Review of ‘competence’ decisions under s 16(9) of the CAA by Courts – hearing de novo

Arbitral tribunals have the ‘competence’ to make rulings on their own jurisdiction under s 16 of the CAA (and Model Law).  However, within 30 days after the ruling, a party can seek a review of that decision by asking the Court to decide the matter (s 16(9)).  The Supreme Court of Victoria has held, by reference to international authorities, that such a review is by way of hearing de novo. 

Lin Tiger Plastering Pty Ltd v Platinum Construction (Vic) Pty Ltd [2018] VSC 221 (Croft J)

Lin Tiger Plastering Pty Ltd (Lin Tiger), a plastering and framing supplier, entered into a sub-contract with Platinum Construction (Vic) Pty Ltd (Platinum Construction), a commercial builder, to perform works on two Melbourne properties.

The terms of the sub-contract contained a layered dispute resolution clause.  One clause contemplated that disputes between the head-contractor and sub-contractor would be deemed to be a ‘domestic building dispute’ and determined by VCAT, while another provided that disputes between the builder and sub-contractor would be determined by a single arbitrator.  It is important to note that s 14 of the Domestic Building Contracts Act 1995 (Vic) (the DBCA) provides that any term in a domestic building contract or other agreement requiring a dispute under the contract to be determined by arbitration is void.

A dispute arose between the parties under the sub-contract.  Platinum Construction proceeded by commencing arbitral proceedings.  An arbitral tribunal was constituted by a single arbitrator.  The tribunal ruled that it had jurisdiction to determine the dispute, and the arbitration agreement in the sub-contract was valid and unaffected by the operation of the DBCA.

Lin Tiger filed an application in the Supreme Court of Victoria under s 16(9) of the Commercial Arbitration Act 2011 (Vic) (the CAA) seeking a determination that the arbitral tribunal did not have jurisdiction to determine a sub-contracting dispute.  This provision provides that if the arbitral tribunal rules (as a preliminary question) that it has jurisdiction, any party ‘may request, within 30 days after having received notice of that ruling, the Court to decide the matter’.

The primary issue in the case was whether Lin Tiger undertook ‘domestic building work’ within the meaning of the DBCA.  If it undertook domestic building work, the dispute in relation to the work would fall within the definition of a ‘domestic building dispute’ under the DBCA (as s 54 of the DBCA provided that a domestic building dispute can include a dispute between a builder and a sub-contractor).  Relevantly, the Domestic Building Contracts Regulations 2017 (Vic) (Regulations) excluded insulating and plastering as ‘building work’ for the purposes of the DBCA.  Lin Tiger asserted that the work under the sub-contract extended beyond plastering and insulation work, and satisfied the definition of ‘domestic building work’ (meaning that the dispute could not be determined by arbitration).  Platinum Constructions on the other hand asserted that the work was only insulating and plastering work, and therefore work excluded by the operation of the DBCA – meaning the dispute under the sub-contract could be determined by arbitration.

In order to consider the application brought by Lin Tiger, the Court had to first determine whether the application under s 16(9) of the CAA (being the ‘request…[for] the Court to decide the matter’) was a hearing de novo, or a review of the ruling of the arbitral tribunal on jurisdiction.

The Court started by observing the now well established principle (derived from recent authorities) that the legislative regime under the various arbitration legislation in Australia (including under the International Arbitration Act 1974 (Cth), and the Commercial Arbitration Acts within the States and Territories in Australia), is for ‘minimum curial interference’ with arbitral proceedings – and to provide maximum court support and assistance for arbitral processes.  In this context, the Court considered that a de novo standard of review under s 16(9) of the CAA would contemplate a complete rehearing which, at first sight, seems to run contrary to the policy of minimal curial interference.

In the absence of any Victorian or Australian authority directly on point, the Court examined relevant jurisprudence from other countries (which has interpreted the equivalent of s 16(9) of the CAA on the basis that it is a Model Law provision).  Having examined authorities from Hong Kong, Singapore, New Zealand and England, and learned authors, Croft J held (at [40]) that a hearing de novo is the correct standard of review to be applied under s 16(9) of the CAA when an application is made by a party seeking a review of an arbitral tribunal’s decision to rule on its own jurisdiction.

Having determined the applicable standard of review, the Court proceeded to consider (by way of rehearing, on the evidence put before the tribunal) whether Lin Tiger undertook ‘building works’ within the meaning of the DBCA.  The Court held that on the evidence before it, the totality of the works undertaken by Lin Tiger was properly regarded as plastering works only.  As this work was excluded from the definition of building works under the DBCA, the Court held that the DBCA did not apply, and the dispute was to be determined by arbitration.

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