Walter Rau Neusser Oel und Fett ADG v Cross Pacific Trading Ltd

REASONS FOR JUDGMENT 1 Application is made before me by the respondents for leave to appeal from orders concerning the notices of motion concerning arbitration delivered on 15 August 2005 (see [2005] FCA 1102). As can be seen from my reasons delivered on 15 August 2005 there are important matters underlying the resolution of the arbitration clause dispute which in my view plainly call for clarification. Once again, I make it plain I hope that that is said with the utmost respect to the Full Court in The 'Kiukiang Career' (Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (1998) 90 FCR 1). 2 I may be quite wrong in the views I have expressed, but it seems to me that there is a fundamental issue as to the conformity of intermediate appellate court authority in this Court with intermediate appellate court authority in New South Wales, Queensland, New Zealand, England and South Africa. For that reason I think it appropriate to grant leave. There is no draft notice of appeal before me. One of the matters that I will deal with in a moment is the prompt filing of a notice of appeal. However, the helpful submissions of the parties that have been filed indicate some of the important questions which will be raised. 3 Not only is the question of leave directed to the matter of the correctness of The 'Kiukiang Career', there are also broader issues as to the construction of s 7 of the International Arbitration Act and the proper principles to be applied in related applications concerning the operation of s 7, in particular, the proper approach to the discretionary stay of claims which, on any view of it, do not fall strictly within the terms of the arbitration agreement, either because the parties are different or because of the nature of the claims. 4 There is also buried within the argument a possible consideration of the width of s 7 bearing in mind the use of the word "matter". For these reasons I do not think it appropriate, as I had thought it might be, to proceed with the hearing of the claims against the second to seventh respondents in September 2005. That is unfortunate. The Court is in a position within 6 months of filing of initiating process to hear the matter on its merits. However, the respondents do not wish this to occur for reasons that they need not disclose. They have the benefit of an arbitration clause and they wish to put to an appellate court not insubstantial arguments in relation to the correctness of the approach that I have adopted. In those circumstances, I propose to grant leave to appeal and I will not be hearing the matter in September 2005. 5 The parties should understand that I am in a position to hear such part of the case as the Full Court says it is appropriate for me to hear in the first quarter of next year, indeed, other than the time in November 2005 when I will be in a Full Court I will be able to hear the matter in the first half of December 2005. Those matters are simply said for the benefit of the parties and the Full Court. 6 The applicant seeks a number of conditions upon any grant of leave. In support of that an affidavit of Danella Ann Wilmshurst sworn today was filed in court. The conditions of leave that are sought are that the respondents provide security in the form of a bank guarantee for the whole of the claim; secondly and alternatively, that they provide security for costs of the appeal in the sum of $40,000; thirdly, that leave be granted to file the second amended statement of claim; fourthly, that the hearing dates in September be retained; and, fifthly, that directions be given for service of notices to produce by the applicant to be made returnable at the end of August. I will deal with these requested conditions one by one. 7 I do not see a basis for the provision of the security for the claim. Either I am right or wrong about the arbitration agreement and its meaning. If I am right the case will be heard promptly, if I am wrong it may be that much of the claim will be stayed until the arbitration. 8 As to the second condition the arguments are not so weak or meritless as to require security for costs of the appeal in my view. The prospective appellants (who are respondents to the proceedings at first instance), have been brought to court. They are not substantive applicants and I do not think security for costs should be given. 9 As to the granting of leave to file the proposed second amended statement of claim, in my view for the sake of good order if for no other reason, the record should be brought into line with the argument. I do think it is appropriate as a condition of leave that the proposed second amended statement of claim be filed. However, the respondents should be in a position where they are protected in that regard. The orders that I propose to make will be that leave be granted to file the proposed second amended statement of claim, but subject to the respondents being protected in any future strike out application. 10 As to the notices to produce I will deal with what I think is appropriate in my orders. Mr Street on behalf of the applicant has indicated in three respects he may seek leave to appeal. To avoid unnecessary expense and unnecessary attendance of the parties and their legal advisers and another application I should indicate subject to hearing Mr Jacobs of course my views about the three matters that Mr Street identified. 11 It would seem to me that if the question of the proper construction of the arbitration clause and the proper construction and meaning of s 7 were going to a Full Court in the comprehensive way identified by Mr Jacobs' submissions, if there are real issues that the applicant wishes to agitate about the meaning and content of s 7, the meaning and content of the arbitration clause and the proper approach to this arbitration clause in the context of s 7, I would grant leave for that cross appeal to proceed. 12 If there is to be any such application it should be made in writing by the end of this week. I am in Brisbane at a Judges' meeting until Friday. I will deal with the matter early next week. 13 The respondents should identify their position in relation to any such application made this week by next Tuesday at the latest. I will then deal with the matters on the papers. For those reasons, the orders I make are therefore as follows: 1. Subject to the respondents prosecuting the appeal with all due expedition, grant leave to the first to seventh respondents to appeal from the orders made on 22 August 2005 in connection with the stay issues. 2. Grant leave to the applicant to file a second amended statement of claim substantially in the form of the proposed second amended statement of claim which was before the court at the hearing of the notices of motion concerning stay. 3 The leave in (2) is without prejudice to the respondents' right in due course to seek to strike out any part of that second amended statement of claim and the respondents are to be in a position as they would have been in opposing leave initially. 4. Costs of the application for leave to appeal be costs in the appeal. 5. Any application by the applicant to cross appeal to be filed and served on or before Friday 26 August 2005. 6. On or before Tuesday, 30 August 2005 the respondent is to file any submissions as to why leave to cross appeal should not be granted. 7. On or before Wednesday, 31 August, the applicant is to file any submissions in reply. 8. The application for leave to cross appeal will thereafter be dealt with on the papers. 9. On or before Friday, 26 August, the applicant file and serve submissions entitled Request for Notice to Produce identifying with attached draft notices the reasons for the notice or notices. 10. On or before 30 August the respondents file any brief submissions as to why those notices to produce should not issue. 11. The question of issue of notices to produce be thereafter dealt with on the papers. 12. Stand over the proceedings for directions to 27 September 2005 at 9.30 am. 13. The notice to produce of the respondents to the applicant dated 12 April 2005 be stood over to a date to be fixed. 14. The notice of motion of the respondents for security for costs be stood over to a date to be fixed. 15. The claim for damages arising out of the freezing orders be stood over to a date to be fixed. 16. The request made today for the return of information and documents in sealed envelopes be stood over to a date to be fixed. 17. Liberty to apply in respect of any relevant matter on three days notice. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop.

Associate: Dated: 6 September 2005 Counsel for the Applicant: Mr A W Street SC with Mr J A N Hogan-Doran

Counsel for the Respondent: Mr M S Jacobs QC with Mr P J Bambagiotti

Solicitor for the Respondent: Alexander & Associates