, it is clear that where the issues raised involve factual matters a court should defer to the jurisdiction of the arbitral tribunal and the application of the Kompetenz‑Kompetenz doctrine now embedded in that jurisdiction.

62 The determination of the scope of an arbitration agreement is a determination as to the express or implied agreement of the parties. The process relies upon 'orthodox principles of interpretation' having regard to 'context and purpose'.[110] Thus, in Comandate Marine Corp v Pan Australia Shipping Pty Ltd, Allsop J said:[111]

The ascertainment of the scope of the clause is a question of the construction of a contract. Its meaning is to be determined by what a reasonable person in the position of the parties would have understood it to mean, having regard to the text, surrounding circumstances, purpose and object of the transaction: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at [22].

The arbitration agreement the subject of this application (whether contained in the Settlement Agreement or otherwise) is couched in a suite of complex provisions in a suite of complex documents and the subject of a long history of various amendments and arbitral awards and determinations. Having regard to these matters it would, in my view, be absurd to suggest the possibility of, in effect, a summary determination of a discrete and narrow question of law devoid of consideration of any factual matters or context which might be approached within a possible Dell 'exception'.

63 Further light is cast on the extent to which the Court should have regard to the substance of the disputes said to be within the net of an arbitration agreement by consideration of the requirement in s 7(2)(b) of the IAA that for a stay in favour of arbitration, 'the proceedings involve the determination of a matter that, in pursuance of the agreement, is capable of settlement by arbitration'. Allsop J considered this requirement in Comandate Marine Corp v Pan Australia Shipping Pty Ltd:[112]

The phrase "a matter" is apt to be understood at a level of generality by reference to the arbitration agreement. This conforms with the views of all the justices in Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 at 344-‍45 and 351-52 and McLelland J in Flakt Australia Ltd v Wilkins & Davies Construction Co Ltd [1979] 2 NSWLR 243 at 250. See also Metrocall Inc v Electronic Tracking Systems Pty Ltd [2000] NSWIRComm 136; (2000) 52 NSWLR 1. It is plain that the phrase "a matter" cannot have the full connotation of the phrase in the Constitutional sense: Tanning Research 169 CLR at 351. This is so because it is linked to the terms of the arbitration agreement. It is the matter, the differences between the parties, the controversy between the parties, which, under the agreement, the parties have agreed to submit to arbitration. Thus, some issue may be part of the overall controversy or matter in the sense understood in federal jurisdiction: Fencott v Muller (1983) 152 CLR 570 at 608 and Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 585-86, but not fall within the scope of the arbitration clause. Recognising how the word "matter" is used in Art II, Subart 3 and the content of Art II, Subart 1, the word "matter" in s 7(2)(b) can be seen to be a reference to the differences between the parties or the controversy that are or is covered by the terms of the arbitration agreement. That is, such part (or all) of the differences that fall within the scope of the arbitration agreement. It is that body of differences which is to be capable of settlement by arbitration.

There is no suggestion that this process involves more than the Court forming a general view that the differences between the parties fall within the scope of the arbitration agreement, much less any examination of claims and responses in detail or the Court embarking on construction of the arbitration agreement. This approach is consistent with respect for and support of the jurisdiction of the arbitral tribunal and application of the doctrine of Kompetenz‑Kompetenz.

64 A similarly 'light touch' approach has been taken to the question of whether a 'matter' needs to satisfy some threshold of sustainability or an initial evaluation of the prospects of success. A possible requirement of this nature was rejected by the Full Federal Court in Hancock:[113]

There is a further difficulty in the approach of the primary judge insofar as it proceeded beyond a characterisation of the nature of the matter and whether it fell within the arbitration agreement. The requirement of an assessment as to whether there was a "sustainable argument" that the matter falls within the arbitration agreement has its dangers. Of course, if there is no sustainable argument that a matter or dispute can be characterised as falling within the agreement, it should not be referred to arbitration. But difficulties arise if this enquiry becomes one directed to the strength of the case raised by the issue or matter. The importance of this will become more evident in due course in discussing the primary judge's treatment of some of the provisions of the Hope Downs Deed. It is sufficient to say at this point that it would generally be wrong for the Court to examine an argument in a form of summary disposal application, and, if it were thought that an asserted case, in terms otherwise falling within the scope of the agreement, was sufficiently weak not to be "sustainable", not to refer the matter to arbitration. That would be to usurp the role of the arbitrator. The Court's role in s 8 [of the Commercial Arbitration Act] is not to act as a court of summary disposal filtering the matters that are suitable for arbitration.

65 I turn now to issues raised with respect to the operation of the proviso to the operation of s 7(2) of the IAA which is contained in s 7(5) which operates to prevent an order under the preceding subsection if the court finds that 'the arbitration agreement is null and void, inoperative or incapable of being performed'. As observed previously, the Respondent relies upon this provision as a basis for a refusal of an order under s 7(2). In essence, the position put is that a variety of provisions of the Settlement Agreement so constrain the operation of the arbitration agreement (whether contained in the Settlement Agreement or other agreement) so as to render the arbitration agreement 'inoperative or incapable of being performed'.

66 Having regard to the statement of Megarry J in Cordell v Second Clanfield Properties Ltd,[114] in the context of this strongly argued application it is, in my view, nevertheless helpful to set out the following commentary on the state of the authorities with respect to the treatment of the proviso:[115]

Before considering each of the sub‑parts of the proviso, it is useful to discuss who makes the decision about whether the proviso is met. This is because the power is co‑extensive between courts and the tribunal, as discussed by the Full Federal Court in Hancock Prospecting Pty Ltd v Rinehart:[116]

147. Whilst s 8 [Commercial Arbitration Act 2010 (NSW)] uses the word "finds" in the proviso, that should not be taken as a categoric requirement that the Court must hear that issue. It can be accepted that as a general rule, unless there is an established legal basis for refusing to do so, a court should, upon legitimate request, exercise jurisdiction conferred on it. However, s 8 is found in an Act of Parliament the paramount object of which is the facilitation of the work of impartial arbitral tribunals. One of the features of that facilitation is the express recognition of the authority of the arbitral tribunal to rule on its own jurisdiction. This includes, expressly, any objection "with respect to the existence or validity of the arbitration agreement", including any objection with respect to the existence or validity of the arbitration agreement: s 16(1). Section 8 should be read with s 16(1) and thus, the word "finds" should not be read as requiring that the matters in the proviso cannot be part of the reference to the arbitrator. These considerations are central to the resolution of the issues discussed in sections F, G and H below.

148. The question will arise as to when the Court should hear the issues in the proviso. We will return to this in more detail in section G below. It is, however, useful at this point to refer to what was said by Colman J in A v B [2007] 1 Lloyd's Rep 237 at [137] in discussing the question whether the Court should hear the application as to whether the arbitration agreement is "null and void etc":

... [O]nce the existence of an arbitration agreement has been established by the applicant, a stay will be granted unless one of the section 9(4) [of the English arbitration Act] matters is established. The respondent to the application must therefore make good the existence of one of those matters. If the court is unable to determine whether it is so satisfied on the witness statements before it, consideration has to be given to whether to order a trial of the issue or whether a stay should be granted and the question of substantive jurisdiction under section 9(4) left to the arbitrators. Whether the latter course is adopted may in many cases depend heavily on the extent to which the resolution of that issue will involve findings of fact which impact on substantive rights and obligations of the parties which are already in issue and whether in general the trial can be confined to a relatively circumscribed area of investigation or is likely to extend widely over the substantive matters in dispute between the parties. If the latter is the case the appropriate tribunal to resolve the jurisdictional issues is more likely to be the arbitration tribunal, provided it has Kompetenz‑Kompetenz.

...

367. Article 8 of the Model Law and s 8 of the CA Act must be read with Art 16 and s 16, respectively. As a matter of construction, the word "finds" in Art 8 and s 8 does not mandate that the Court hear the question whether the arbitration agreement is "null and void, inoperative or incapable of being performed". We refer to what we have said at [147]-[148] above.

...

377. The real issue in any case is whether the Court should hear the separate attack or permit the arbitral tribunal to hear it, by staying its own proceeding. The proper answer to this question will depend on the nature of the attack and all the circumstances.

378. Thus, the words of Art 8 and s 8 should be read and given content against the background, first, that the Court is not required to decide the matters in the proviso; secondly, that the competence principle is wide enough to permit the arbitral tribunal to decide any question of jurisdiction, including whether the arbitration agreement came into existence; and, thirdly, that that decision by the arbitral tribunal is not final, the Court having the final say on the question. A further consideration is that s 8 should, conformably with its language, be construed to facilitate, not impede, the process of arbitration: s 1C(1) of the CA Act.

Lyons J in Transurban WGT Co Pty Ltd v CPB Contractors Pty Ltd summarised the reasoning of the Full Court as follows:[117]

[160] Relevantly, the Full Federal Court considered that:

(1) if the issues relating to the proviso were of short compass, it may be appropriate for the Court to resolve the issue. For example, if there is a question of law otherwise affecting the answer to the question of jurisdiction, especially one that is confined, which might be dispositive, then it might be useful for the Court to address the issue.

(2) if the issues relating to the proviso are of some legal and/or factual complexity, then it will be generally more appropriate for the proviso issue to be referred to the arbitral tribunal.

[161] I note that in Hancock [Prospecting Pty Ltd v Rinehart], the Full Federal Court determined to refer the proviso issue to the arbitral tribunal. In doing so, their Honours noted that '[t]he parties to the litigation have displayed an intensity of application to every matter in dispute that makes us consider that the prospect of holding the parties to a short hearing is unlikely'.

His Honour went on to hold that the proviso should be determined by the arbitrators, as it could not simply be determined - that is, there were complex legal or factual issues outstanding, and issues were 'interrelated' to such a degree that 'argument on one issue might well inform the determination of another'.[118] These decisions reflect the view noted and also adopted in CPB Contractors Pty Ltd v DEAL SRL,[119] that while courts 'can determine such questions', 'generally speaking, [courts] should leave these matters to the arbitrator unless the context in which these questions arise make it preferable for the Court to determine such matters'. Instances where the court itself chooses to determine the proviso itself are thus usually confined to circumstances where there are confined legal and factual issues.[120]

67 In the present circumstances, to the extent that it may be said that the arbitration agreement (whether contained in the Settlement Agreement or otherwise) is subject to any proviso issues relating to it, borrowing from the words of Lyons J, of 'some legal and/or factual complexity' such that any proviso issue is a matter for the arbitral tribunal. This position is also, in my view, consistent with the authorities to which reference has been made as to the respect to be paid to and support for the jurisdiction of the arbitral tribunal and, particularly, the operation and application of the doctrine of Kompetenz‑Kompetenz.

68 For the preceding reasons, including my observations and opinions expressed in the course of setting out and considering some more specific aspects of the party submissions, I find that the Applicants have established the basis for an order under s 7 of the IAA staying this proceeding (save as to costs issues). More particularly, I find that applying the 'light touch' approach referred to in Hancock - rather than using 'labels' - that any issues as to the scope of the arbitration agreement and, or alternatively, its proper construction (as contained in the Settlement Agreement or otherwise) is a matter within the jurisdiction of the arbitral tribunal and not the Court. Also, I am satisfied that the nature of the dispute or disputes between the parties has the requisite connection - as explained in the preceding reasons - with such agreement. I should add, to avoid any misunderstanding, that nothing in these reasons is to be taken as expressing any view or views on the part of the Court as to the scope or proper construction of the arbitration agreement (as contained in the Settlement Agreement or otherwise).

69 Orders will be made as sought by the Applicants under the provisions of s 7 of the IAA. The question of costs is reserved and the parties will be heard on this issue as required.

70 The parties are to provide draft orders to give effect to these reasons with respect to the stay application and also with respect to the issue of costs if the latter is the subject of agreement.

WOODSIDE ENERGY (BASS STRAIT) PTY LTD (ACN 004 228 004)

WOODSIDE ENERGY (NORTH WEST SHELF) PTY LTD (ACN 004 514 489)

[1] Esso Australia Resources Pty Ltd v Oil Basins Limited [2024] VSCA 240 (Appeal).

[3] Hancock Prospecting Pty Ltd v Rinehart [2017] FCAFC 170; (2017) 257 FCR 442 (Hancock), [146].

[6] Appeal, [4]-[8] (for the purposes of the reasons in this application, the reference in the background as set out by the Court of Appeal to 'Producers' is a reference to the Applicants and the reference to 'OBL' is a reference to the Respondent).

[7] Including the notices of dispute sent by the Applicants dated 8 and 9 October 2023 (Notice of Dispute) at exhibit JEK‑1 to Kelly 1 (JEK‑1), 9-11, 16-18. See also the Applicants' letter dated 7 September 2023 and the Respondent's response dated 14 September 2023: JEK‑1, 39-46.

[8] Kelly 1, [6] and confidential exhibit JEK‑2, 101-139. Recital J to the Arbitrator Appointment Agreement defines the Arbitral Panel: confidential exhibit JEK‑2, 104.

[12] Final Award, [19] [AB20/B0954].

[13] This appears to stand for 'End of Area Life'.

[14] The letter states that the claims are inconsistent with cl 6(h). It should have stated that the claims are inconsistent with cl 6B(f). Nothing turns on this.

[15] See [12] above.

[16] Amended Statement of Claim Prayers A, BA and D [AB1/A0014].

[17] Points of Defence and Counterclaim, [5] [AB57/C1516], [92.1] [AB57/C1552].

[18] Hancock Prospecting Pty Ltd v DFD Rhodes Pty Ltd [2020] WASCA 77; 55 WAR 435, [322]; Quinlan CJ (Beech and Vaughan JJA) citing Carter Holt Harvey Ltd v Genesis Power Ltd [2006] NZHC 114; [2006] 3 NZLR 794, [46]; see Transurban WGT Co Pty Ltd v CPB Contractors Pty Ltd [2020] VSC 476 (Transurban WGT), [136], [146], which includes removal of the Court's inherent and auxiliary equitable jurisdictions.

[19] That is, the dispute 'shall be determined by arbitration in Melbourne, Victoria, Australia in accordance with the Commercial Arbitration Act 1984 (Vic)'.

[20] Born, G.B, International Commercial Arbitration, 3rd Ed (Born), ss 7.02[E], 1163, 7.03[A][2][c], 1186-8; and Hancock Prospecting Pty Ltd v Rinehart [2017] FCAFC 170; (2017) 257 FCR 442, [348]-[349], [355], [377]-[378]; Ciano Trading & Services C.T. v. Skylink Aviation Inc., 2015 ONCA 89 (CanLII), Court of Appeal for Ontario, Canada, 9 February 2015, [7].

[22] Hancock, [378]; Transurban WGT, [157].

[23] See Article 5 of the Model Law as adopted by the IAA, see Articles 2 and 28 particularly.

[25] [2017] FCAFC 170; (2017) 257 FCR 442, [149].

[28] See Dell Computer Corporation v Union des Consommateurs [2007] 2 SCR 801 (Dell).

[29] See below, [56] and following.

[30] Hancock, [141], [145], citing with approval the majority's judgment in Dell, [84].

[32] Hancock, [141], [145] (emphasis added).

[35] Tesseract International Pty Ltd v Pascale Construction Pty Ltd (2024) 98 ALJR 880, [13] (Gageler CJ), [37], [39]-[42]; and see below, [56] and following.

[36] See [8] and [9] above.

[37] See [10] above.

[38] See questions posed at page 6 of the Ali Report and Amended Statement of Claim, [43(a)], [44B(a)].

[39] See the Ali Report and (issues of foreign law being questions of fact: Mostyn v Fabrigas (1774) 1 Cowp 160, 174; 98 ER 1029, 1028 (Lord Mansfield) and Commonwealth v Yarmirr [2001] HCA 56; (2001) 208 CLR 1, [203]; DC of T v Shi [2021] HCA 22; (2021) 273 CLR 235, [93]; the Gillette Report.

[40] See the Maniatis Report, especially [5], [7], [8], [9a], [9b], [33]-[37].

[41] See [23] and [24] above.

[42] See below, [56] and following.

[43] [2020] VSC 476, [155]-[161], [190].

[45] Transurban WGT, [206]-[207].

[46] See cl 19(a) of the Settlement Agreement (emphasis added).

[47] First to Third Defendants' Submissions in Support of Stay Application (19 November 2024), [38]-[43].

[49] See [67] and [73] of the Final Award, 826, 828-829 of JEK‑1.

[50] See [5] and [7] of the Maniatis Report.

[51] See [24]-[27] and [42]-[50] of the Ali Report.

[52] See [9] and [33]-[37] of the Maniatis Report.

[56] First to Third Defendants' Submissions in Support of Stay Application (19 November 2024), [47], [48].

[57] See the email sent by ABL to K&L Gates dated 21 October 2024 (contained in Attachment A to the First to Third Defendants' Submissions in Support of Stay Application).

[58] Contrary to the position in Dialogue Consulting Pty Ltd v Instagram Inc and Ors [2020] FCA 1846 (Dialogue) [5]-[6], [125]-[149], [183], including the filing of pleadings (which raised no issue as to jurisdiction), including cross claims, the provision of further and better particulars, compliance with notices to produce, orders made for discovery and participation by the parties in a court ordered mediation.

[59] First to Third Defendants' Submissions in Support of Stay Application (19 November 2024), [8]-[10].

[61] Cf Dialogue, [150], where the application for the stay was filed over 12 months after the commencement of the proceeding.

[63] Cf Dialogue, [180]-[181], [200].

[66] See First to Third Defendants' Submissions in Support of Stay Application (19 November 2024), [31].

[67] Degroma Trading Inc v Viva Energy Australia Pty Ltd [2019] FCA 649.

[69] See ss 39(2)(a) and 39(b)(i) of the IAA; Esso Australia Resources Pty Ltd v Oil Basins Limited [2024] VSCA 240, [42].

[70] See First to Third Defendants' Submissions in Support of Stay Application (19 November 2024), [20].

[72] Appeal, [42]; set out above, [2].

[73] Written Submissions of the Plaintiff / Respondent on First to Third Defendants' Stay Application (22 November 2024), [15]-[18].

[74] See, e.g., Great Union Pty Ltd v Sportsgirl Pty Ltd [2021] VSCA 299, [28] (McLeish, Kennedy JJA and Macaulay AJA).

[75] [2015] VSC 268; (2015) 49 VR 323, 336 [21].

[76] Robotunits [2015] VSC 268; (2015) 49 VR 323, 345 [43].

[77] See, e.g., in addition to the cases mentioned below, Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332, 351 (Deane and Gaudron JJ) ('[t]he words "capable of settlement by arbitration" indicate that the controversy must be one falling within the scope of the arbitration agreement'); Warner Bros Feature Productions Pty Ltd v Kennedy Miller Mitchell Films Pty Ltd [2018] NSWCA 81; (2018) 130 IPR 527 [75]-[86], [88] (Bathurst CJ, Beazley P and Emmett AJA agreeing) (reversing the trial judge's conclusion that no arbitration clause had been incorporated into an agreement and determining that the dispute fell within it, thus granting a stay under s 7(2)); Samsung C&T Corp v Duro Felguera Australia Pty Ltd [2016] WASC 193 [44]-[45] (Le Miere J) (holding that, where the stay application turned on whether an arbitration clause had been incorporated into the contract, 'the correct approach ... is to decide on the balance of probabilities whether, on the proper interpretation of the Interim Subcontract [the relevant agreement], the arbitration agreement is a term of the Interim Subcontract and hence whether the Duro Claims [the claims said to be subject to arbitration] fall within the scope of an arbitration agreement in the Interim Subcontract'); Casaceli v Natuzzi SPA [2012] FCA 691; (2012) 292 ALR 143 [38]-[44] (Jagot J) (holding that the dispute in issue fell within the scope of an arbitration agreement, and not another contract that provided for litigation in an agreed jurisdiction, as contended by the party resisting arbitration).

[78] (2000) 100 FCR 240, [10] (emphasis added).

[79] (2000) 100 FCR 240, [22]-[44].

[80] (2000) 100 FCR 240, [45].

[81] (2000) 100 FCR 240, [63].

[82] Article II(1) defines an arbitration agreement as 'an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration'.

Article II(3) provides: 'The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.'

[83] See also Tianqi Lithium Kwinana Pty Ltd v MSP Engineering Pty Ltd (No 2) [2020] WASCA 201; (2020) 56 WAR 169, [76] (Buss P, Murphy and Mitchell JJA): 'It would be inconsistent with the paramount object of the [WA State] Arbitration Act to construe it as requiring that a dispute which the parties agreed could, but was not required to be, determined by arbitration must nevertheless be referred to arbitration when a party to the dispute engages s 8.'

[84] See below, [56] and following.

[85] See for example, Seeley International Pty Ltd v Electra Air Conditioning BV [2008] FCA 29; [2008] 246 ALR 589 (whether there was an arbitration agreement); American Diagnostica Inc v Gradipore Ltd (1998) 44 NSWLR 213 (inability of parties to opt out of the application of legislative provisions by agreement); Instagram Inc v Dialogue Consulting Pty Ltd (2022) 291 FCR 240 (whether arbitration agreement inoperative by waiver).

[86] [2017] FCAFC 170; (2017) 257 FCR 442, [149].

[87] See, e.g., Hancock, [145] (Allsop CJ, Besanko and O'Callaghan JJ): 'We think that any rigid taxonomy of approach is unhelpful, as are the labels "prima facie" and "merits" approach. How a judge deals with an application under s 8 of the CA Act [Commercial Arbitration Act 2010 (NSW)] will depend significantly upon the issues and the context.'

[88] See below, [56] and following.

[89] [2021] VSCA 299, [28] (McLeish, Kennedy JJA and Macaulay AJA), citing (in n 22) Hancock, [146].

[90] [2016] WASC 193, [44]-[45] (Le Miere J). See, to the same effect, Rinehart v Rinehart (No 3) [2016] FCA 539; (2016) 257 FCR 310 [297] (Gleeson J), discussed in Hancock.

[91] IAA Schedule 2 Article 16, as inserted by International Arbitration Amendment Act 1989 (Cth) s 7 (inserting IAA ss 15-16) and s 8 with Schedule 1 (inserting the 1985 Model Law as IAA Schedule 2, including Article 16(1)). Article 16(1) provided as follows:

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 the invalidity of the arbitration clause.

[92] (1998) 44 NSWLR 312, 323D-G.

[93] Including after the amendments to the IAA with effect from 6 July 2010 with effect that the Model Law applied to an arbitration under the Settlement Agreement: see International Arbitration Amendment Act 2010 (Cth) Schedule 1 item 16, repealing and substituting a new version of what is now IAA s 21(1). See also Civil Law and Justice Legislation Amendment Act 2015 (Cth) Schedule 2, inserting IAA s 21(2).

[94] Section 43 of the Commercial Arbitration Act 2011 (Vic):

(a) this Act applies to an arbitration agreement (whether made before or after the commencement of this Act) and to an arbitration under such an agreement; and

(b) a reference in an arbitration agreement to the Commercial Arbitration Act 1984, or a provision of that Act, is to be construed as a reference to this Act or to the corresponding provision (if any) of this Act.

(2) If an arbitration was commenced before the commencement of this Act, the law governing the arbitration and the arbitration agreement is to be that which would have been applicable if this Act had not been enacted.

(3) For the purposes of this section, an arbitration is taken to have been commenced if -

(a) a dispute to which the relevant arbitration agreement applies has arisen; and

(b) the arbitral tribunal has been properly constituted.

[95] Written Submissions of the Plaintiff / Respondent on First to Third Defendants' Stay Application (22 November 2024), [105]-[107].

[96] As explained above, the Settlement Agreement and Reference evince no such intention.

[97] If the award were a 'foreign award', then the same result would obtain under IAA s 8(5)(d). It would not be because it would not be made outside of Australia: see the definition of 'foreign award' in s 3(1).

[98] Cf Tesseract International Pty Ltd v Pascale Construction Pty Ltd (2024) 98 ALJR 880 [45] (Gageler CJ): 'Article 28 of the Model Law should not be construed to compel an arbitral tribunal to engage in the futile exercise of applying the substantive law to produce an award which, by reason of its application of that law, would be liable to be set aside by a supervising court under Art 34(2)(b)(i) or (ii) of the Model Law applying the law or public policy of the place chosen by the parties as the place of the arbitration.' Here, the harmonious construction of Articles 1, 7 and 16 of the Model Law similarly requires that effect be given to the parties' agreement that a court, and not arbitrators, should decide whether a dispute falls within the scope of the arbitration agreement.

[99] See generally Barceló, The Competence‑Competence Principle's Negative Effect in Kröll, Bjorklund and Ferrari, Cambridge Compendium of International Commercial Investment Arbitration (2023) 807, 809, noting that while the competence‑competence principle 'is more or less universally accepted in all national jurisdictions', it does not automatically follow that questions of arbitral jurisdiction should necessarily be decided by arbitration.

[100] (2000) 100 FCR 240, [22]-[63] (which concerned Iowa law).

[101] [2015] VSC 268; (2015) 49 VR 323, [43]-[59] (where Victorian law applied to the agreement containing the arbitration clause: at [8]).

[102] See, as to the Court's discretion as to how to approach the application by analogy to s 8 of the State Commercial Arbitration Acts, Hancock, [145] (Allsop CJ, Besanko and O'Callaghan JJ).

[103] Not least for the reason in [106.2] of the Written Submissions of the Plaintiff / Respondent on First to Third Defendants' Stay Application, that an award on that issue would be one not falling within or beyond the scope of the parties' submission to arbitration, and thus liable to be set aside.

[104] And see above, [47].

[105] Hancock, [149] (Allsop CJ, Besanko and O'Callaghan JJ).

[106] First to Third Defendants' Submissions in Support of Stay Application (19 November 2024), [20].

[107] C Croft, D Stamboulakis, M Warren, International and Australian Commercial Arbitration (LexisNexis, 2022), [3.36], [3.37], 126-7.

[108] [2017] FCAFC 170; (2017) 257 FCR 442, 480-1 (emphasis added).

[109] (2020) SCC 16, 447 DLR (4th) 179 (Can).

[110] As stressed by the High Court in Rinehart v Hancock Prospecting Pty Ltd [2019] HCA 13; (2019) 267 CLR 514, 517; and see Great Union Pty Ltd v Sportsgirl Pty Ltd [2021] VSCA 299, [28]-[35].

[111] [2006] FCAFC 192; (2006) 157 FCR 45, 87-8.

[112] [2006] FCAFC 192; (2006) 157 FCR 45, [235] (emphasis added); and see Robotunits Pty Ltd v Mennel [2015] VSC 268; (2015) 49 VR 323, 669-9 [22]-[30].

[113] Hancock, 483 [149]; a similar approach having been taken and any requirement of 'sustainability' rejected in Robotunits Pty Ltd v Mennel [2015] VSC 268; (2015) 49 VR 323, 339-45 - and, as observed in the reasons in this proceeding, there was no issue in Robotunits with respect to Kompetenz‑Kompetenz.

[114] [1969] 2 Ch 9, 16-17; and see Aldi Foods Pty Ltd v Northcote Shopping Centre Pty Ltd [2024] VSC 799.

[115] C Croft, D Stamboulakis, M Warren, International and Australian Commercial Arbitration (LexisNexis, 2022), [3.47], 134-6.

[116] [2017] FCAFC 170; (2017) 257 FCR 442, 482-3, 535-6.

[118] [2020] VSC 476, [206]-[207].

[119] [2021] NSWSC 820, [60].

[120] See, for example, Freedom Foods Pty Ltd v Blue Diamond Growers [2021] FCA 172 at [94] per Moshinsky J (the issues 'are relatively confined, both legally and factually. I consider that the Court is well placed to determine these issues now'); cf Dialogue Consulting Pty Ltd v Instagram, Inc [2020] FCA 1846, where the court also determined that it should resolve the proviso, based primarily on the availability of evidence before the court, 'tricky choice of law questions', and the view that the court was 'better placed' to deal with arguments of Australian law than the tribunal ([196]-[202]).