Case Reports

Arbitrator's powers, duties and discretion - merits

In Yarraman Pine P/L v Forestry Plantations Queensland [2009] QCA 102 (24 April 2009), the Queensland Court of Appeal has considered whether an arbitrator is permitted to remake a determination which is made pursuant to a contract. Held: arbitrator could only remit matter to chief executive in accordance with contract and not make fresh determination.  Arbitrator did not have right to undertake full merits review as dispute of broad discretional character and arbitrator did not have requisite knowledge or expertise.

The significance of this decision is that where a contract provides for a fixed "mechanical" process which is sufficiently certain, the arbitrator has the power to make the award. However, where the determination is made pursuant to a "broad exercise of discretion" or requires specialised knowledge, the arbitrator cannot set aside the determination unless it was made contrary to contractual obligations to act honestly, fairly and reasonably.