Does an Expert Determination have to give reasons for its decision?

The level of detail required to be given in a expert determination depends on the written instrument pursuant to which the expert determination is conducted.

Our practice is to comply with those requirements were expressly stated and where the agreement is silent on the issue we ordinarily give detailed reasons.

Further in each instance we seek to break the reasons into separate parts to provide the best chance of the expert determination withstanding judicial review.

In summary, to the extent possible, this seeks to avoid the the problems which have been illustrated by the cases below.

• Submissions of the Attorney-General for the Commonwealth as Amicu Curiae to the High Court of Australia in Westport Insurance Corporation v Gordian Runoff Limited in relation to the adequacy of reasons that need to be included in an arbitral award.

• Gebauer Nominees Pty Ltd v Cole ¹⁾
• Cole v Gebauer Nominees Pty Ltd ²⁾
• TX Australia Pty Limited v Broadcast Australia Pty Limited [2012] NSWSC 4 (16 January 2012)
  • Proposed Term Sheet for the engagement of the Expert

• Westport Insurance Corporation v Gordian Runoff Limited ³⁾

• Thoroughvision Pty Ltd v Sky Channel Pty Limited & Anor ⁴⁾

• Davidson v Fish ⁵⁾

• BHP Billiton Ltd v Oil Basins Ltd ⁶⁾
  • My review of the authorities and the facts of this case leads me to conclude that the arbitrators were under a duty to give reasons of a standard which was equivalent to the reasons to be expected from a judge deciding a commercial case.
  • The arbitration is a large commercial arbitration involving many millions of dollars.
  • It was attended with many of the formalities of a legal proceeding, including the exchange of points of claim and defence and of substantial witness statements.
  • The hearing occupied 15 sitting days.
  • In addition to oral argument, substantial written submissions were made by the parties.
  • The arbitrators were obviously chosen for their legal experience and were retired judges of superior courts.
  • Both sides were represented by large commercial firms of solicitors and very experienced Queens Counsel
  • Nowhere in these conclusions is any reference made to the submissions made on behalf of [the respondents] in support [their] contention that ….
  • These submissions made on behalf of [the respondents] were not at the periphery of its case; nor were they so obviously untenable that they could safely be ignored by the arbitrators.
  • The submissions were at the heart of the matter, as demonstrated by the fact that the arbitrators had set them out in some detail in the reasons.
  • This is also demonstrated by the content of paragraph 180 of the reasons, in which the arbitrators express a conclusion on the very issue to which these submissions were directed.
  • The arbitrators were required to do more than merely refer to these submissions.
  • They were required to give intelligible reasons for their rejection.
  • They did not do so; and their reasons on this issue are manifestly inadequate as a result
  • the majority arbitrators said nothing at all about their evidence….
• Oil Basins Ltd v BHP Billiton Ltd ⁷⁾Buchanan JA, Nettle JA, Dodds-Streeton JA ⁸⁾
  • In our view, the judge did not err as alleged. The arbitrators’ decision in the present case called for reasons of a judicial standard.
  • A judge is also bound to deal with central contentions, even if sometimes only briefly, and at least to the extent of explaining in general terms why he or she has rejected them.
  • Accordingly, where evidence and contentions combine as they are prone to do in the form of expert evidence, and the dispute involves ‘something in the nature of an intellectual exchange with reasons and analysis advanced on either side’, it is plain that the judge is bound to enter into the issues canvassed before the court and to provide an intelligible explanation as to why the judge prefers one case over the other.
  • In our view, an arbitrator is subject to similar obligations.
  • Admittedly, as McHugh JA pointed out in Soulemezis,⁹⁾ it is only in relatively recent times that judges have been required to give reasons of that kind.
  • The obligation to do so evolved over the last century out of the creation of rights of appeal by statute, the enactment of stated case and review procedures, and the transfer from juries to judges of the function of deciding questions of fact.¹⁰⁾
  • It must also be acknowledged that, in a number of the cases concerning the scope of the judicial obligation to give reasons, a principal consideration has been that reasons should be sufficient to enable courts of appeal to see if there has been any error in the process of fact finding.
  • There is no right of appeal on questions of fact from the decision of an arbitrator.
  • But the judicial obligation to give reasons is not based solely on rights of appeal.
  • Ultimately, it is grounded in the notion that justice should not only be done but be seen to be done.
  • And in point of principle, there is not a great deal of difference between that idea and the imperative that those who make binding decisions affecting the rights and obligations of others should explain their reasons.
  • Each derives from the fundamental conception of fairness that a party should not be bound by a determination without being apprised of the basis on which it is made.¹¹⁾
  • So, in arbitration, the requirement is that parties not be left in doubt as to the basis on which an award has been given. To that extent, the scope of an arbitrator’s obligation to give reasons is logically the same as that of a judge.¹²⁾
  • As has been noticed, what is needed to satisfy that requirement will depend upon the particular circumstances of the case.
  • If a dispute turns on a single short issue of fact, and it is apparent that the arbitrator has been chosen for his or her expertise in the trade or calling with which the dispute is concerned, a court might well not expect anything more than rudimentary identification of the issues, evidence and reasoning from the evidence to the facts and from the facts to the conclusion.
  • Byrne J captures the point in this dictum in his Honour’s judgment in Schwarz:[69]
    • In what are often called trade arbitrations, the parties and the Arbitrators are all engaged in a particular trade.
    • In such an arbitration the reasons may be expressed in the jargon of the trade or they may ignore matters which will be well known to the participants.
    • Such an award which may appear deficient to an outsider, may nonetheless satisfy the fundamental purpose of the statement of reasons.
    • It cannot be the case that an award should be drafted only with an eye to informing an appeal court which may be unfamiliar with the trade and its practices.¹³⁾
  • Contrastingly, however, in complex commercial arbitrations, it may appear that the determination of the dispute demands reasons considerably more rigorous and illuminating than the mere ipse dixit of a ‘look-sniff’[71] trade referee.
  • And in cases like the present, which involve an intellectual exchange with reasons and analysis advanced on either side, conflicting expert evidence of a significant nature and substantial submissions, the parties to the dispute are almost certain to be left in doubt as to the basis on which an award has been given unless the reasons condescend to an intelligible explanation of why one set of evidence has been preferred over the other; why substantial submissions have been accepted or rejected; and, thus, ultimately, why the arbitrator prefers one case to the other.
  • Hence, in our view, the reasons in this case should have been of that standard.¹⁴⁾
  • Furthermore, in the usual course of events, disputants choose their arbitrators on the basis of qualifications, knowledge or a skill which is fitted to the nature of the dispute, and so to preparing the type of determination which is appropriate. Disputants are also likely to adopt a form of arbitral proceeding which is consonant with those requirements.
  • To that extent, as the judge said in effect, the disputants’ choice of arbitrator and the structure of their arbitral proceeding may reflect the nature of their dispute and so the nature of the reasons required.¹⁵⁾
  • It would not facilitate the object of s 29 of the Commercial Arbitration Act 1984, and it could well discourage the continuing subjection of substantial commercial law disputes to arbitration, if the court were to tolerate less.
  • Contrary to the appellant’s submissions, however, that does not imply that the court is to approach the work of commercial arbitrators with a view to finding fault.
  • The arbitration of commercial disputes is to be encouraged and hence arbitrators are free to a large extent to express their reasons as they choose.
  • Nor does it follow that the court demands a higher standard of reasoning from retired judges and other legally trained arbitrators than from arbitrators who are not so trained.
  • As Buchanan JA observed in the course of the hearing, it is the nature of a dispute which sets the standard for reasons, not the nature of the arbitrator.
  • The appellant contends that the judge was in error in stating that ‘[t]his is especially so where the arbitrator is a retired judicial officer’.
  • Counsel for the appellant submitted that the judge thereby implicitly accepted that differing standards applied as between the majority arbitrators and the minority arbitrator.
  • But in our view, that is not the case.
  • As we read his Honour’s observation, it simply emphasised the point that the majority arbitrators (with whose reasons alone his Honour was concerned) were eminent retired judges who had been chosen because of their legal ability.
  • That does not imply that a different or lesser standard should be expected of the third arbitrator.
  • The third arbitrator was an eminent United States oil and gas lawyer and academic who was plainly well qualified to provide reasons of the standard expected of the other two.
• Rashid v Minister for Immigration and Citizenship ¹⁶⁾

• Hunter v Transport Accident Commission ¹⁷⁾, Nettle JA (in relation to Court proceedings)
  • The judge may have thought that it was enough simply to set out the evidence and other material upon which her findings were based and then to state her conclusions.
  • But for the reasons already explained that was not enough.
  • The requirement to refer to the evidence upon which findings are based is a requirement to analyse the evidence and to explain why some parts of it do and others do not lead to the ultimate conclusion.
  • And that analysis must be recorded in the reasons.
  • In general, and in this case in particular, the mere recitation of evidence followed by a statement of findings, without any commentary as to why the evidence is said to lead to the findings, is about as good as useless.

• UCATT v Brain [1981] ¹⁸⁾

• Arbitration Act 1984 (NSW) s29(1)(c) (repealed)
• Commercial Arbitration Act 1984 (Vic), s29 Form of award
• Commercial Arbitration Act 1984 (Vic), s38 Judicial Review of Awards
• Commercial Arbitration Act 1984 (Vic), s42 Power to set aside award
• Commercial Arbitration Act 1984 (Vic), s43 Court may remit matter for reconsideration