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Australia – Apex court speaks out on adequacy of arbitral reasons

by Albert Monichino

Albert Monichino SC Global Arbitration Review Journal (online, 12 January 2012).

The High Court decision in Westport Insurance Corporation v Gordian Runoff concerns the standard of reasons of domestic arbitral awards under a now largely repealed legislative regime. It has no direct relevance to the content of reasons required by Article 31 of the Model Law which is the relevant standard under the revised Commercial Arbitration Act, (which in future will regulate domestic arbitration in Australia) and also under Australia’s International Arbitration Act (in respect of international arbitrations seated in Australia).

The High Court rejected the notion that domestic arbitrators are required to provide reasons of a judicial standard. The content of an arbitrator’s reasons will depend upon the nature of the case. Generally, the greater the complexity and amount involved, the more elaborate should be the reasons. In other words, a principle of proportionality has emerged. In this regard, it should be noted that a ‘proportionality’ test was adopted by Croft J in the 2010 Victorian Supreme Court judgement of Thoroughvision v Sky Channel.

But there remains some uncertainty as to the practical content of the standard of reasons – in particular, whether domestic arbitrators under the old uniform Act are required to identify the evidence supporting their findings of fact and, further, whether they are required to deal with all serious arguments put before them. Common sense dictates that the prudent arbitrator should provide more rather than less and ‘not be tempted to stay close to [the] cliff edge’ to quote Justice Byrne in the 2003 Victorian Supreme Court judgment of Peter Schwarz (Overseas) Pty v Moreton. 

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