Bond v Mackay & Ors

When the scope of an arbitration reference is disputed, the court construes the notice of arbitration and surrounding communications objectively, considering the broad factual matrix reasonably available to the parties. The scope is not confined by later pleadings where the relevant claim formed part of the referred dispute. On a successful jurisdiction challenge under the Arbitration Act 1996, the court may vary the award and set aside a consequential costs order.

The claimant challenged the arbitrator’s second award under section 67 of the Arbitration Act 1996. The dispute concerned compensation for mineral sterilisation caused by pipelines crossing the claimant’s land. The claimant argued that a dispute under clause 2(i) of a 1994 deed fell within an existing arbitration reference concerning compensation under other clauses.

The arbitrator had decided that the clause 2(i) dispute was outside the reference and had ordered costs against the claimant. The central issue was whether the reference, construed in its factual and documentary context, included that claim.

1. The section 67 application was allowed in substance. The court treated the jurisdictional issue as a rehearing.
2. The scope of an arbitration reference is determined objectively from the notice and surrounding communications, viewed in their factual matrix. A broad approach was appropriate because there were no formal terms of reference.
3. The clause 2(i) compensation claim fell within the arbitrator’s substantive jurisdiction. Although earlier correspondence referred expressly to clauses 5 and 6, the underlying dispute concerned compensation for mineral sterilisation. The later pleadings could not reduce the scope of the reference, and the failure to plead the clause 2(i) breach earlier was irrelevant to jurisdiction.
4. The second award was varied to confirm the arbitrator’s jurisdiction. The costs order was also set aside under section 67(3), since it rested on the erroneous jurisdictional outcome.

First-instance jurisdiction challenge under section 67 of the Arbitration Act 1996. The judgment records an earlier appeal concerning the arbitrator’s first award, allowed on 29 June 2016, but gives no citation. The present court varied the second award and set aside its costs order.