|MATTER||Feldman v Tayar  VSCA 185|
|PARTIES||PINCHUS FELDMAN First Applicant
YOSEF FELDMAN Second Applicant
COREY STEPHEN TAYAR Respondent
|MATTER NUMBER||S EAPCI 2020 0030|
|COURT||IN THE SUPREME COURT OF VICTORIA|
|JUDGES:||MCLEISH, SIFRIS and KENNEDY JJA|
|DATES OF HEARING:||19 March 2021|
|DATE OF JUDGMENT:||24 June 2021|
|MEDIUM NEUTRAL CITATION:|| VSCA 185|
|APPEALED FROM:|| VSC 66 (Lyons J)|
|CATCHWORDS||ARBITRATION – Clause in arbitration agreement submitting ‘Disputed Matters’ to arbitration – Disputed Matters defined by reference to pleadings – Pleadings not filed – Agreement for oral articulation of claims on first day of arbitration – Whether arbitration agreement complied with writing requirements under s 7(3) of Commercial Arbitration Act 2011 – Whether ‘certain disputes’ submitted to arbitration – Arbitration agreement provided in writing clear mechanism for precise identification of disputes – Agreement to dispense with pleadings did not affect validity of arbitration agreement – Leave to appeal granted but appeal dismissed – Commercial Arbitration Act 2011 s 7.
ARBITRATION – Whether judge erred in not finding arbitrators failed to give reasons as required by s 31 of Commercial Arbitration Act 2011 – No requirement for arbitral reasons to be of judicial standard – Adequacy depends on evidence, nature and complexity of issues and relevant findings – Claim straightforward – Reasons disjointed and not easy to understand but adequately set out arguments, principles and conclusions – Reasons conveyed applicants lacked documentation and arbitral panel accepted respondent’s documentation calculating amount owing – Application dismissed – Westport Insurance Corporation v Gordian Runoff Ltd (2011) 244 CLR 239 applied – Commercial Arbitration Act 2011 s 31.
|REPRESENTATION||For the Applicants:
Solicitors – Philip Henenberg
Council – Mr J Korman
For the Respondent
Solicitors – Dov Silberman
Counsel – Mr D Silberman (solicitor)
- On 4 March 2013, the applicants and the respondent entered into a written arbitration agreement (‘Arbitration Agreement’) appointing three arbitrators (‘Arbitral Panel’) ‘to determine the Disputed Matters’. The Disputed Matters were to be identified and determined by pleadings to be filed in the arbitration as directed by the arbitrators. However, the arbitration commenced on the day of execution of the Arbitration Agreement and, in place of pleadings, the parties and the arbitrators agreed that the claims would be identified orally at the commencement of the arbitration, which they were.
 The Arbitrators were parties to the Arbitration Agreement and executed it on 4 March 2013.
- Recital A to the Arbitration Agreement recorded that the parties were in dispute about ‘certain loans, rents, salary payments, the ownership of properties and other matters’.
- The parties agreed that the Disputed Matters would be determined by reference to principles of Orthodox Jewish Law (‘Halacha’) and that the Arbitration Agreement would be governed by the laws of the State of Victoria.
- The award, titled ‘Court Decision’ (‘Award’), was published with reasons (‘Reasons for the Award’) on 9 May 2013. The Award recorded the Arbitral Panel’s decision in respect of five claims by the respondent:
- Claim 1 — Claim on whole or part of certain properties(‘Properties’)
- Claim 2 — Claim under rental agreement
- Claim 3 — Claim for rent
- Claim 4 — Claim for salary
- Claim 5 — Claim for redundancy payments
 67 and 69 Penkivil Street, 7 Park Street, Office within the Adler Building, Dormitory Building.
- Claim 1 was partially successful in that a monetary sum ($1,635,802) was ordered, in lieu of the claim to the Properties. Claims 2 to 4 were successful. Claim 5 was unsuccessful.
 The Award provided for a lien over the Properties as security for payment of the monetary sum.
- The respondent only sought to enforce the monetary component of the Award in respect of Claim 1 ($1,635,802), Claim 2 ($320,168.02) and Claim 4 ($14,000). The respondent did not seek to enforce the Award in respect of Claim 3. Allowing for an amount of $120,400 already paid, the total amount sought was $1,849,570.02.
- The application to enforce the Award (in respect of Claims 1, 2 and 4) was heard by a judge of the Trial Division of the Court on 2 December 2019. In his reasons for judgment, the judge held that the monetary component of Claim 1 should be enforced in the sum of $1,515,402.02 after taking into account the repayment of $120,400. The judge refused enforcement of the parts of the Award dealing with Claims 2 and 4. On 2 March 2020, the judge made an enforcement order under s 35 of the Commercial Arbitration Act 2011 (‘Act’). Further orders were made for the payment of interest and costs.
 Tayar v Feldman  VSC 66 (‘Reasons’).
- The applicants seek leave to appeal from the judge’s orders on two grounds. The first is that the Arbitration Agreement does not comply with ss 7(1) and 7(3) of the Act. By this ground, the applicants contend that there was no arbitration agreement under the Act, because there was no agreement in writing as to which disputes were to be submitted to arbitration. Secondly, it is contended that the arbitrators failed to give adequate reasons for the Award in respect of the monetary component of Claim 1 as required by s 31(3) of the Act.
- The respondent worked at the Yeshivah Centre in Sydney, a Jewish institution operated by the applicants. From time to time between 2008 and 2013, the respondent lent various amounts of money to the applicants for the purpose of meeting the ongoing expenses of the centre, which he claimed had not been repaid. Neither the respondent nor the applicants produced a copy of any loan agreement.
- The respondent lent the money to the applicants pursuant to the Jewish legal principle known as ‘Heter Isko’ where the person who advances funds is categorised as an investor seeking to derive a profit from investing capital rather than a lender seeking to derive interest from a loan. It appeared that as part of the arrangement to advance funds, the Properties comprising various parcels of land owned by the applicants and others were pledged to the respondent but were to be returned if the loans were repaid.
- Further disputes arose between the parties including in relation to the non-payment of the rent of the respondent’s home by the applicants and non-payment of salary for work done by the respondent.
The Arbitration Agreement
- On 4 March 2013, the parties and the arbitrators entered into the Arbitration Agreement.
- The recitals to the Arbitration Agreement provide that:
- Disputes have arisen between the Parties concerning certain transactions between them during the period from 2007 to date, including certain loans, rents, salary payments, the ownership of properties and other matters.
- Pursuant to this Agreement, an Arbitral Panel will be appointed to determine the Disputed Matters in accordance the processes set out in this Agreement.
- ‘Disputed Matters’ is defined as ‘the matters described in Schedule 1 to be determined by the Arbitral Panel and made subject of an Award’. Schedule 1 states:
The Disputed Matters
The matters to be determined by the Arbitral Panel are to be determined by the Statement of Claim, Statement of Defense [sic] and Cross Claim (if any) and the Reply and Deference [sic] to Cross Claim (if any) to be filed in the arbitration as directed by the Arbitral Panel.
- Clause 2 of the Arbitration Agreement relevantly provides:
- a) The Parties appoint the Arbitral Panel to determine the Disputed Matters in the manner and within the times set out in this Agreement and the Arbitral Panel accepts the appointment on the basis set out in the Agreement.
- b) The Parties agree that:
- i) the Arbitral Panel will act as an arbitral tribunal under the Act;
- ii) the Arbitral Panel must conduct the determination of the Disputed Matters in accordance with the Arbitration Rules.
- Schedule 2 of the Arbitration Agreement provides for ‘Arbitration Rules’, amongst other things:
- Reference to Arbitration
Arbitration pursuant to this Agreement shall be conducted under and in accordance with the Act and as otherwise set out in these Arbitration Rules (Rules).
- Principles Relating to Arbitration
Subject to section 28 of the Act, the Parties agree that the Arbitral Panel may determine any question that arises for determination in the course of the arbitration in relation to the substance of the Disputed Matters by reference to principles of Orthodox Jewish Law (known as Halacha) including its references to local law (Dinah d’malchushah) and local custom (minhag hamakon).
Conduct of the Arbitration
- The arbitration commenced on 4 March 2013. None of the documents referred to in Schedule 1 were ever created. The respondent made his claims orally and the second applicant on behalf of himself and the first applicant responded orally. All parties agreed to this course. During the course of at least two days of hearings, the parties orally identified the disputes the subject of the arbitration. There was no evidence to the effect that the applicants opposed this course at the time, or at any time thereafter, or sought an adjournment to ensure that the claims for determination by the Arbitral Panel were further identified. All of the claims fell within the ‘Disputed Matters’ identified in Recital A of the Arbitration Agreement.
- The respondent claimed around $6,000,000 in relation to loans and other transactions that were made between the parties, in respect of which he had only been repaid an insignificant amount. The respondent relied on at least one document relating to the amount of the outstanding advances, which was presented to the Arbitral Panel. That document was not before the trial judge or this Court. The applicants in defence submitted to the Arbitral Panel that only around $1,000,000 had actually been lent by the respondent and that all or nearly all of that had been repaid. The applicants did not produce any documents in support of their claim.
- There was little evidence as to how the hearing was conducted or as to the documents that were relied upon. However, it is not in dispute that the respondent’s claims were the subject of evidence and submissions before the Arbitral Panel and that the applicants were afforded procedural fairness in relation to those claims.
The Award and the Reasons for the Award
- On 9 May 2013, the Arbitral Panel published the Award, together with the Reasons for the Award. The Award relevantly provides:
Parts of the decision mainly based on claims frankly made by the Parties on a court hearing and on the claims expressed orally on the second hearing of the Court (as the Court was unable to approve the claims sent and written via email).
 The second applicant deposed that the first part of this sentence should properly be translated as: ‘The contents of the decision are mainly based on the claims which were frankly stated by the Parties at the sitting of the Rabbinical Court’: Reasons .
Claim 1 – the claim on the whole property or a part thereof located at 67&69 Penkivil Street, 7 Park Street, Office within the Adler Building, Dormitory Building.
Court decision: The mentioned properties remain in possession of the defendants and nevertheless the defendants are obliged to pay the amount of $1,635,802 to the plaintiff. However, the lender retains a lien on the properties up to the value of the aforementioned amount.
Claim 2 – the claim regarding $17,815.47 pcm rental agreement
Court decision: The defendants must pay the entire amount of the rental agreement $17,815.47 pcm, as agreed between the parties initially (including all outstanding payments, which have not been paid completely yet). This obligation continues until the defendants pay the entire above mentioned amount mentioned in claim 1. Regarding the monthly payments from that time till [sic] September 2013, it depends on the details of initially made agreement and needs further clarification by the Court.
Claim 3 – the claim of apartment rental payment of $850 per week
Court decision: Mr Joseph Feldman must pay the entire amount of the claim related to the rent that has not yet been paid.
Claim 4 – the claim regarding salary
Court decision: The defendants must pay the entire amount of the salary (that has not yet been paid) to the plaintiff for all the time of his service at the office etc., but not for the time after he resigned from work.
Claim 5 – the claim regarding redundancy payments
Court decision: At the moment, the defendants are exempt from compensating the plaintiff.
- The Reasons for the Award are short (three pages) and not easy to understand. The language is often disjointed. They are very much based upon the Halacha.
- The introductory paragraph of the Reasons for the Award provides:
Our intention here is to quote in brief the primary perspectives that led to the above mentioned decision of the Court, after seriously considering all parts of the Halacha, and after consulting great Torah scholars who sit in judgement around the globe, and it is understood that it is the way of Torah that every matter has perspectives, this one builds and the other demolishes, nevertheless the decision was made according to the opinion of the Court.
- The body of the Reasons for the Award relate almost entirely to Claim 1, namely the loans or advances, the agreement to transfer property in relation to the advances, the advances outstanding at the time of the hearing, and the interest (or profits) thereon.
- The respondent issued enforcement proceedings pursuant to s 35 of the Act on 6 May 2019, nearly six years after the Arbitral Panel made the Award. The applicants issued an application for refusal of enforcement under s 36 of the Act on 11 September 2019.
- The matter was heard by a judge of the Trial Division on 2 December 2019. On 2 March 2020, the judge handed down judgment and made an enforcement order pursuant to s 35 of the Act that the applicants pay the respondent the sum of $1,515,402.02.
Relevant provisions of the Act
- Section 1 of the Act defines the scope of the Act:
1 Scope of application
(1) This Act applies to domestic commercial arbitrations.
(3) An arbitration is domestic if—
(a) the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in Australia; and
(b) the parties have (whether in the arbitration agreement or in any other document in writing) agreed that any dispute that has arisen or may arise between them is to be settled by arbitration; and
(c) it is not an arbitration to which the Model Law (as given effect by the International Arbitration Act 1974 of the Commonwealth) applies.
- Section 4 of the Act provides a statutory waiver of a right to object in certain circumstances:
4 Waiver of right to object
A party who knows that any provision of this Act from which the parties may derogate or any requirement under the arbitration agreement has not been complied with and yet proceeds with the arbitration without stating the party’s objection to such non-compliance without undue delay or, if a time-limit is provided for stating the party’s objection, within such period of time, is taken to have waived the party’s right to object.
- Section 7 provides for the definition and form of arbitration agreement:
7 Definition and form of arbitration agreement
(1) An 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.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
(3) The arbitration agreement must be in writing.
(4) 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.
(7) 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.
- Section 31 provides for the form and contents of an award:
31 Form and contents of award
(1) The award must be made in writing and must be signed by the arbitrator or arbitrators.
(3) The award must state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or the award is an award on agreed terms under section 30.
- Section 35 provides for the recognition and enforcement of an award:
35 Recognition and enforcement
(1) An arbitral award, irrespective of the State or Territory in which it was made, is to be recognised in this State as binding and, on application in writing to the Court, is to be enforced subject to the provisions of this section and section 36.
(2) The party relying on an award or applying for its enforcement must supply the original award or a copy of the original award.
(3) If the award is not made in English, the Court may request the party to supply a translation of it into English.
- Section 36 provides the grounds for refusing recognition or enforcement of an award:
36 Grounds for refusing recognition or enforcement
(1) Recognition or enforcement of an arbitral award, irrespective of the State or Territory in which it was made, may be refused only—
(a) at the request of the party against whom it is invoked, if that party furnishes to the Court proof that—
(i) a party to the arbitration agreement was under some incapacity, or the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication in it, under the law of the State or Territory where the award was made; or
(ii) the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present the party’s case; or
(iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognised and enforced; or
(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the State or Territory where the arbitration took place; or
(v) the award has not yet become binding on the parties or has been set aside or suspended by a court of the State or Territory in which, or under the law of which, that award was made; or
(b) if the Court finds that–
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State; or
(ii) the recognition or enforcement of the award would be contrary to the public policy of this State.
- In respect of ss 35 and 36, the judge made the following comments:
In the context of enforcement proceedings, a prima facie right to recognition and enforcement of the award has been described as ‘consonant with the common law view that the issuing of an arbitral award gives rise to an implied promise that the award will be honoured’. As French CJ and Gageler J said in TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia (a case involving an application to enforce an award under s 8 of the [International Arbitration Act 1974 (Cth)]):
Enforcement of an arbitral award is enforcement of the binding result of the agreement of the parties to submit their dispute to arbitration, not enforcement of any disputed right submitted to arbitration.
The role of the Court under ss 35 and 36 of the [Act] is understood to be limited to the enforcement of contractual obligations arising from the arbitration agreement: it is not to determine substantive disputes between the parties as to fact and law, those being the realm of the arbitral tribunal. The Court is concerned with the ‘structural integrity of the arbitration proceedings’. As a result, the arbitral award should be enforced unless any of the grounds contemplated by s 36 apply.
 Andent Pty Ltd v Thornhill Machine Tools Australia Pty Ltd  VSC 647,  (Croft J).
 TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia (2013) 251 CLR 533, 555–6  (French CJ and Gageler J).
 Indian Farmers Fertiliser Cooperative Ltd v Gutnick (2015) 304 FLR 199, 207  (Croft J).
 Grand Pacific Holdings Ltd v Pacific China Holdings Ltd (in liq) [No 1]  4 HKLRD 1, 7  (Tang V-P, Kwan JA and Fok JA agreeing at 38  and ).
- At trial, the applicants principally contended that there was no ‘domestic commercial arbitration’ and no enforceable or valid arbitration agreement, because the Disputed Matters were not identified in writing. They also contended that s 36(1) applied so that the Court should refuse to enforce the Award.
- First, the judge held that the Arbitration Agreement was valid and enforceable. In particular, the disputes submitted to arbitration were sufficiently identified. He referred to Austra Tanks Pty Ltd v Running and continued:
In the present case, the Agreement contains details of the parties, the Arbitral Panel and how the arbitration was to be conducted. Having recorded in Recital A that disputes had arisen between the parties ‘concerning certain transactions between them during the period from 2007 to date [4 March 2013], including certain loans, rents, salary payments, the ownership of properties and other matters’, the Agreement provided that the Disputed Matters were to be referred to arbitration. Schedule 1 contains the means by which the Disputed Matters were to be identified, namely by the subsequent filing of a statement of claim by the Applicants and a defence by the Respondents. In these circumstances, at the time the Agreement was made, I conclude that there was a binding, valid and enforceable agreement between the parties.
I can see no issue of validity or enforceability in the parties agreeing to identify the particular disputes to be referred to arbitration subsequent to the Agreement being entered into. Indeed, many arbitration agreements provide a mechanism for defining disputes which ‘may arise’ between the parties to be referred to arbitration. Such an arbitration agreement does not itself set out the particular disputes which are to be referred. That can only take place at a later point in time. However, it is clear that these kinds of arbitration agreements are valid and binding arbitration agreements under the [Act] notwithstanding the precise nature of the dispute is yet to be identified.
In my view, the real complaint of the Respondents, at the level of validity and enforceability, is that the Applicant failed to file a statement of claim in accordance with the terms of the Agreement. On its face, that non-compliance may amount to a contractual breach. But in my view, that does not mean that there was not a valid and binding agreement. Rather, it means that the Respondent had the right to complain about that breach: i.e. to seek enforcement of that term of Agreement or to terminate the Agreement for breach. However, that issue is not relevant to the question of whether the Agreement on its face was void for incompleteness or uncertainty.
  2 NSWLR 840, 843 (Wootten J).
- The judge then addressed whether the Arbitration Agreement complied with ss 1(3)(b) and 7 of the Act. In relation to s 1(3)(b), he said:
Section 1(3)(b) first requires that the parties have agreed that ‘any dispute’ that ‘has arisen or may arise between them’ is to be settled by arbitration. It also requires that agreement is in ‘the arbitration agreement or in any other document in writing’.
In my view, the Agreement satisfies the first requirement of s 1(3)(b). As set out above, it provides that the Disputed Matters are to be settled at arbitration by the Arbitral Panel and sets out the mechanism or procedure for how the Disputed Matters are to be identified, namely by the Applicants filing a statement of claim pursuant to Schedule 1. In this case, as the Agreement is in writing, it satisfies the second requirement in s 1(3)(b).
- In relation to s 7, the judge said:
Section 7(1) of the [Act] first requires 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. Section 7(3) requires that agreement ‘must’ be in writing. Section 7(4) provides that it 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.
In my view, the Agreement satisfies the first requirement of s 7(1). As set out above, it provides that ‘certain disputes’ are to be settled at arbitration by the Arbitral Panel, namely the Disputed Matters. It sets out the mechanism or procedure for how the Disputed Matters are to be identified, namely by the Applicants filing a statement of claim pursuant to Schedule 1. As that Agreement is in writing, it satisfies the requirement in s 7(3).
In my view, the real complaint of the Respondents, at the level of the [Act], is that either s 1(3)(b) and/or s 7 requires the actual matters to be referred for determination by the Arbitral Panel to be in the writing. I am unable to discern any such requirement on the proper construction of these sections. This is in the context, noted above, that many arbitration agreements relate to disputes which ‘may arise in the future’: those disputes can only be identified at a later point in time. In my view, such agreements clearly fall within s 1(3) and s 7, each of which refer to agreements relating to disputes that ‘may arise between’ the parties.
- The judge found that the parties were aware of how the ‘Disputed Matters’ were to be defined in the absence of a statement of claim and precisely what matters were to be heard and determined by the Arbitral Panel. The judge accepted that there was no complaint by the applicants and that they were not prejudiced or denied procedural fairness by the failure to provide a statement of claim. In conclusion the judge said:
As a result, I consider that the Agreement does comply with s 1(3)(b) and s 7 of the [Act] as there is no requirement under those provisions for the particular matters referred to an arbitrator to be in writing. Further, and as a consequence, I do not consider that the arbitration was beyond the scope of the [Act].
- The judge then found that in any event, in the circumstances, by executing the Arbitration Agreement and embarking on the arbitration on the very same day without any statement of claim, the applicants ‘waived their right to object to the [respondent’s] failure to do so’. He referred in that context to s 4 of the Act.
- The judge then held that, as the Arbitration Agreement satisfied the requirements of s 1(3)(b), the arbitration was a ‘domestic’ arbitration. Further, save for Claim 4, the arbitration was a ‘commercial’ arbitration within s 1(1) of the Act. This issue was not in dispute in the case of Claim 1.
- Accordingly, the judge was satisfied that the Court was able to enforce Claims 1 and 2. The arbitration of Claims 1 and 2 was a domestic commercial arbitration under the Act and the other necessary procedural matters under the Act and the Arbitration Rules had been complied with.
- The judge rejected, for the same reasons, the applicants’ contention that the Court should refuse to enforce the Award pursuant to s 36 of the Act on the grounds that:
(a) there was no valid arbitration agreement under Victorian law;
(b) the Award dealt with disputes not falling within or beyond the scope of the submissions to arbitration; and
(c) the arbitral procedure was not in accordance with the agreement of the parties.
- The judge went on to say that, even if the applicants had established grounds under s 36, he would not have refused to enforce the Award. He said that refusal to enforce is a matter of discretion. The judge said:
Third, for the reasons set out above, in this case I am not satisfied that the failure to reduce to writing the Disputed Matters caused any practical unfairness or prejudice in any way to the Respondents. None was asserted by the Respondents at the arbitral hearings, before the Award and the Reasons were finalised, or in this proceeding.
As a result, I would enforce the Award in respect of Claim 1.
- The judge then dealt with the failure to provide reasons as required pursuant to s 31(3) of the Act. In relation to Claims 2 and 4, the judge said:
In these circumstances, the Reasons do not on their face satisfy the requirements to give reasons as required by s 31(3) of the [Act] in respect of Claims 2 and 4. As a result, in the exercise of my discretion, I would refuse to enforce the Award in respect of Claims 2 and 4 under s 36(1)(a)(iv) of the [Act].
- In relation to Claim 1, the judge, after referring to the relevant authorities, which were not in dispute, said:
Taking these matters into account, there must still be some reasoning process setting out how the tribunal came to its decision. When considering the adequacy of reasons the Court is not concerned with assessing the merits of the reasons given for an award beyond determining whether they adequately indicate how the arbitral tribunal came to its decision. In the context of enforcement proceedings, Croft J in Giedo noted that:
In this respect the court does nevertheless stress that this enforcement application does not involve anything in the nature of a merits appeal from the award. Indeed, it is not the function of the court to investigate this issue, save to indicate that on the basis of the material, including the submission to arbitration, it was clearly open to the arbitrator to make the relevant findings as set out in the award.
 Ibid , ; Westport Insurance Corporation v Gordian Runoff Ltd (2011) 244 CLR 239, 269–70 ;  HCA 37 (French CJ, Gummow, Crennan and Bell JJ); Bremer Handelsgesellschaft mbH v Westzucker GmbH [No 2]  2 Lloyd’s Rep 130 (‘Bremer’); R v F  5 HKLRD 278.
 Giedo van der Garde BV v Sauber Motorsport AG  VSC 80, .
- The judge concluded that the reasons were adequate and said:
The Reasons are not easy to understand. The language is often disjointed. These issues may be the result of the translation or the way in which the original Reasons were written.
The Reasons focus predominantly on the dispute over the advances that were the subject of Claim 1: nearly all of the three pages of the Reasons deal with Claim 1. That is understandable given that it was the largest claim before the Arbitral Panel. Without assessing the merits of the Reasons, I note that the Reasons on Claim 1 set out the relevant arguments, the Halachic principles upon which they rely, and the conclusions arrived at consequential to those facts. As such, in my view, they are adequate.
Proposed grounds of appeal
- The applicants’ proposed grounds of appeal are as follows:
- The primary judge:
(a) erred in finding that the parties had entered into an arbitration agreement for purposes of sections 7(1) and 7(3) of the [Act]; and
(b) ought to have found that:
(i) there was no arbitration agreement;
(ii) the parties did not agree in any other document in writing that any dispute that had arisen or may arise between them would be settled by arbitration;
(iii) in consequence, under section 1(3)(b) of the [Act], the arbitration was not domestic; and
(iv) pursuant to section 1(1) of the [Act], the arbitral award could not be enforced under the [Act].
- The primary judge:
(a) erred in not finding that the arbitrators failed to give reasons as required by section 31(3) of the [Act] for their finding that the Applicants were liable to repay the Respondent the borrowed principal;
(b) ought, in the exercise of his discretion under section 36(1)(a)(iv) of the [Act], to have refused to enforce the arbitral award in respect of the borrowed principal, being $1 million; and
(c) ought to have found that the portion of the arbitral award determining the applicants’ liability for interest was not clearly separate and divisible from the portion of the award dealing with the applicants’ liability to repay the borrowed principal, so that the entirety of Claim 1 could not be enforced.
Proposed ground 1 —Arbitration Agreement
- As noted above, the judge held that:
(d) the Arbitration Agreement was not void for uncertainty or incompleteness as the disputes were ascertainable;
(e) the Arbitration Agreement satisfied the requirements of ss 1(3)(b) and 7(1) and 7(3) of the Act for the reasons given;
(f) the parties were aware how the Disputed Matters were to be defined and determined in the absence of a statement of claim and neither party was prejudiced or complained;
(g) the arbitration of Claims 1 and 2 constituted a domestic commercial arbitration under the Act and as all procedural requirements had been complied with, Claim 1 should in the exercise of the Court’s discretion be enforced under s 35 of the Act; and
(h) in the exercise of his discretion, he would not refuse to enforce Claim 1 under s 36 of the Act even if, contrary to his view, that discretion were enlivened.
 The judge found that this was sufficient to constitute a waiver of the right to object to the absence of a statement of claim.
 Claim 2 was not enforced because the reasons were not adequate.
- The applicants submitted that the Arbitration Agreement did not comply with s 7 of the Act because, unless and until pleadings were filed there was no agreement to submit ‘all or certain disputes which have arisen or which may arise’ between the parties to arbitration. Some further process and articulation, in writing, was required, in this case the agreed pleadings.
- In the written case, the applicants submitted that the Arbitration Agreement ‘can be characterised in two ways’ and that ‘[b]oth lead to the conclusion that it was not an arbitration agreement for purposes of section 7 of the [Act]’. The first way was by incorporation by reference, that is the pleadings, which did not take place.
- The second way was that the parties contemplated a further step or agreement as explained in Masters v Cameron (category two) which never took place with the consequence that ‘an arbitration agreement never came into existence’.
- The applicants contended that the consequence was as follows:
In circumstances where there was no arbitration agreement, and no other document in writing in which the parties agreed to submit any dispute to arbitration, there was no domestic arbitration, the [Act] did not apply, and the Court had no jurisdiction to enforce the arbitral award.
- During oral submissions, counsel for the applicants placed much emphasis on the construction of ss 7(1) and (3), contending that it was fundamental to identify, in writing, which disputes are to be submitted to arbitration because of the finality and legal consequences of an award. Reference was made to Aughton Limited (formerly Aughton Group Ltd) v MF Kent Services Ltd, in which Sir John Megaw said:
it has been laid down by statute … that an arbitration agreement has to be ‘a written agreement’ … The object, or the effect, of that statutory requirement must be to emphasise, and seek to ensure, that one is not to be deprived of his right to have a dispute decided by a court of law, unless he has consciously and deliberately agreed that this should be so.
- The gravamen of the applicants’ oral submission was that the disputes to be submitted to arbitration were not identified in writing. The disputes were to be identified and determined by pleadings that did not come into existence. Any oral agreement as to the disputes to be determined was not sufficient. In short, cl 2(a) of the Arbitration Agreement submitted Disputed Matters to the Arbitral Panel. There were no Disputed Matters because the matters were to be defined by the pleadings. The applicants submitted that Recital A and the oral agreement between the parties as to which disputes were to be determined was not sufficient compliance with ss 7(1) and (3). As a consequence, it was submitted that the judge fell into error.
- The respondent submitted that there was no error in the approach and findings of the judge. The Arbitration Agreement was in writing, appointed the Arbitral Panel and identified the general nature of the disputes between the parties and procedural aspects as to how the arbitration was to be conducted.
- The respondent submitted that the pleadings were not incorporated into the Arbitration Agreement and the Arbitration Agreement was not a ‘Masters v Cameron type of agreement’.
- The respondent submitted further that the failure to file a statement of claim had no effect on and did not determine the validity of the Arbitration Agreement and compliance with s 7. According to the respondent:
Such a view is supported by a number of factors. Firstly the Schedule 1 requirement is clearly procedural as it requires the Parties to file certain types of documents ‘in the arbitration as directed by the Arbitral Panel’. It is clear from this passage that at the moment when any Statement of Claim (written or oral) would need to be presented there would have to have been an Arbitral Panel in existence. It follows that the Arbitral Panel would then have the jurisdiction and power to direct the Parties as to how and what documents and evidence were to be produced in accordance with the Agreement. It follows that the Agreement created an Arbitral Panel with a valid jurisdiction before the creation of any Statement of Claim or defence.
To conclude otherwise would lead to a situation where the Agreement has both created and not created the Arbitral Panel. The Agreement created the Arbitral Panel and has given that tribunal a jurisdiction to direct parties as to the presentation of, [sic] including a Statement of Claim and Defence. At the same time, it has not created any Arbitral Panel and has not given it a jurisdiction because ‘Pleadings were not filed, and an arbitration agreement never came into existence’. Such an interpretation of the nature of the Schedule 1 will lead to uncertainty. It will be contrary to the principles of interpretation highlighted by the primary judge. It will also be contrary to a principle set out in the case mentioned in Applicants’ Written Case … ‘if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense’.
The general nature of the disputes and claims between the parties are specifically named in the Recital A and most relevantly and importantly correspond precisely with the Claims specifically covered in the Award.
 Romero v Farstad Pacific Shipping (Indian Pacific) Pty Ltd (2014) 231 FCR 403, 414–5  (Allsop CJ, Rares and McKerracher JJ) citing McCormick v Riverwood International (Australia) Pty Ltd  FCA 1640, – (Weinberg J).
- Arbitration has been a method and feature of dispute resolution under the common law well before the various Arbitration Acts. However, the various Acts and in particular the Act, provide numerous advantages particularly in relation to enforcement. Arbitration may be conducted according to the common law. The Act however applies to ‘domestic commercial arbitrations’.
- To qualify as a ‘domestic commercial arbitration’ the parties must agree that ‘any dispute that has arisen or may arise between them is to be settled by arbitration’. The agreement may be in the arbitration agreement or in any other document in writing (s 1(3)(b) of the Act).
- Under s 7(1) of the Act ‘arbitration agreement’ is defined as ‘an agreement by the parties to submit to arbitration all or certain disputes, which have arisen and which may arise between them’. Although the agreement must be in writing (s 7(3)), it is sufficient if it is recorded ‘in any form’ if the agreement is otherwise concluded orally or by conduct (s 7(4)).
- The requirements contained in ss 1(3)(b) and 7(1) are addressed to establishing that ‘all or certain disputes’ have been submitted in writing to arbitration. If the submission embraces ‘all’ disputes, it is plain that the provisions are met, even though the disputes in question have not, in the agreement itself, been identified with any particularity. More precise identification must then await the arbitral process itself. There is no reason why a submission of ‘certain’ disputes should demand any greater specificity. Therefore, although the word ‘certain’ is capable of connoting precise identification, as used in s 7(1) it means simply ‘some’, standing in contrast to ‘all’. This is usually satisfied by submitting any dispute under a particular agreement, as noted by the judge. Equally, the parties may agree in writing to a mechanism or process for determining which disputes that have arisen or which may arise between them are to be submitted to arbitration. As long as there is a process to determine with certainty which disputes are to be submitted, there is a valid and binding arbitration agreement. The particular disputes need not be identified in the arbitration agreement.
- Turning to the facts of the present case, the matter may be tested by considering the position at the time the Arbitration Agreement was signed. At that point, prior to the giving of any direction by the Arbitral Panel and therefore prior to the filing of any pleadings, there can be no issue as to the validity of the Arbitration Agreement, which was immediately binding on the parties. It provides in writing for the submission of disputes between the parties to arbitration. The disputes are identified, both in the definition of ‘Disputed Matters’, which presupposes a direction by the Arbitral Panel, and in Recital A. The Act requires no more, and no Masters v Cameron issue arises.
 (1954) 91 CLR 353;  HCA 72.
- In our opinion, the fact that the Arbitral Panel gave no direction, and no pleadings were exchanged, does not alter that position. The Arbitration Agreement identifies the general nature of the disputes submitted to arbitration in Recital A, leaving the precise articulation and quantification of the specific claims to be determined by pleadings as directed by the Arbitral Panel. In this case, the parties instead agreed orally that this need not occur. While that gave the defined term ‘Disputed Matters’ no work to do, the description of the disputes in Recital A was plainly thought sufficient to identify the subject matter of the arbitration. That was not inconsistent with the Arbitration Agreement, because the Arbitral Panel did not direct pleadings at all. Nothing in the Arbitration Agreement dictated that such directions were mandatory. In their absence, the Arbitration Agreement still appointed arbitrators for the purpose of deciding the disputes identified in Recital A.
- It follows that it is not correct to say that, because there were no ‘Disputed Matters’ (as defined), nothing was submitted to arbitration, or that the Arbitration Agreement did not provide for ‘certain disputes’ to be submitted to arbitration. The first proposed ground is not made out.
- Given the nature and extent of the argument we will grant leave to appeal on this proposed ground but dismiss the appeal.
Proposed ground 2 — Reasons
- To understand proposed ground 2, it is necessary to say a little more about the Reasons for the Award.
- The Reasons are not easy to understand. This may partly be due to the fact that they have been translated. In any event, however, some things are clear enough. Having decided that the sale of the Properties was void for ‘overreaching’, the Reasons state that ‘there remains at most the debt of $1,831,360’, as to which there was no proof of overreaching.
- As to that amount, the Reasons state that approximately $1,000,000 was principal which the applicants were ‘certainly … liable to pay’, and the remainder profits or interest. There being doubt as to the position regarding interest, one third would be awarded. The respondent was also entitled to $126,000 by way of principal under separate loans and ‘5% of the profits as a compromise amount’, together with amounts referable to ‘damage and toil aggravation etc’. This produced the figure of $1,635,802.
- The source of these figures is not further explained. However, the Reasons state earlier that the applicants ‘completely relied on all of the calculations’ of the respondent, except for disputing the claimed debt of $1,831,360.
- As noted at paragraph 45 above, the judge held that in relation to Claim 1 the reasons were adequate.
- The applicants submitted that having identified the relevant contested dispute between the parties in relation to the monetary component of Claim 1 — whether the principal has been repaid — the finding in favour of the respondent ‘contains nothing which can be described as constituting “some reasoning process setting out how the tribunal came to its decision”’.
- The applicants submitted further that the claim in respect of interest is not severable and the failure to give reasons in relation to repayment of the principal means that the interest component cannot be enforced.
- The respondent submitted that there was no error in the finding and reasons of the judge. The reasons were adequate in circumstances where the evidence established, as sufficiently identified in the Award, that the respondent provided the Arbitral Panel with a document that consolidated all of the financial dealings between the parties, being a document relied on by the applicants, who tendered no documentary evidence and simply made bald unsubstantiated assertions about repayment.
- The authorities are not in dispute. Both parties relied on the decision of the High Court in Westport Insurance Corporation v Gordian Runoff Ltd (‘Gordian Runoff’).
 (2011) 244 CLR 239;  HCA 37.
- Prior to that decision, there was some difference of opinion between the Victorian and New South Wales Courts of Appeal. In Oil Basins Ltd v BHP Billiton Ltd, the Victorian Court of Appeal held that in certain circumstances the complexity of reasons could reach that of a superior court. In Gordian Runoff Ltd v Westport Insurance Corporation, the New South Wales Court of Appeal held that the arbitral reasons did not have to be of a judicial standard. The Court referred to the test formulated by Donaldson LJ in Bremer Handelsgesellschaft mbH v Westzucker GmbH [No 2] as follows:
All that is necessary is that the arbitrators should set out what, on their view of the evidence, did or did not happen and should explain succinctly why, in the light of what happened, they have reached their decision and what that decision is. That is all that is meant by a ‘reasoned award’.
 (2007) 18 VR 346;  VSCA 255.
  NSWCA 57 (‘Gordian Runoff v Westport’).
 Ibid  (Allsop P, Spigelman CJ agreeing at , Macfarlan JA agreeing at ) quoting Bremer  2 Lloyd’s Rep 130, 132–3 .
- The New South Wales Court of Appeal emphasised the differences between arbitration and litigation and said:
[I]t is wrong to equate the obligations of judges and arbitrators to give reasons as part of the ascription of meaning to the CA Act, s 29(1)(c). This is because of my view that so to equate the responsibilities of arbitrators and judges is not in accordance with the content of either s 29(1)(c) or the Model Law (being relevantly its source and inspiration) or with international arbitration practice as reflected by the cases.
- The issue was clarified by the High Court in Gordian Runoff. Both the joint judgment (French CJ, Gummow, Crennan and Bell JJ) and the separate concurring judgment of Kiefel J endorsed Donaldson LJ’s test of the standard of reasons required in arbitral awards and referred to the passage set out above. The joint judgement and the separate concurring judgment of Kiefel J make clear that there was nothing in the legislation to suggest that arbitral awards should display reasons of a judicial standard.
 (2011) 244 CLR 239;  HCA 37.
- The adequacy or sufficiency of reasons will depend on the evidence, the complexity and nature of the issue, and the relevant finding. The reasons must address why the arbitrators have reached a particular decision.
- The first point to note is that the issue in respect of the monetary component of Claim 1 was relatively simple and straightforward. The applicants claimed that they gave back about $1 million over the years. The respondent claimed that he received only an insignificant amount. The applicants produced no evidence to support their bald and general assertion of repayment. The respondent provided the Arbitral Panel with a document that consolidated all the previous financial dealings between the parties. The document contained information regarding monies advanced to, and repaid by, the applicants over time. The applicants relied on these figures. Presumably these figures formed the basis of the Award.
 As referred to above, the reconciliation document is not in evidence.
- As noted earlier, the judge held that, although the Reasons for the Award are ‘not easy to understand’ and ‘[t]he language is often disjointed’, ‘they are adequate’. In particular, the judge noted ‘that the Reasons on Claim 1 set out the relevant arguments, the Halachic principles upon which they rely, and the conclusions arrived at consequential to those facts’.
- It must be recalled, and it is not without significance, that Claim 1 dealt with a wider issue than repayment of the loan or principal. Claim 1 was essentially a claim to the Properties because of non-payment of the principal. The Reasons for the Award deal with and provide reasons as to why the claim to the Properties failed. There is no suggestion that in this respect the reasons were not adequate. However, a necessary part of the reasoning required a consideration of the extent of disparity between the value of the Properties and the amount of the loan or principal. The existence and extent of the loan and any unpaid balance were integral to the analysis, reasoning and findings.
- Having rejected the claim to the Properties, the amount owing became the primary focus, although as pointed out it also informed the dismissal of the claims to the Properties.
- The Reasons for the Award set out the relevant rival arguments, albeit rather inelegantly (which may to some extent be a result of translation). Nevertheless, the Reasons for the Award record the assertion by the applicants that they ‘gave back over those years approximately 1,000,000’ and the assertion by the respondent that ‘he received only an insignificant amount here and there’.
- In finding for the respondent, the reason stated in the Reasons for the Award was that ‘the [applicant] completely relied on all of the calculations of the [respondent] and now he disagrees with him regarding a “significant” amount’. This sufficiently conveys that the applicants had no documentation and yet asserted a ‘significant’ disparity between the versions while simultaneously relying on the respondent’s detailed document, which was in evidence before the Arbitral Panel. The Reasons for the Award then go on to deal with the issue of interest and, it may be inferred, rely on the same figures put forward by the respondent in undertaking the necessary calculations. The applicants, on whom the onus lay to establish that the reasons were inadequate, led no evidence suggesting otherwise. Good or bad, out of sequence, not fully or precisely stated, there is a sufficient process of reasoning in dealing with Claim 1.
- In light of our finding, the issue raised by proposed ground 2(c) as to whether the applicant’s liability for interest was separate and divisible from the portion of the Award dealing with their liability to repay the borrowed principal, does not arise.
- It is also not necessary to deal with a notice of contention, by which the respondent contended that, even if the Reasons for the Award were inadequate and capable of triggering the discretion of the Court under s 36 of the Act to refuse to enforce the Award, the Award should still be enforced as there was no serious breach of the rules of natural justice.
- We will grant leave on proposed ground 2 but dismiss the appeal.
- Accordingly, we grant leave to appeal and dismiss the appeal.