Court of Appeal  Supreme Court New South Wales

Case Name:	Dnata Airport Services Pty Ltd v Polar Air Cargo Worldwide, Inc
Medium Neutral Citation:	[2026] NSWCA 105
Hearing Date(s):	25 May 2026
Date of Orders:	04 June 2026
Decision Date:	4 June 2026
Before:	Bell CJ at [1];  Kirk JA at [47];  McHugh JA at [48].
Decision:	1.   Grant leave to appeal.  2.   Appeal dismissed with costs.
Catchwords:	INTERNATIONAL ARBITRATION — arbitration agreement — stay of proceedings under s 7(2) of the International Arbitration Act 1974 (Cth) — interpretation of tiered dispute resolution clause in IATA Standard Group Handling Agreement — whether an agreement to agree — whether “the dispute” referred to substantive dispute or dispute as to arbitral process — no mandatory referral to arbitration   AVIATION — interpretation of tiered dispute resolution clause in IATA Standard Group Handling Agreement
Legislation Cited:	Commercial Arbitration Act 1985 (NT)  International Arbitration Act 1974 (Cth) ss 7(2), 18  UNCITRAL Model Law on International Commercial Arbitration (1985) Arts 5, 6, 8, 11, 18, 19, 20, 22, 25, 26
Cases Cited:	AFC Holdings Pty Ltd v Shiprock Holdings Pty Ltd (2010) 15 BPR 28,199; [2010] NSWSC 985   Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99; [1973] HCA 36  Canadian National Railway v Lovat Tunnel Equipment Inc (1999) 174 DLR (4th) 385  Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1  Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45; (2006) 238 ALR 457; [2006] FCAFC 192  Commercial Union Assurance Co Plc v NRG Victory Reinsurance Limited (Skandia International Insurance Corpn v NRG Victory Reinsurance Ltd) [1998] 1 Lloyd’s Rep 80   Elecnor Australia Pty Ltd v Clough Projects Australia Pty Ltd [2025] NSWSC 610  FAI General Insurance Co Ltd v Ocean Marine Mutual Protection and Indemnity Association (1997) 41 NSWLR 559  Ferris v Plaister (1994) 34 NSWLR 474; (1994) 11 BCL 417  Flakt Australia Ltd v Wilkens & Davies Construction Co Ltd [1979] 2 NSWLR 243; (1979) 25 ALR 605  Global Partners Fund Limited v Babcock & Brown Limited (in liq) [2010] NSWCA 196; (2010) 79 ACSR 383  Hermes One Ltd v Everbread Holdings Ltd [2016] 1 WLR 4098; [2016] UKPC 1  HIH Casualty & General Insurance Limited (in liquidation) v R J Wallace sued on his own behalf and on behalf of all other members of Syndicate No 683 at Lloyd’s of London for the 1993 underwriting account & Ors (2006) 68 NSWLR 603; [2006] NSWSC 1150  Inghams Enterprises Pty Limited v Hannigan (2020) 379 ALR 196; [2020] NSWCA 82  Itec Corp v Chicago Aerial Industries 248 A 2d 625 (Del 1968)  Jillcy Film Enterprises Inc v Home Box Office Inc 593 F Supp 515 (1984)  King v Brandywine Reinsurance Co (UK) Ltd [2004] 2 Lloyd’s Rep 670; [2004] EWHC 1033 (Comm)  Nas Aviation Services India Pvt. Ltd vs Kingfisher Airlines Limited (High Court of Judicature at Bombay, 28 February 2014, unrep) Paharpur Cooling Towers Ltd v Paramount (WA) Ltd [2008] WASCA 110  PMT Partners Pty Ltd (In liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301; [1995] HCA 36  Re McNamara Construction of Ontario Ltd v Brock University [1970] 2 O.R. 583; 11 D.L.R. (3d) 513  Ridgeway Coal Co Inc v F M C Corporation 616 F Supp 404 (1985)  United Group Rail Services Limited v Rail Corporation New South Wales (2009) 74 NSWLR 618; [2009] NSWCA 177  Walter Rau Neusser Oel und Fett AG v Cross Pacific Trading Ltd [2005] FCA 1102  Westfield Management Ltd v AMP Capital Property Nominees Ltd (2012) 247 CLR 129; [2012] HCA 54  XL Insurance Co SE v BNY Trust Company of Australia Limited [2019] NSWCA 215
Texts Cited:	G B Born, International Commercial Arbitration (3rd ed, 2021, Wolters Kluwer)  P Herzfeld and T Prince, Interpretation (3rd ed, 2024, Lawbook Co)
Category:	Principal judgment
Parties:	Dnata Airport Services Pty Ltd (Applicant)  Polar Air Cargo Worldwide, Inc (Respondent)
Representation:	Counsel:  T Brennan SC with H Cooper (Applicant)  J Hogan-Doran SC with S Odgers (Respondent)    Solicitors:  Norton White (Applicant)  HWL Ebsworth Lawyers (Respondent)
File Number(s):	2026/00013902
Publication Restriction:	Nil
Decision under appeal:
Court or Tribunal:	Supreme Court of New South Wales
Jurisdiction:	Common Law
Citation:	[2025] NSWSC 1500
Date of Decision:	15 December 2025
Before:	Sweeney J
File Number(s):	2023/308136

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court’s computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE

[This headnote is not to be read as part of the judgment]

This case involved an application brought by dnata Airport Services Pty Ltd (Dnata) to challenge an interlocutory decision of Sweeney J (the primary judge) declining to stay two third-party cross-claims brought by Polar Air Cargo Worldwide, Inc (Polar Air) in favour of arbitration.

Polar Air is a cargo airline which owns and operates freight aircraft and has its principal office in Purchase, New York. Dnata is an Australian corporation with its principal office in Mascot, New South Wales. On 1 June 2016, the parties entered into an agreement (the SGHA) pursuant to which Dnata was contracted by Polar Air to provide ground cargo handling services at Sydney Airport. The SGHA incorporated the “Main Agreement” which was a Standard Group Handling Agreement prepared by the International Air Transport Association (IATA). 

The underlying proceedings arose out of a Statement of Claim filed on 28 September 2023 on behalf of Mr Iosefa, an employee of Dnata, claiming in negligence against Polar Air alleging that, on 22 March 2021, he suffered injuries by unloading cargo from a Polar Air-owned Boeing 747 freighter aircraft. 

By a Statement of Cross-Claim filed on 31 July 2025, Polar Air relevantly alleged that Dnata had breached the SGHA and also had failed to indemnify it in respect of any liability arising out of Mr Iosefa’s negligence claim against it (the contractual cross-claims). 

Dnata sought to stay the contractual cross-claims pursuant to s 7(2) of the International Arbitration Act 1974 (Cth) (the Act) and have them referred to arbitration by reference to an “arbitration agreement” in Article 9 of the “Main Agreement”. Article 9 provided as follows:

“In the event of any dispute or claim concerning the scope, meaning, construction or effect of this Agreement, the parties shall make all reasonable efforts to resolve disputes amongst themselves. Failing mutual resolution of the dispute, the parties may elect to resolve the dispute through arbitration (either by a single arbitrator or a panel of arbitrators). In the event that the parties fail to agree to an arbitration process, the dispute shall be settled in accordance with the laws of the state or jurisdiction set out in Annex(es) B, by the courts set out in Annex(es) B without regard to principles of conflict of laws.”

The single question of law raised before the primary judge, and reagitated before the Court of Appeal, was whether Article 9, properly construed, constituted an “arbitration agreement” within the meaning of the Act. The primary judge answered that question in the negative and declined to stay the contractual cross-claims on that basis.

The Court (Bell CJ, Kirk JA and McHugh JA agreeing) held, granting leave to appeal but dismissing the appeal: 

1. Any election for arbitration in the second sentence of Article 9 involved both parties electing for that method of dispute resolution and agreeing as to the arbitration process to be followed. If the second sentence conferred on each party a contractual “right” to elect to arbitrate, that was a qualified right which only had any efficacy if it was exercised by both parties to the agreement. That construction was supported by the third sentence of Article 9 which provided that, failing consensus between the parties, the dispute was to be settled by litigation. It was also reinforced by the other references to “the parties” in Article 9 and elsewhere in the Main Agreement, and the absence in Article 9 of any specification of rules or provisions relating to important procedural aspects of arbitration: [10]-[20] (Bell CJ); [47] (Kirk JA); [48] (McHugh JA).

Hermes One Ltd v Everbread Holdings Ltd [2016] 1 WLR 4098 at [3]; [2016] UKPC 1; Elecnor Australia Pty Ltd v Clough Projects Australia Pty Ltd [2025] NSWSC 610; Canadian National Railway v Lovat Tunnel Equipment Inc (1999) 174 DLR (4th) 385, distinguished. 

Australian Broadcasting Commission v Australasian Performing Rights Association (1973) 129 CLR 99; [1973] HCA 36; Westfield Management Ltd v AMP Capital Property Nominees Ltd (2012) 247 CLR 129; [2012] HCA 54, cited. 

PMT Partners Pty Ltd (In liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301; [1995] HCA 36, referred to.

2. The “dispute” referred to in the third sentence of Article 9 was the substantive dispute between the parties, and not, as Dnata contended, a different dispute which arose from the parties’ failure “to agree as to an arbitration process”. That construction was supported by the use of the word “dispute” in the first two sentences of Article 9, the lack of any criteria in the SGHA or the general law for curial resolution of a dispute as to the arbitration process to be followed, the language of “the dispute shall be settled in accordance with” which is apt for the resolution of a substantive dispute, as well as the inclusion of the choice of law and exclusive jurisdiction clause. Further, curially resolving a procedural dispute, only to then return the substantive dispute to arbitration, is a somewhat cumbersome and uncommercial outcome: [21]-[29] (Bell CJ); [47] (Kirk JA); [48] (McHugh JA). 

Australian Broadcasting Commission v Australasian Performing Rights Association (1973) 129 CLR 99; [1973] HCA 36; Flakt Australia Ltd v Wilkens & Davies Construction Co Ltd [1979] 2 NSWLR 243; (1979) 25 ALR 605, cited. 

3. Dispute resolution clauses may be crafted and drafted in an almost infinite variety of ways and styles, and may give (or purport to give) one or both parties an option to arbitrate or litigate. The presumption against redundancy or surplusage did not displace the primary judge’s construction of the second sentence of Article 9; that sentence served both the legal purpose of signalling that the ultimate commitment to dispute resolution by litigation should not be taken to be a bar to arbitration if both parties elect for it, and the commercial purpose of signalling that IATA itself was not opposed to parties seeking to resolve their disputes by arbitration should they mutually agree to do so: [30]-[43] (Bell CJ); [47] (Kirk JA); [48] (McHugh JA).

Inghams Enterprises Pty Limited v Hannigan (2020) 379 ALR 196; [2020] NSWCA 82; Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45; (2006) 238 ALR 457; [2006] FCAFC 192; Walter Rau Neusser Oel und Fett AG v Cross Pacific Trading Ltd [2005] FCA 1102; Ferris v Plaister (1994) 34 NSWLR 474; (1994) 11 BCL 417; FAI General Insurance Co Ltd v Ocean Marine Mutual Protection and Indemnity Association (1997) 41 NSWLR 559; AFC Holdings Pty Ltd v Shiprock Holdings Pty Ltd (2010) 15 BPR 28,199; [2010] NSWSC 985; XL Insurance Co SE v BNY Trust Company of Australia Limited [2019] NSWCA 215; United Group Rail Services Limited v Rail Corporation New South Wales (2009) 74 NSWLR 618; [2009] NSWCA 177; Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1; Itec Corp v Chicago Aerial Industries 248 A 2d 625 (Del 1968); Ridgeway Coal Co Inc v F M C Corporation 616 F Supp 404 (1985); Jillcy Film Enterprises Inc v Home Box Office Inc 593 F Supp 515 (1984), cited.

HIH Casualty & General Insurance Limited (in liquidation) v R J Wallace sued on his own behalf and on behalf of all other members of Syndicate No 683 at Lloyd’s of London for the 1993 underwriting account & Ors (2006) 68 NSWLR 603; [2006] NSWSC 1150; Paharpur Cooling Towers Ltd v Paramount (WA) Ltd [2008] WASCA 110; King v Brandywine Reinsurance Co (UK) Ltd [2004] 2 Lloyd’s Rep 670; [2004] EWHC 1033 (Comm); Commercial Union Assurance Co Plc v NRG Victory Reinsurance Limited (Skandia International Insurance Corpn v NRG Victory Reinsurance Ltd) [1998] 1 Lloyd’s Rep 80; Re McNamara Construction of Ontario Ltd. v. Brock University [1970] 2 O.R. 583; 11 D.L.R. (3d) 513; Nas Aviation Services India Pvt. Ltd. vs Kingfisher Airlines Limited (High Court of Judicature at Bombay, 28 February 2014, unrep), considered.

JUDGMENT

1. BELL CJ: The sole question raised on this application for leave to appeal is whether Sweeney J (the primary judge) erred in dismissing a Notice of Motion brought by dnata Airport Services Pty Ltd (Dnata) seeking to stay two third party contractual cross-claims brought against it by Polar Air Cargo Worldwide, Inc (Polar Air) in favour of arbitration: Joseph Iosefa v Polar Air Cargo Worldwide, Inc; Polar Air Cargo Worldwide, Inc v Dnata Airport Services Pty Ltd [2025] NSWSC 1500 (PJ or primary judgment). 
2. Polar Air is a cargo airline which owns and operates freight aircraft and has its principal office in Purchase, New York. Dnata is an Australian corporation with its principal office in Mascot, New South Wales. On 1 June 2016, the parties entered into an agreement (the SGHA) pursuant to which Dnata was contracted by Polar Air to provide ground cargo handling services at Sydney Airport. The SGHA consisted of three instruments, the “Main Agreement”, Annex A and Annex B. The Main Agreement was a Standard Group Handling Agreement prepared by the International Air Transport Association (IATA). 
3. Questions going to the proper construction of a standard form of international agreement, presumably adopted and adapted by carriers and handling operatives globally, made this an appropriate case for the grant of leave to appeal.
4. The underlying proceedings arose out of a Statement of Claim dated 28 September 2023 filed by Mr Iosefa, an employee of Dnata, claiming in negligence against Polar Air alleging that, on 22 March 2021, he suffered injuries by slipping on the wet surface of a Polar Air-owned Boeing 747 freighter aircraft while unloading unit load devices from the aircraft’s “Cargo Loading System”.
5. By its third-party Statement of Cross-Claim filed on 31 July 2025, Polar Air alleged that Dnata had breached the SGHA and also had failed to indemnify it in respect of any liability arising out of Mr Iosefa’s negligence claim against it (the contractual cross-claims). Polar Air also alleged that Dnata had been negligent. By Notice of Motion dated 2 September 2025, Dnata sought a stay of the contractual cross-claims. 
6. The stay was sought primarily pursuant to s 7(2) of the International Arbitration Act 1974 (Cth) (the Act) or, alternatively, either Article 8 of the UNCITRAL Model Law on International Commercial Arbitration (1985) (the Model Law) or the inherent jurisdiction of the Court. The basis of the asserted stay was that the two contractual cross-claims fell within the scope of an “arbitration agreement” in Article 9 of the   “Main Agreement” or, perhaps more accurately, as Mr Brennan SC put it in submissions on appeal, that an arbitration agreement came into existence upon Dnata’s election for arbitration pursuant to Article 9 which was made on its behalf by its solicitor, Mr Tzortzatos, on 2 September 2025 by way of an affidavit filed in the proceedings.
7. Article 9 provided as follows:

“ARTICLE 9. ARBITRATION

In the event of any dispute or claim concerning the scope, meaning, construction or effect of this Agreement, the parties shall make all reasonable efforts to resolve disputes amongst themselves. Failing mutual resolution of the dispute, the parties may elect to resolve the dispute through arbitration (either by a single arbitrator or a panel of arbitrators). In the event that the parties fail to agree to an arbitration process, the dispute shall be settled in accordance with the laws of the state or jurisdiction set out in Annex(es) B, by the courts set out in Annex(es) B without regard to principles of conflict of laws.”

8. The parties agreed that the contractual cross-claims fell within the scope of Article 9 and that the negligence cross-claim did not. The single question of law raised before the primary judge, and reagitated before this Court, concerned the proper construction of Article 9.
9. The essence of the primary judge’s reasoning was contained in PJ [51]-[53] as follows:

“[51]   …The use of the term ‘the parties may elect’ to resolve the dispute through arbitration, and the use in the third sentence of the term ‘In the event that the parties fail to agree to an arbitration process’ means that failing mutual resolution of the dispute among themselves, the parties may agree to resolve the dispute through arbitration, but in the event that the parties fail to agree to resolve the dispute through arbitration, then the dispute shall be settled by litigation.

[52]   This is also, in my view, consistent with the context of the agreement which was that dnata agreed to provide services to Polar Air, the agreement contemplated dnata would provide services through its staff and contemplated suits by dnata staff. This construction does not lack commercial sense in that it avoids Polar Air having to deal with a dispute in two forums when it is drawn into litigation by an employee of dnata, thus duplicating costs.

[53]   Article 9 is not an agreement by the parties to submit to arbitration of their disputes about the Agreement.  It is not an arbitration agreement as defined. Therefore s 7 of the International Arbitration Act does not apply and dnata is not entitled to the stay it seeks.”

10. Insofar as Article 9 referred to arbitration, on its proper construction the expression – “the parties may elect to resolve the dispute through arbitration” (emphasis added) – in the second sentence indicated that, while each was amenable as a matter of principle to arbitration, any election for arbitration involved both parties electing for that method of dispute resolution (which had not occurred) and agreement as to the arbitration process to be followed. 
11. On this construction, which the primary judge correctly, in my view, favoured, neither party was obliged to agree to that form of dispute resolution and the third sentence of Article 9 expressly contemplated that the parties may fail to agree to an “arbitration process”. The opening words of the third sentence – “[i]n the event that the parties fail to agree to an arbitration process” – highlighted that consensus was required, failing which the dispute was to be settled by litigation.
12. This observation is reinforced when one has regard to the absence in Article 9 of any specification, whether in terms or by the adoption or incorporation of the rules of an arbitral institution such as ACICA (Australian Centre for International Commercial Arbitration), the ICC (International Chamber of Commerce), SIAC (Singapore International Arbitration Centre), or the AAA (American Arbitration Association), or provisions relating to important procedural aspects of arbitration including the seat of the arbitration, any limitations on its length and nature (i.e. whether it was a stopwatch arbitration), any right of appeal and the ability of arbitrators to rule on their own jurisdiction cf. for example, the arbitration clauses in Hermes One Ltd v Everbread Holdings Ltd [2016] 1 WLR 4098 at [3]; [2016] UKPC 1 and Elecnor Australia Pty Ltd v Clough Projects Australia Pty Ltd [2025] NSWSC 610 at [27] (Elecnor), both of which were referred to by the parties in argument. It is unlikely that commercial parties, had they intended to submit themselves to arbitration (following negotiation), would leave so many procedural matters unresolved, especially in relation to the uncapped number of arbitrators. 
13. It is also unlikely that the parties intended that the (single) party who elected for arbitration could choose the number of arbitrators (noting that Article 9 did not put a limit on the number of arbitrators who may be chosen on a panel), but Mr Brennan accepted this was one consequence of the construction for which he contended on Dnata’s behalf. If the party who made the first election may unilaterally dictate the form of the arbitration and especially the arbitral panel, Mr Hogan-Doran SC, who appeared for Polar Air, submitted that would be a “license to untoward commercial pressure” of a kind that might undermine the preceding negotiation phase and unfairly disadvantage smaller parties. This, he submitted, was a reason why Article 9 required a joint election, that is to say, an election by “the parties” as opposed to either party.
14. Contrary to Mr Brennan’s submission, the construction contended for by Dnata required reading the expression – “[t]he parties” – in the second sentence of Article 9 as meaning “either party” such that an election by one party for arbitration (as occurred in the present case) would bind the other party to arbitrate. There are two compelling reasons why this is not an attractive construction. 
15. First, the same phrase – “the parties” – is used in the first and third sentences of Article 9 and in both of those sentences, the expression is plainly referring to both parties. It would be very odd and conspicuously discordant if the parties intended that that same expression would bear a different meaning within the same Article of the Main Agreement. In this context, it should be noted that there was a tendency in Dnata’s argument to place attention on the second sentence of Article 9 without the immediate context and textual indications contained in its companion sentences. At times it appeared that only lip service was being paid to the important principle stated by Gibbs J in Australian Broadcasting Commission v Australasian Performing Rights Association (1973) 129 CLR 99 at 109; [1973] HCA 36 (ABC v APRA), namely to give meaning to the words of a clause or part of a clause in the contract within the context of the contract construed as a whole. “The duty of a court in construing a written contract is to endeavour to discover the intention of the parties from its words, and this requires consideration of the whole of the agreement between them”: Westfield Management Ltd v AMP Capital Property Nominees Ltd (2012) 247 CLR 129; [2012] HCA 54 at [27].
16. Second, there are numerous references to “either party” elsewhere in the Main Agreement (e.g. articles 10.1, 10.2, 11.4, 11.5, 11.6, 11.7, 11.8, 11.9. 11.10 11.12); see also Article 2.2 which refers to “[n]either Party”. This militates strongly against the submission that “[t]he parties” in the second sentence of Article 9 was intended to mean “either party”. The drafter’s conscious differentiation between “the parties” and “either party” throughout the Main Agreement must be taken to have been deliberate and, in submissions in reply, Mr Cooper accepted that “[t]he parties” when used in the second sentence of Article 9 could refer to both parties.
17. I would also reject Mr Brennan’s reliance upon the reference at the beginning of the Main Agreement that “the Carrier and/or the Handling Company may hereinafter be referred to as the ‘party(ies)’”. Contrary to that submission, that reference is either neutral or favours Polar Air’s construction, given the term “party(ies)”, combined with “and/or”, suggests that, where the Main Agreement refers to “party”, it refers to either Dnata or Polar Air, and where it refers to “parties”, it refers to both. 
18. Mr Brennan emphasised, by reference to PMT Partners Pty Ltd (In liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301; [1995] HCA 36 (PMT), that the reference to “election” in Article 9 was a reference to a contractual right. For the proposition that an “arbitration agreement” under the Act includes an agreement which confers on either partythe right to elect to arbitrate, Mr Brennan referred to the joint judgment of Brennan CJ, Gaudron and McHugh JJ in PMT at 310 where their Honours observed, by reference to the definition of an “arbitration agreement” in the Commercial Arbitration Act 1985 (NT), that:

“It is of fundamental importance that statutory definitions are construed according to their natural and ordinary meaning unless some other course is clearly required. It is also of fundamental importance that limitations and qualifications are not read into a statutory definition unless it is clearly required by its terms or its context, as for example if it is necessary to give effect to the evidence purpose of the Act. The words ‘agreement…to refer present or future disputes to arbitration’ in s 4 of the Act are, in their natural and ordinary meaning, quite wide enough to encompass agreements by which the parties are bound to have their dispute arbitrated if an election is made or some event occurs or some condition is satisfied, even if only one party has the right to elect or is in a position to control the event or satisfy the condition.” (Emphasis added). 

19. It may well be correct that Article 9 conferred on each party a contractual “right” but the critical point for present purposes is that it was a qualified right which only had any efficacy if it was exercised by both parties to the agreement. Alternatively, even if it were a right conferred on either party which was able to be unilaterally exercised, the third sentence of Article 9 made its efficacy subject to both parties’ agreement to the arbitration process. Absent such agreement, the parties were directed by the balance of the third sentence to settle their dispute by litigation. 
20. Dnata sought to rely on Canadian National Railway v Lovat Tunnel Equipment Inc (1999) 174 DLR (4th) 385 in which the Court of Appeal for Ontario (at [12]-[14]) upheld the trial judge’s finding that, in the following arbitration clause,

“11.   Disputes 

The parties may refer any dispute under this agreement to arbitration, in accordance with Arbitration Act of Ontario [sic].”

the reference to “parties” in fact meant “either party” such that “either party may refer a dispute to binding arbitration and arbitration then becomes mandatory.” That clause, however, was notably different to Article 9, most obviously (and as Mr Brennan candidly accepted) because it did not have an equivalent to Article 9’s third sentence. That third sentence bore directly upon the construction of the second sentence because it set out an alternative to arbitration in circumstances where an election to arbitrate – whatever that required – was not made. 

21. Dnata advanced the argument, which the primary judge rejected, that the third sentence of Article 9 was directed not to resolving the substantive dispute between the two parties referred to in the first two sentences of the Article but to a different dispute, namely that which had arisen from the parties’ failure “to agree as to an arbitration process”. This argument, which was repeated on appeal, was unattractive for at least five reasons. 
22. First, it involved, as Mr Brennan accepted, giving the word “dispute” as referred to in Article 9 a different meaning as between the first two sentences and the third. The unlikelihood of the parties having that objective intention was only reinforced by the use of the definite article “the dispute” twice in the second sentence and again in the third sentence, reinforcing the fact that the dispute being referred to was one and the same. So Dnata’s construction of Article 9 involved not only giving the expression “the parties” a different meaning within Article 9 (see [15] above) but also involved giving a differential meaning to the expression “the dispute” when used within Article 9. 
23. The presumption that a word or expression appearing multiple times in a document has the same meaning throughout is not immutable or invariable but it must be more powerful where the same expression is used in the same section, article or clause of a contract or agreement: see, generally, P Herzfeld and T Prince, Interpretation (3rd ed, 2024, Lawbook Co) at [22.60]. It is also trite to observe, as noted above, that an arbitration clause such as Article 9 must, as with any other contractual provision, be interpreted as a whole, “and the words of every clause must if possible be construed so as to render them all harmonious one with another”: ABC v APRA at 7(Gibbs J). 
24. Second, if, as Dnata contended, the third sentence of Article 9 is directed to resolving a “dispute” as to the arbitration process to be followed, and directs that that different dispute be settled by a court, neither the SGHA nor the general law offered any criteria for resolving such a dispute.  
25. It was contended on behalf of Dnata that the reference in the third sentence to the laws of Australia picks up the Act, and that, by reason of s 18 of the Act, Article 11(3)-(4) of the Model Law provided such criteria relating to the appointment of arbitrators in the absence of agreement between the parties. The Model Law, however, provides for very limited curial intervention in the arbitral process (see Article 5) and only a small number of provisions of the Model Law are intended for curial application. These are specified in Article 6 of the Model Law. Notably, they do not include Articles 18, 19, 20, 22, 25 and 26 of the Model Law which concern matters such as equal treatment of parties, determination of rules of procedure, place and language of arbitration, default of a party and appointment of experts.   Moreover, Article 11(3)-(4), which may be applied by a court by reason of the stipulation in Article 6 of the Model Law, presupposes that the parties have agreed on the preliminary question of whether to adopt a single arbitrator or a panel of three, and does not provide for curial intervention where there is no such agreement.
26. Accordingly, the position remains that if, on Dnata’s argument, the third sentence of Article 9 of the Main Agreement was directed towards the resolution of a procedural dispute as to the arbitration process rather than the parties’ substantive dispute, the absence of any criteria for the resolution of such a dispute militates powerfully against that construction. Moreover, the third sentence refers to the failure to agree on “an arbitration process” which highlights the inchoate nature of any contractual commitment to arbitration.
27. Third, on Dnata’s argument, any procedural dispute having been resolved curially, the substantive dispute would return to arbitration. That is a somewhat cumbersome and, one might suppose, uncommercial outcome. 
28. Fourth, the language in the third sentence of Article 9 – “the dispute shall be settled in accordance with” – is language apt for the resolution of a substantive dispute: cf. Flakt Australia Ltd v Wilkens & Davies Construction Co Ltd [1979] 2 NSWLR 243 at 250; (1979) 25 ALR 605. 
29. Fifth, the third sentence of Article 9 makes perfect sense: it contains a choice of law and exclusive jurisdiction clause in the event that both parties do not elect to settle their substantive dispute by means of arbitration. It has particular utility given that Polar Air was a foreign corporation and it made provision for nomination of an exclusive jurisdiction in which to resolve disputes curially in the event that arbitration was not agreed (albeit that the parties did not make any express reference to Australian courts in Annex B of the SGHA).
30. Further, as I pointed out in Inghams Enterprises Pty Limited v Hannigan (2020) 379 ALR 196; [2020] NSWCA 82 at [48], “dispute resolution clauses may be crafted and drafted in an almost infinite variety of ways and styles.” Such clauses may give (or purport to give) one or both parties an option to arbitrate or litigate. An example of the former was considered by Einstein J in HIH Casualty & General Insurance Limited (in liquidation) v R J Wallace sued on his own behalf and on behalf of all other members of Syndicate No 683 at Lloyd’s of London for the 1993 underwriting account & Ors (2006) 68 NSWLR 603; [2006] NSWSC 1150; see also Paharpur Cooling Towers Ltd v Paramount (WA) Ltd [2008] WASCA 110.
31. King v Brandywine Reinsurance Co (UK) Ltd [2004] 2 Lloyd’s Rep 670; [2004] EWHC 1033 (Comm) (Brandywine) is an example of the latter albeit that the clauses in question were held to be “unenforceable as binding arbitration agreements” because “they are agreements to agree to refer disputes to arbitration” (emphasis added) at [52]. This was the same conclusion as was reached by the primary judge in the present case. The relevant clause in Brandywine, extracted at [49] of the decision, provided that:

“In the event of any difference arising between the Insured and the Insurers with reference to this insurance such difference may, upon the agreement of the parties (after all requirements of this insurance with respect to recovery of any claim shall have been complied with) be referred to three disinterested arbitrators, one being chosen by the Insured, one chosen by the Insurers and the third chosen by the two aforesaid arbitrators before they enter into arbitration. (Emphasis added).

See also Commercial Union Assurance Co Plc v NRG Victory Reinsurance Limited (Skandia International Insurance Corpn v NRG Victory Reinsurance Ltd) [1998] 1 Lloyd’s Rep 80 at 84-5. 

32. The decision of the Ontario Court of Appeal in Re McNamara Construction of Ontario Ltd v Brock University [1970] 2 O.R. 583; 11 D.L.R. (3d) 513 is also instructive. There, the Court considered the following clause in a construction contract:

“Article 44. Arbitration

In the case of any dispute arising between the owner (or the architect acting on his behalf) and the contractor as to their respective rights and obligations under the contract, either party hereto shall be entitled to give to the other notice of such dispute and to request arbitration thereof; and the parties may with respect to the particular matters then in dispute agree to submit the same to arbitration in accordance with the applicable law of the place of building.

Arbitration proceedings shall not take place until after the completion or alleged completion of the work except (a) on a question of certificate for payment or (b) in a case where either party can show that the matter in dispute is of such nature as to require immediate consideration while evidence is available.”

and upheld the trial judge’s finding that arbitration was not mandatory and that both parties had to agree before the matter was submitted to arbitration, with Jessup JA observing at [23] that “the parties have carefully avoided foreclosing the option of recourse to the Courts failing agreement at the two levels of negotiation which, as I see it, the contract contemplates”. 

33. In Nas Aviation Services India Pvt. Ltd. vs Kingfisher Airlines Limited (High Court of Judicature at Bombay, 28 February 2014, unrep) (Nas Aviation), the Court was involved in construing the following clause which was based on the same Standard Group Handling Agreement prepared by IATA as formed the basis of the Main Agreement in the present case:

“ARTICLE 9 ARBITRATION In the event of any dispute or claim concerning the scope, meaning, construction or effect of this Agreement, the parties shall make all reasonable efforts to resolve disputes amongst themselves. Failing mutual resolution of the dispute, the parties may elect to resolve the dispute through arbitration (either by a single arbitrator or a panel of arbitrators). In the event that the parties fail to agree to an arbitration process laid in Arbitration & Conciliation Act, 1996, the dispute shall be settled in accordance with 8 (1984) 4 Supreme Court Cases 679 ppn 9 arbp-456.13 wt arbap-151.13.doc the laws of India or Jurisdiction set out in Annex(es)B, by the Courts set out in Annex(es)B without regard to principles of conflict of laws.”

34. This clause is the same as Article 9 in respect of the first two sentences, but slightly different in the third, and a further distinction was that the contract in Nas Aviation contained a governing law article which made further reference to arbitration (in respect of which the Main Agreement had no equivalent). The Court held that recourse to arbitration was optional and required the consent of both parties, observing as follows: 

“[22]   What the parties stated in Article 9 is that they may elect to resolve the dispute through arbitration and if they fail to agree to an arbitral process, the dispute shall be settled in accordance with the laws of India. Intention on the face of it, is clear. It was that, first the parties must make an effort to resolve the dispute amongst themselves, failing which they may elect to go for arbitration. If they did not so elect, the dispute shall be settled as per laws of India and jurisdiction specified…

Plain common sense reading of the clause shows that it did not mandate the parties to go for arbitration. It was left to the choice of the parties.

… 

[24]   Thus reading of the agreement as a whole following intention of the parties appears. First the parties would make an effort to resolve the dispute by themselves. This course of action was compulsory. Failing that the parties may decide to resolve their dispute through arbitration. This was optional. If they did not agree for arbitration, the dispute would be settled as per laws of India and jurisdiction specified in the agreement.” 

35. The construction of this clause was to the same effect as that given to Article 9 by the primary judge in the present case (although her Honour does not appear to have been referred to it).
36. True it is that many cases give effect to arbitration agreements where one or more parties has been given a right to elect for arbitration. Reliance was placed in this regard on extracts from G B Born, International Commercial Arbitration (3rd ed, 2021, Wolters Kluwer) at §5.01 ff and the cases referred to, but it is a departure from principle to work from some generalised statements either by text writers or judges in particular decisions rather than the text of the contract or clause being construed. Professor Born’s commentary, in any event, discloses a range of constructions as the following extracts make plain (citations omitted):

“In many instances, courts reason that the putatively non-mandatory arbitration clause creates an option, permitting (but not requiring) either party to initiate arbitration, and that, if the option is exercised by either party, both parties are then bound to arbitrate. The basis for this conclusion is that it would make little or no commercial sense for parties to agree to arbitration only in an entirely non-mandatory sense, leaving both parties free to decide when a dispute arises whether or not they wish to arbitrate. This analysis is well-considered: a non-mandatory provision of this sort would give the parties nothing that does not exist in the absence of any agreement; unless there is very clear language to the contrary, this result should not be assumed…

Nonetheless, if the language of an arbitration clause is clearly non-mandatory, some U.S. courts have concluded that the clause does not obligate either party to arbitrate (absent some further agreement). Even in these cases, a non-mandatory clause of this character may nonetheless be subject to the enforcement regime of the FAA…

There are nonetheless cases where a putative agreement to arbitrate is held to be non-mandatory, in the sense that the parties will only be required to arbitrate if they subsequently agree to do so. For example, the Indian Supreme Court has held that a clause providing that disputes ‘shall be referred to arbitration if the parties so determine’ was ‘not an arbitration agreement but a provision which enables arbitration only if the parties mutually decide after due consideration as to whether the disputes should be referred to arbitration or not’. Courts in other jurisdictions have occasionally reached similar conclusions, typically when language clearly providing that arbitration was non-mandatory foreclosed any other interpretation.” 

37. Perhaps the strongest argument advanced by Dnata, but one which I would ultimately also reject, was that the construction of Article 9 preferred by the primary judge had the effect of rendering the “right” to elect for arbitration redundant. This was said to be a most unlikely result in circumstances where Article 9 was headed “Arbitration”. This argument presupposed that the right was conferred on both parties but was able to be exercised unilaterally. Mr Brennan submitted that the second sentence of Article 9 was superfluous because it is always open to contractual parties to agree to arbitration.
38. As to the significance of the heading to Article 9, Mr Brennan did not seek to give that fact particular weight, accepting that it was only part of the context when confronted with McHugh JA’s observation, in the course of argument, that:

“It’s still a clause with respect to arbitration.  It’s simply saying it’s limited in the way described in the second sentence, isn’t it?  And the third.  It’s saying, ‘To the extent we’re interested in the topic of arbitration, this is the size of it.  The parties may elect to do that if they want, otherwise you go to Court’.  The heading doesn’t take you very far in the end, does it?”

39. Superfluity or surplusage may, depending on the circumstances of a case, be a sound principle of contractual construction but there are a number of circumstances where it is inapplicable: Interpretation at [22.50]. Where a clause or part of a clause is invalid because it is or involves an unenforceable agreement to agree, for example, it is not so much a question of superfluous language as ineffective drafting. 
40. Further, the presumption against redundancy operates within an otherwise enforceable agreement. In the present case, the asserted arbitration agreement said to have been contained within Article 9 is treated as a separate agreement: Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45; (2006) 238 ALR 457; [2006] FCAFC 192 at [228]; Walter Rau Neusser Oel und Fett AG v Cross Pacific Trading Ltd [2005] FCA 1102 at [89]; Ferris v Plaister (1994) 34 NSWLR 474 at 504; (1994) 11 BCL 417; see also FAI General Insurance Co Ltd v Ocean Marine Mutual Protection and Indemnity Association (1997) 41 NSWLR 559 at 567. It was that separable agreement that the primary judge held was not an arbitration agreement within the meaning of the Act, as being in effect an agreement to agree.
41. Still further, in AFC Holdings Pty Ltd v Shiprock Holdings Pty Ltd (2010) 15 BPR 28,199; [2010] NSWSC 985 at [13], in a decision approved by this Court in XL Insurance Co SE v BNY Trust Company of Australia Limited [2019] NSWCA 215 at [72], Ball J summarised the applicable principles with respect to redundancy of words in a contract as follows:

“The general principle is that the words of a contract should be interpreted in a way which gives them an effect rather than a way in which makes them redundant: North v Marina [2003] NSWSC 64 at [45]; Davuro Pty Ltd v Wilkins [2000] FCA 1902, (2000) 105 FCR 476 at [152], [230]. That principle does not operate as an invariable rule. In some cases, it may be appropriate to interpret words in a way that makes them redundant. That may be appropriate where the alternative construction of the words is inconsistent with other provisions of the contract or where the alternative construction is inconsistent with the commercial purpose of the contract or where it appears that the words have been included out of abundant caution: see Re Strand Music Hall Co Ltd; Ex parte European and American Finance Co Ltd (1865) 35 Beav 153 at 159; 55 ER 853 at 856 per Sir John Romilly MR; Dryden Construction Co Ltd v New Zealand Insurance Co Ltd [1959] NZLR 1336; Beaufort Developments (NI) Ltd v GilbertAsh NI Ltd [1999] 1 AC 266 at 273-4 per Lord Hoffmann.”

42. Mr Hogan-Doran submitted that the second sentence of Article 9 served at least two purposes, one legal and one commercial. First, it signalled that the ultimate commitment to dispute resolution by litigation (in the third sentence of Article 9) should not be taken to be a bar to arbitration if both parties elected for it. This would be an example of the words in the second sentence of Article 9 having been included out of abundant caution. In this context, the role of the second sentence of Article 9 was to make clear that, notwithstanding the exclusive jurisdiction clause contemplated in the third sentence of Article 9, it was open to both parties to agree to arbitration instead. This was an attractive submission which was embraced by Kirk JA who posited in the course of argument on appeal that “a way of reading the third and second sentences in that order is there is exclusive jurisdiction of Australian courts but that does not prevent you arbitrating if you so agree.” This was a means of giving sensible work to the second sentence of Article 9 even if that sentence did not give rise to an enforceable arbitration agreement. I agree.
43. Commercially speaking, Mr Hogan-Doran submitted that the inclusion of Article 9 in IATA’s standard form contract signalled that IATA itself was not opposed to parties seeking to resolve their disputes by arbitration but left the decision to the parties to mutually agree to do so. It should also be recalled that the Main Agreement was a standard form IATA Agreement intended for global application and that in some jurisdictions, what might appear to be an unenforceable agreement to agree may give rise at least to an enforceable obligation to negotiate in good faith: see generally the learned discussion of the topic within the common law tradition by Allsop P, as he then was, in United Group Rail Services Limited v Rail Corporation New South Wales (2009) 74 NSWLR 618; [2009] NSWCA 177 at [30] ff; see also Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1 at 21-5 citing Ridgeway Coal Co Inc v F M C Corporation 616 F Supp 404 (1985) at 407 (USDC, WVA); Itec Corp v Chicago Aerial Industries 248 A 2d 625 (Del 1968); Jillcy Film Enterprises Inc v Home Box Office Inc 593 F Supp 515 (1984) at 521 (USDC, NY).
44. I would make two additional observations. First, familiar statements which Dnata invoked about affording arbitration (and exclusive jurisdiction) agreements a broad, liberal and elastic construction have typically been made in relation to construing the scope of the clause in question: Global Partners Fund Limited v Babcock & Brown Limited (in liq) [2010] NSWCA 196; (2010) 79 ACSR 383 at [60] (Global Partners). In the present case, the scope of Article 9 was delimited by the language “any dispute or claim concerning the scope, meaning, construction or effect of this Agreement”. As has already been noted, there was no dispute between the parties as to the scope of Article 9 and that the two contractual cross-claims, but not the negligence cross-claim, fell within it, properly construed. I do not consider that the broad and liberal approach referred to in Global Partners has any particular applicability to the construction of Article 9 in the present case.
45. Second, Dnata sought to frame much of its argument both at first instance and on appeal by reference to a tripartite schema of analysis which had been considered by Stevenson J in Elecnor, a decision currently under appeal in this Court. In that case, the parties had crafted their arguments by reference to three potential constructions of the dispute resolution clause there in question, namely the “Permissive Construction”, the “Mandatory Construction” and the “Elective Construction”: see at [60]-[65]. That schema was considered in the context of the particular clause in question in that case. Its invocation in the present case which concerned a different clause in a different contract was unhelpful. The focus should be on the words used by the parties in the context of the agreement as a whole.
46. For the above reasons, coupled with those in [52] of the primary judge’s reasons, her Honour’s decision was correct. The appeal should be dismissed with costs.
47. KIRK JA: I agree with Bell CJ.
48. McHUGH JA: I agree with the Chief Justice.

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