Australia Court Confirms Proceedings May Be Split Between Court And Arbitration

A recent decision of the New South Wales Court of Appeal¹ addressed the operation of section 7 of the International Arbitration Act 1974 (Cth) in circumstances where only part of a dispute fell within an arbitration agreement. The decision provides important guidance on the identification of arbitrable “matters,” mandatory stay of proceedings and the limits of arbitrability. While arising in the context of a major construction joint venture dispute, its implications extend more broadly to parties to international commercial contracts in Australia, particularly in complex, multiparty disputes.

Background

Elecnor Australia Pty Ltd (Elecnor) and Clough Projects Australia Pty Ltd (Clough) were joint venture partners on Project EnergyConnect, a major electricity transmission infrastructure project for Transgrid. Following Clough’s insolvency in late 2022 and the subsequent implementation of a deed of company arrangement (DOCA), a dispute arose concerning the ownership of Clough’s