Supreme Court New South Wales

• Medium Neutral Citation: Ashjal Pty Ltd v Alfred Toepfer International (Australia) Pty Ltd [2012] NSWSC 1306
• Hearing dates: 8 October 2012
• Decision date: 26 October 2012
• Jurisdiction: Equity Division - Commercial Arbitration List
• Before: Stevenson J

Decision

The enactment of s 5, s 34, s 35 and s 36 of the Commercial Arbitration Act 2010 was not beyond the legislative power of the New South Wales Parliament

• Catchwords: CONSTITUTIONAL LAW - legislative power of NSW Parliament - defining characteristics of Supreme Court; COMMERCIAL ARBITRATION - validity of s 5, s 34, s 35 and s 36 of the Commercial Arbitration Act 2010
• Legislation Cited: Building and Construction Industry Security of Payment Act 1999; Commercial Arbitration Act 1984; Commercial Arbitration Act 2010; Constitution; Constitution Act 1902; Foreign Judgments Act 1991; International Arbitration Act 1974 (Cth); Judiciary Act 1903 (Cth); Statute of 1698 (9 & 10 Will III c.15)
• Cases Cited: Anderson v Stewart (1876) 2 VLR 75; Baker v The Queen [2004] HCA 45; (2004) 223 CLR 513; Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190; (2010) 78 NSWLR 393; Egan v Willis [1998] HCA 71; (1998) 195 CLR 424; Hodgkinson v Fernie (1857) 3 CB (NS) 189; 140 ER 712; Goode v Bechtel [1904] HCA 27; (1904) 2 CLR 121; Gold Coast City Council v Canterbury Pipe Lines (Aust) Pty Ltd [1968] HCA 3; (1968) 118 CLR 58; Kable v Director of Public Prosecutions (DPP) (NSW) [1996] HCA 24; (1996) 189 CLR 51; Kirk v Industrial Court of New South Wales [2010] HCA 1; (2010) 239 CLR 531; Le Mesurier v Connor [1929] HCA 41; (1929) 42 CLR 481; Minister for Works (WA) v Civil and Civic Pty Ltd [1967] HCA 4; (1967) 116 CLR 273; Powell v Apollo Candle Co Ltd (1885) 10 AC 285; Public Service Association of South Australia Inc v Industrial Relations Commission of South Australia [2012] HCA 25; (2012) 289 ALR 1; Premium Nafta Products Ltd v Fili Shipping Co Ltd [2007] 4 All ER 951; [2007] UKHL 40; R v Criminal Injuries Compensation Board; Ex parte Lain [1967] 2 QB 864; Re Bailey and Hart (1883) 9 VLR 311; Re Refugee Tribunal; Ex parte Aala [2000] HCA 57; (2000) 204 CLR 82; Westport Insurance Co v Gordian Runoff Limited [2011] HCA 37; (2011) 244 CLR 239; Tuta Products v Hutcherson Bros Pty Ltd [1972] HCA 4; (1972) 127 CLR 253
• Texts Cited: Mustill and Boyd, The Law and Practice of Commercial Arbitration in England, 2nd ed (1989); New South Wales, Law Reform Commission, Report on Commercial Arbitration (1976)
• Category: Principal judgment
• Parties: Ashjal Pty Ltd (ACN 074 244 072) (plaintiff); Alfred Toepfer International (Australia) Pty Ltd (ACN 126 806 979) (formerly Elders Toepfer Grain Pty Ltd) (defendant); Attorney General for NSW trading as Crown Solicitors Office (intervener)
• Representation: Counsel: F M Douglas QC with J O'Sullivan and T Prince (plaintiff); J K Kirk SC with A Shearer (defendant); S Free (Attorney General for NSW; intervener); Solicitors: Jarratt Webb & Graham (plaintiff); Thomsons Lawyers (defendant); I V Knight (Attorney General for NSW; intervener)
• File Number(s): SC 2012/74342
• Publication restriction: Nil

Judgment

Introduction

1 The plaintiff seeks a declaration that the enactment of s 5, s 34, s 35 and s 36 of the Commercial Arbitration Act 2010 ("the 2010 Act") was beyond the legislative power of the Parliament of New South Wales.

2 The plaintiff submitted that there are two reasons why this is so: -

(a) by analogy with Kirk v Industrial Court of New South Wales [2010] HCA 1; (2010) 239 CLR 531, s 5, s 34, s 35 and s 36 of the 2010 Act together are an impermissible attempt to remove from this Court its constitutionally entrenched jurisdiction to review arbitral awards for "jurisdiction error"; and

(b) it follows from Kable v Director of Public Prosecutions (DPP) (NSW) [1996] HCA 24; (1996) 189 CLR 51 that s 35 and s 36 of the 2010 Act, which require this Court to enforce arbitral awards except in limited circumstances, together with s 5 and s 34, impermissibly impair the "institutional integrity" of this Court by requiring the Court to enforce an arbitral tribunal infected by "jurisdiction error".

Decision

3 I refuse to make the declaration sought. In my opinion, for the reasons that follow, the enactment of s 5, s 34, s 35 and s 36 of the 2010 Act was not beyond the legislative power of the NSW Parliament.

Background

4 In July 2010 the plaintiff agreed to sell to the defendant two separate quantities of wheat. The contracts provided that any dispute was to be resolved by arbitration in accordance with the Grain Trade Australia Dispute Resolution Rules.

5 A dispute arose between the parties.

6 The parties referred that dispute to arbitration.

7 A final award was made on 17 November 2011. The arbitrators found that the plaintiff, as vendor of the wheat, had wrongfully cancelled the contracts and was liable to pay the defendant purchaser $119,000 for non-delivery of the grain.

8 At the time the contracts were entered into, the Commercial Arbitration Act 1984 ("the 1984 Act") was in force.

9 On 30 September 2010, the 1984 Act was repealed and the 2010 Act came into force.

10 It is common ground that the 2010 Act (to the extent that it is valid) governs whatever rights of appeal or review that the plaintiff has.

The Commercial Arbitration Act 2010

11 Section 5, s 34, s 34A, s 35 and s 36 of the 2010 Act are, omitting procedural provisions, in the following terms: -

"5 Extent of court intervention

In matters governed by this Act, no court must intervene except where so provided by this Act.

...

34 Application for setting aside as exclusive recourse against arbitral award

(1) Recourse to the Court against an arbitral award may be made only by an application for setting aside in accordance with subsections (2) and (3) or by an appeal under section 34A.

(2) An arbitral award may be set aside by the Court only if:

(a) the party making the application furnishes proof that:

(i) a party to the arbitration agreement referred to in section 7 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 this State, or

(ii) the party making the application was not given proper notice of the appointment of an arbitral tribunal 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 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, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside, or

(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Act from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Act, or

(b) 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 award is in conflict with the public policy of this State.

...

34A Appeals against awards

(1) An appeal lies to the Court on a question of law arising out of an award if:

(a) the parties agree, before the end of the appeal period referred to in subsection (6), that an appeal may be made under this section, and

(b) the Court grants leave.

(2) An appeal under this section may be brought by any of the parties to an arbitration agreement.

(3) The Court must not grant leave unless it is satisfied:

(a) that the determination of the question will substantially affect the rights of one or more of the parties, and

(b) that the question is one which the arbitral tribunal was asked to determine, and

(c) that, on the basis of the findings of fact in the award:

(i) the decision of the tribunal on the question is obviously wrong, or

(ii) the question is one of general public importance and the decision of the tribunal is at least open to serious doubt, and

(d) that, despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the Court to determine the question.

...

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.

...

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."

12 Section 5, s 34, s 35 and s 36 (but not s 34A) replicate the United Nations Commission on International Trade Law ("UNCITRAL") Model Law on International Commercial Arbitration (as adopted by the UNCITRAL on 21 June 1995, and as amended by the United Nations Commission on International Trade Law on 7 July 2006).

Preliminary questions

13 On 4 May 2012, Hammerschlag J determined (as a preliminary question) that the parties did not "agree", within the meaning s 34A(1) of the 2010 Act, that an appeal may be made to this Court.

14 I am asked to determine, as a further preliminary question, the issue referred to in [1] above.

Section 78B notices

15 The plaintiff has served on the Attorneys General of the Commonwealth and of the States a notice pursuant to s 78B of the Judiciary Act 1903 (Cth).

16 The Attorney General for NSW has participated in the hearing as an intervener pursuant to s 78A of the Judiciary Act.

Nature of Arbitration

17 There is a distinction between purely private arbitrations (of the kind with which these proceedings are concerned) and arbitrations that arise pursuant to an actual or deemed referral of judicial proceedings. The distinction is explained in Mustill and Boyd, The Law and Practice of Commercial Arbitration in England, 2nd ed (1989). Mustill and Boyd point out (at 433) that, following the enactment of the Statute of 1698 (9 & 10 Will III c.15) ("the 1698 Act"), there were "three quite different systems of arbitration in existence at the same time": -

(a) a reference in a pending case where the court referred some or all of the issues, in a proceeding pending before it, to arbitration;

(b) a reference under the 1698 Act whereby the court, by consent, referred a dispute to arbitration before any proceedings had commenced in the court; and

(c) a voluntary submission out of court, whereby the submission was purely a result of the agreement of the parties.

18 These proceedings concern an arbitration of the latter type: an arbitration arising wholly from the parties' private contractual arrangement.

19 The 2010 Act deals with such of those arrangements as is a "domestic commercial arbitration", namely where: -

(a) the parties to an arbitration agreement have their places of business in Australia (s 1(3)(a));

(b) the parties have agreed that any dispute that has arisen or may arise between them is to be settled by arbitration (s 1(3)(b)); and

(c) the arbitration is not one to which the Model Law (as given effect to by the International Arbitration Act 1974 (Cth)) applies (s 1(3)(c)).

20 The "paramount object" of the 2010 Act is to "facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense" (s 1C(1)).

21 The 2010 Act seeks to achieve that object by: -

(a) enabling parties to agree about how their commercial disputes are to be resolved (subject to "such safeguards as are necessary in the public interest" (s 1C(2)(a)); and

(b) providing arbitration procedures that enable commercial disputes to be resolved in a cost effective manner, informally and quickly (s 1C(2)(b)).

The Kirk argument

Introduction

22 There was no dispute before me that the NSW Parliament has power to make laws for the peace, welfare and good government of NSW (s 5 of the Constitution Act 1902) and that those powers are plenary in nature: Powell v Apollo Candle Co Ltd (1885) 10 AC 282, considered in Egan v Willis [1998] HCA 71; (1998) 195 CLR 424 at 470 per McHugh J.

23 Nor is there any dispute that the NSW Parliament has power to make such laws as it thinks fit regarding the regulation of commercial arbitrations.

24 Further, subject to the limitations referred to in Kirk, the NSW Parliament has the power to enlarge or restrict the jurisdiction of this Court.

25 In Le Mesurier v Connor [1929] HCA 41; (1929) 42 CLR 481, the High Court said, at 495-496 (per Knox CJ and Rich and Dixon JJ): -

"But the Courts of the State are the judicial organs of another Government. They are created by State law; their existence depends upon State law; that law, primarily at least, determines the constitution of the Court itself, and the organisation through which its powers and jurisdictions are exercised. When a Court has been erected, its jurisdiction, whether in respect of place, person or subject matter, may be enlarged or restricted. The extent of the jurisdiction of the State Court would naturally be determined by State law..."

26 The plaintiff's argument is that there is a relevant limitation on the power of the NSW Parliament arising by implication from the Constitution.

27 The plaintiff's argument is that, by analogy with the reasoning of the High Court in Kirk, s 5, s 34, s 35 and s 36 of the 2010 Act purport to remove from this Court its constitutionally entrenched jurisdiction to review an award of an arbitral tribunal for jurisdictional error.

The plaintiff's argument by analogy

28 The plaintiff's argument is based on the following four propositions: -

(1) the NSW Parliament has no power to make any law altering the constitution or character of this Court so that it ceases to meet the constitutional description "Supreme Court";

(2) at Federation, it was established that the Supreme Courts of the colonies had inherent jurisdiction to review arbitral awards for "jurisdictional error";

(3) that jurisdiction was an essential and defining characteristic of a "Supreme Court"; and

(4) it follows that any law purporting to prevent this Court from exercising supervisory jurisdiction over arbitral awards infected with "jurisdictional error" is invalid.

The First Proposition: the NSW Parliament has no power to make any law altering the constitution or character of the NSW Supreme Court so that it ceases to meet the constitutional description "Supreme Court"

29 There was no dispute about this proposition. It follows from Kirk.

The Second Proposition: at Federation, it was established that the Supreme Courts of the colonies had inherent jurisdiction to review arbitral awards for "jurisdictional error"

30 Mr Douglas QC, who appeared with Mr O'Sullivan and Mr Prince for the plaintiff, submitted that this proposition was "unarguable". Mr Kirk SC, who appeared with Mr Shearer for the defendant, and Mr Free, who appeared for the Attorney General, disputed the proposition, although Mr Kirk did accept that there was "room for argument" about it.

31 Mr Douglas drew attention to pre Federation decisions of the Supreme Court of Victoria which proceeded upon the basis that that Court did have jurisdiction to review an arbitral award for error of law on the face of the record: Anderson v Stewart (1876) 2 VLR 75 at 79 and Re Bailey and Hart (1883) 9 VLR 311 at 327.

32 Similarly the High Court, in a decision made immediately after Federation, appears to have proceeded on the same basis: Goode v Bechtel [1904] HCA 27; (1904) 2 CLR 121 at 126 per Griffith CJ.

33 Mr Douglas submitted that subsequent decisions of the High Court have confirmed the existence of the jurisdiction.

34 Thus, in Gold Coast City Council v Canterbury Pipe Lines (Aust) Pty Ltd [1968] HCA 3; (1968) 118 CLR 58, Windeyer J said at 76: -

"Except where the parties have submitted a particular question of law to an arbitrator and have agreed to be bound by his decision, a court can and should set aside an award of an arbitrator if an error of law appears on the face of it. That rule, first stated in Kent v Elstob, seems to have been established originally in cases in which a question arising in an action at law has been remitted to an arbitrator. In cases of that kind the court, naturally enough, could not countenance the arbitrator departing from the law which it would have applied in the action. However, the rule that an award is examinable for error of law seems now to have a wider scope, and to be applicable to any dispute which parties submit to arbitration in accordance with the statutory provisions in that behalf." (citation omitted)

35 Similarly in Minister for Works (WA) v Civil & Civic Pty Ltd [1967] HCA 18; (1967) 116 CLR 273, Kitto J said at 284: -

"[A]lthough an authority given to an arbitrator to decide a specific question of law cannot be interfered with, since it is validly exercised even though the award shows on its face that the decision is erroneous ... yet an authority to decide any other question between parties is intended to be exercised in accordance with the law, and consequently a decision in purported exercise of it but arrived at by error of law may be set aside, provided that the Court can perceive the error of law without having 'travelled into the fact' ... by going behind the award into the proceedings of the arbitration itself." (citation omitted)

36 These authorities persuade me of the correctness of Mr Douglas's second proposition.

The Third Proposition: that jurisdiction was an essential and defining characteristic of a "Supreme Court"

37 In support of this proposition, Mr Douglas put the following submission: -

"The jurisdiction was fundamental to the Supreme Courts as at Federation. Generally speaking, the jurisdiction to enforce and determine the actual contractual rights of parties was, and is, a fundamental part of the Supreme Court's function and is and was a defining and essential characteristic of a Supreme Court, particularly because, in the case or arbitral award at least, the making of an award in arbitration proceedings is more than the performance of private contractual arrangements between the parties which yields an outcome which rests purely in contract. The enforcement of such an arbitral award, whether at common law, by the enlistment of the jurisdiction of the Supreme Court, or by force of statute involves the exercise of public authority (see Westport v Gordian (2011) 244 CLR 239, French CJ, Gummow, Crennan and Bell JJ at [19] - [20])." (the latter emphasis added)

Exercise of public authority?

38 In the passages in Westport Insurance Co v Gordian Runoff Limited to which Mr Douglas referred in his submission, the High Court said, at 261-262, that: -

"The statutory regime [under the 1984 Act] involves the exercise of public authority, whether by force of the statute itself or by enlistment of the jurisdiction of the Supreme Court...

[and]

... it is going too far to conclude that performance of the arbitral function is purely a private matter of contract, in which the parties have given up their rights to engage judicial power, and is wholly divorced from the exercise of public authority". (emphasis added, citations omitted)

39 The "exercise of public authority" to which the High Court referred was the power of this Court (under the 1984 Act) to enforce an award, or to remove an arbitrator who had misconducted the proceedings or who was incompetent or unsuitable to deal with a particular dispute.

40 There are similar provisions in the 2010 Act; the Court can decide on the termination or the arbitrator's mandate (s 14(2)), decide whether the arbitrator has jurisdiction (s 16(5)), or recognise and enforce an award (s 35).

41 There is thus what Mr Kirk accepted as being a "public dimension" or "statutory dimension" to arbitral proceedings. And it is no doubt true to say, as Mr Douglas submitted, that the enforcement of an arbitral award involves, in this way, the "exercise of public authority".

42 But, in my opinion, it does not follow from this that an arbitrator, when making the award, is exercising public authority. Plainly, in the case of a voluntary submission to arbitration, out of court, the arbitrator is not exercising public authority.

Nothing in Kirk suggests the analogy lies

43 In my opinion, nothing said by the High Court in Kirk suggests that analogy for which the plaintiff contends is made out.

44 In Kirk the reasoning of the High Court was that: -

(a) Chapter III of the Constitution requires that there be a body fitting the description "the Supreme Court of a State", and that it is beyond the legislative power of the States to so alter the constitution or character of a Supreme Court so that it ceases to meet the constitutional description (at [96]);

(b) the Supreme Courts' "supervisory jurisdiction enforcing the limits on the exercise of State executive and judicial power by persons and bodies other than [the Supreme Courts]", exercised through the granting of prerogative writs, was, and is, a "defining characteristic" of those courts (at [99]);

(c) therefore the jurisdiction to grant relief in respect of jurisdictional error in the exercise of State executive and judicial power could not be removed, because that jurisdiction was a "defining characteristic" of the Supreme Court (at [99] - [100]); and

(d) it was within the legislative power of the States to regulate and limit the jurisdiction of their Supreme Courts to perform such judicial review, save that review for jurisdictional error could not be denied by legislation.

45 The High Court's reasoning confined the Supreme Courts' "defining character" to the supervisory role of State Supreme Courts to determine and enforce limits on exercise of "State executive and judicial power"; that is the act of public officials in the execution of statutory and prerogative powers.

46 At [99] the Court said: -

"To deprive a State Supreme Court of its supervisory jurisdiction enforcing the limits on the exercise of State executive and judicial power by persons and bodies other than that Court would be to create islands of power immune from supervision and restraint."

47 As I read that passage, the Court was referring to "islands" of State executive and judicial power.

48 The centrality of those words to the reasoning of the Court was emphasised in its later decision of Public Service Association of South Australia Inc v Industrial Relations Commission of South Australia [2012] HCA 25; 289 ALR 1 at [60] per Gummow, Hayne, Kiefel and Bell JJ and at [73] per Heydon J.

49 It is not surprising that the reasoning of the High Court was so confined.

50 I accept the following submission made on behalf of the Attorney General:-

"Of particular significance to the Court's consideration of the constitutional limits on State legislative power was the inherent jurisdiction of Supreme Courts to grant certiorari to quash error on the part of inferior courts and administrative tribunals and officers: Kirk at 568, 578-9. Certiorari is 'a process by which a superior court, in the exercise of original jurisdiction, supervises the acts of an inferior court or other tribunal': Craig v South Australia (1995) 184 CLR 163 at 175. 'Tribunal' in this context means public tribunal which is a repository of executive power, sourced either in statute or prerogative powers. Private arbitrators are not tribunals in this sense or repositories of executive power. Review of decisions by private arbitrators in matters entirely outside the judicial system does not form any part of the 'supervisory jurisdiction' of State Supreme Courts analysed in Kirk. The prerogative writs, including certiorari, do not issue in respect of decisions of private arbitrators: see Grocon Constructors Pty Ltd v Planit Cocciardi Joint Venture (No 2) (2009) 26 VR 172 at 186-187, [54]-[56]. In R v Northumberland Compensation Appeal Tribunal, Ex parte Shaw [1952] 1 KB 338 at 351 Lord Denning noted:

'The Court of King's Bench never interfered by certiorari with the award of an arbitrator, because it was a private tribunal and not subject to the prerogative writs.'"

51 Similarly, in Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190; (2010) 78 NSWLR 393 the Court of Appeal was considering an adjudication (in effect a statutory arbitration) under the Building and Construction Industry Security of Payment Act 1999.

52 Spigelman CJ said, at [5], that such process of adjudication: -

"...is not in any sense a consensual arbitration of the character which has often been held not to be subject to the Court's supervisory jurisdiction. Rather, it is a public, relevantly a statutory, dispute resolution process, and as a consequence is subject to supervisory jurisdiction (see, for example, R v Criminal Injuries Compensation Board; Ex parte Lain [1967] 2 QB 864 at 822)".

53 The source of the arbitrator's power to decide the dispute between the parties in a "consensual arbitration" arises from the agreement of the parties: Premium Nafta Products Ltd v Fili Shipping Co Ltd [2007] 4 All ER 951; [2007] UKHL 40 at [20] per Lord Hoffman. The authority of private arbitrators is "derived solely from agreement of parties to the determination": R v Criminal Injuries Compensation Board at 884 per Diplock LJ.

54 The parties in a consensual arbitration are not compelled to resolve their disputes by arbitration; they do so because that is their agreement. An award binds the parties because they have agreed to abide the arbitrator's decision.

55 Their position is quite different from that of a citizen subject to the exercise of state, judicial, governmental or executive power; that citizen has no choice.

56 The arbitrator, acting under contract, is not exercising state, judicial, governmental or executive power.

57 To accept Mr Douglas's submissions would require this Court to recognise a significant new constitutional dimension, moving well beyond Kirk.

58 I see nothing in the reasoning of the High Court in Kirk to suggest that the constitutionally entrenched jurisdiction of this Court extends beyond its supervisory jurisdiction over state executive and judicial bodies for jurisdictional error.

59 That this is so is illustrated by the fact that the parties could effectively agree to exclude the Court's jurisdiction over an arbitral tribunal. As Mr Kirk submitted, this could be done in one of two ways.

60 First, the parties could refer matters to arbitration in such a way that the arbitrators were invited to decide for themselves a question of law. In that case "error of law affords no ground for setting aside the award": Tuta Products Pty Limited v Hutcherson Bros Pty Limited [1972] HCA 4; (1972) 127 CLR 253 at 262 per Menzies J; and Minister for Works (WA) v Civil and Civic Pty Ltd per Kitto J referred to at [35].

61 Second, the parties could agree that the arbitrators need not state the reasons for the award, in which case no review would lie.

62 This is not suggestive of entrenched inherent jurisdiction.

63 The matters to which I have referred persuade me that such jurisdiction as this Court had at Federation over arbitral tribunals was not constitutionally entrenched.

64 That was the view of Barwick CJ, who clearly thought it was within the power of the NSW Parliament to remove this Court's power to review arbitral awards. In Tuta Products Pty Limited v Hutcherson Bros Pty Limited at 258 the Chief Justice said: -

"Many judges of the past have regretted, as I do now, the exception to the finality of an arbitrator's award which was made in cases before Hodginkson v Fernie. However, it is with us, the legislature of New South Wales not having seen fit by legislation to remove it." (citation omitted)

65 Mr Douglas characterised this remark as an "utterance from another era" and pointed out that it was obiter dicta. However, it remains the only observation, to which my attention was drawn, of the High Court on the critical question before me. I consider I am obliged to give it due deference.

66 And the New South Wales Law Reform Commission was of the same view: see Report on Commercial Arbitration (1976), especially the recommendations at [9.6.24].

67 I reject Mr Douglas's third proposition.

The Fourth Proposition: it follows that any law purporting to prevent the NSW Supreme Court from exercising supervisory jurisdiction over arbitral awards infected with "jurisdictional error" is invalid

68 As I do not accept Mr Douglas's third proposition it follows I do not accept the fourth.

69 For those reasons, I reject the Kirk argument.

The Kable argument

70 Mr Douglas put this argument on the following basis: -

"Legislation compelling the Supreme Court to give effect to what are apparently the contractual rights and obligations of the parties, but which are in fact not [those] rights and obligations impairs the 'institutional integrity' of the Supreme Court. Sections 35 and 36 [of the Act] co-opt the Supreme Court into giving force to an award that pretends to represent the parties' rights and obligations but in fact does not. Compelling the Supreme Court to give its aid to something which does not represent the legal rights of the parties interferes with its decisional independence, renders it a mere agency of the executive and impairs its institutional integrity: State of South Australia v Totani [2010] 242 CLR 1 at [70] - [71], [82], [131], [428], [436]. In short, the function of the Supreme Court, like other courts, is to say what the law is: see Abebe v The Commonwealth (1999) 197 CLR 510 at 560 [137]".

71 I fail to see how the "institutional integrity" or the "decisional independence" (the expression used by French CJ in State of South Australia v Totani at [62]) of this Court is impaired by the conferral on it of power to enforce an award in the circumstances set forth in s 35 and s 36 of the 2010 Act.

72 First, and contrary to Mr Douglas's submission, there is no question here of the Court being rendered "a mere agency of the executive".

73 In Totani, the legislation in question required the relevant court to make a "control order" against a person if the court was satisfied that the person was a member of an organisation the subject of a "declaration" by the Attorney General for South Australia.

74 The High Court held the legislation to be invalid as it represented a "substantial recruitment of the judicial function [of the relevant court] to an essentially executive process" (per French CJ at [82]), and because it required the relevant court to make a control order "after undertaking an adjudicative process that is so confined, and so dependent on the Executive's determination in the declaration, that it departs impermissibly from the ordinary judicial process of an independent and impartial tribunal" (per Crennan and Bell JJ at [436]).

75 That is not this case. Section 35 and s 36 of the 2010 Act do not make the Court's function dependent on, or liable to be influenced by, a determination of the executive.

76 Second, the making of the award is the result of the bargain struck by the parties that disputes between them will be resolved by arbitration.

77 Pursuant to s 35 and s 36 of the 2010 Act, the Court is giving effect to that bargain.

78 The NSW Parliament may pass a law requiring a court to make specified orders if some conditions are met and, "in general, a legislature can select whatever factum it wishes as the 'trigger' of a particular legislative consequences" (Baker v The Queen [2004] HCA 45; (2004) 223 CLR 513 at [43] per McHugh, Gummow, Hayne and Heydon JJ; cited by French CJ in Totani at [71]).

79 The "trigger" selected by the legislature for the "particular legislative consequences" in s 35 and s 36 of the 2010 Act is the making of the award.

80 Third, the Court retains an adjudicative role, namely to determine whether one of the bases set forth in s 36 to refuse to enforce the award has been made out. That fact is not determinative of the question (per French CJ in Totani at [78]) but is a factor in the equation.

81 It is true that those bases are limited, and are directed in large part to the fairness of the conduct of the arbitration.

82 However, s 36(1)(a)(iii) provides that enforcement of an award may be refused if the award "deals with a dispute not contemplated by or falling within the terms of the submission to arbitration" or contains "decisions on matters beyond the scope of the submission to arbitration".

83 That provision gives the Court the power to intervene in circumstances approximating (if not replicating) those of jurisdictional error (making a decision "outside the limits of the functions and powers" of the decision maker or doing "something which he or she lacks power to do": per Hayne J in Re Refugee Tribunal; Ex parte Aala [2000] HCA 57; (2000) 204 CLR 82 at [163]; cited by the plurality in Kirk at [66]).

84 The role of the Court in enforcing an award is akin to the role it plays in relation to a settlement achieved in litigation before it, or a judgment registered pursuant to the Foreign Judgments Act 1991 (Cth).

85 In those cases, the Court plays no adjudicative role in the making of the agreement or foreign judgment; indeed the agreement or judgment may very well grant to, or impose on, the parties rights and obligations different from those the Court would have granted or imposed. The Court may play an adjudicative role in a challenge to enforcement of the agreement (for example, to set aside the settlement as a matter of contract) or foreign judgment (for example under s 7 of the Foreign Judgments Act). Otherwise, the Court lends its aid to the enforcement of the agreement or judgment.

86 In neither case is the institutional integrity of the Court impaired.

87 Nor is it, in my opinion, by reason of s 35 and s 36 of the 2010 Act.

88 I reject the Kable argument.

Conclusion

89 For these reasons, I refuse to make the declaration sought.

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Decision last updated: 26 October 2012