TURNER CORPORATION LIMITED V AUSTOTEL PTY LTD (1992) CLD100015 OF
Supreme Court of NSW – 3 April 1992
By contract in the form JCC A 1985, Turner agreed to construct a hotel for Austotel.
Turner issued proceedings against Austotel for declarations and orders relating to extensions of time and payment under the contract, damages for breach of the contract and other matters.
In response, Austotel sought an order that the proceedings be stayed pursuant to section 53(1) of the Commercial Arbitration Act 1984 (NSW). This provision allows for a party to an arbitration agreement to seek a stay in legal proceedings to allow an arbitration to be conducted.
The relevant clause of the contract provided that one party could serve a notice of dispute on the other party. If the dispute was not resolved a party could elect to issue proceedings or refer the dispute to arbitration. In this case Austotel served on Turner a notice to refer the dispute to arbitration.
The Court had to decide whether there was an arbitration agreement within the meaning of the act.
The court held that clauses 13.1 and 13.2 of JCC-A and B constitute an arbitration agreement for the purposes of the Commercial Arbitration Act.
Giles J said:
“If the parties have agreed that disputes are to be referred to arbitration should one of them so elect, that is aptly described as an agreement to refer the disputes to arbitration. To treat an agreement of that nature as an arbitration agreement for the purposes of s 53 of the Act is consistent with the evident objective of requiring those who have chosen to have their disputes determined by arbitration to be bound by that choice. Indeed to exclude agreements of that nature for other purposes of the Act might leave an arbitration consequent upon a notice of referral to arbitration such as that for which clause 13.02 provides unregulated by the Act because there could be no arbitration agreement other than that flowing from the original contract” – pages 14 and 15 (1992) CLD100015 of 1992
“In my opinion, cl 13 of the contract constitutes an arbitration agreement for the purposes of S53 of the Act because Turner and Austotel agreed that disputes between them would be referred to arbitration if one of them gave to the other a notice of referral to arbitration (and complied with clauses 13.02.01 & .03), that being in my view an agreement to refer disputes to arbitration.” – page 19 (1992) CLD100015 of 1992
The decision of a party to refer a matter to arbitration using the JCC A 1985 contract may be deemed to be a decision to refer a matter to arbitration for the purposes of the Commercial Arbitration Act.
If an contractual clause allows a party to elect to advance a dispute by litigation or arbitration, then the clause is an arbitration clause and a stay of litigation will be granted provided that the other party has not issued proceedings before the election to refer the dispute to arbitration.