Arbitration – Damages Claims not “Under” Agreement

    View Author May 2020

    The New South Wales Court of Appeal has held that a claim for damages for failure to pay amounts under a contract is not an arbitrable claim for a “monetary amount payable and/or owed by either party to the other under this Agreement.”

    In essence, the court held that a claim for damages is not a claim under the contract, but is a claim under the general law for breach of the contract. If Lord Diplock’s theory of secondary obligations arising on breach of contract is adopted, the claim is under those secondary obligations rather than under the contract.

    The decision emphasises the need to draft arbitration clauses with a close eye to the disputes intended to be dealt with by arbitration, whether that is all the disputes relating to the contract or only a subset of those disputes.