A Rare Insight into an Arbitration Agreement

Rinehart v Hancock Prospecting Pty Ltd [2019] HCA 13

Since the passing of Commercial Arbitration Acts (CCA’s) in all States of Australia,[1] arbitration is becoming an increasingly popular method of dispute resolution. However, because arbitrations are usually conducted privately, valuable data on arbitrations, and their subject matter, is limited. The High Court recently provided insight into the scope of arbitrations, in the decision of Rinehart v Hancock Prospecting Pty Ltd [2019] HCA 13, where it determined that the validity of an arbitration agreement was fit for determination by arbitration.


The proceedings were borne out of a long running dispute between Gina Rinehart (Rinehart) and two of her four children, John Hancock and Bianca Rinehart (the Appellants). The Appellants claim that, in breach of trusts and other duties, Rinehart (and others) dealt with trust assets to her benefit and to the detriment of the Appellants, as beneficiaries under the trusts. However, threats of litigation with respect to these claims were made long before proceedings were commenced, which resulted in the Appellants signing various deeds of settlement (Deeds).

The Deeds each contained an arbitral clause which provided that “any dispute under this deed” is to be referred to a confidential arbitration.

Rinehart (and other third parties) sought a stay of the substantive proceedings and sought orders that the action be referred to arbitration, relying on section 8 of the CCA,[2] which requires a court, on application by a party to “a matter which is the subject of an arbitration agreement”, to refer the parties to arbitration. The Appellants asserted that they were not bound by the Deeds because their assent to them was procured by misconduct or undue influence on the part of Rinehart, and were therefore void.


The Court applied orthodox principles of contractual interpretation in deciding that the phrase “any dispute under this deed” was broad enough to encompass a question as to the validity of the Deeds. Of particular relevance to the Court’s decision was the context in which the Deeds came into existence.

The following factors made it obvious to the Court that it was the intention of the parties that any question concerning the validity of the Deeds was to be determined confidentially, by arbitration:

1.     the Deeds required the parties to obtain and warrant that they had obtained independent advice regarding their effect, and acknowledge that they entered into the Deeds freely and without undue influence, before they could be executed;

2.     the disputes involved members of a family, which in and of  itself imported notions of confidentiality; and

3.     the Deeds were required not only because of threats of litigation against Rinehart, but also because at the time they were entered into, a joint venture between the Hancock and Rio Tinto Groups concerning tenements the subject of the relevant trusts (of which the Rinehart children were beneficiaries) was being negotiated. Claims concerning ownership of tenements had the potential to derail those negotiations. The Court found that “confidentiality was plainly a serious concern at this point”[3] and that it could not have been understood by the parties to the Deeds that any challenge to their efficacy “was to be determined in the public spotlight”.[4]

The Court did not find necessary to consider principles arising under UNCITRAL Model Law[5] (which the CCA’s are modelled on), nor consider whether Fiona Trust [6] is good law in Australia, citing that the operation of the arbitral clause, construed in context, was clear.[7] So, unfortunately the approach to the interpretation of arbitration agreements remains in conflict, and it is unclear when principles other than those of general contractual interpretation should be applied to determine the operation of arbitration agreements.  

Key takeaways

The Court also found that third parties (assignees of mining tenements from parties to the Deeds) who were not party to the Deeds but sought to rely on certain releases and clauses in the Deeds for the purpose of the substantive proceedings constituted parties for the purpose of section 2 of the CCA, and allowed the action as it related to those parties to be referred to arbitration. The Court’s reasoning being that aspects of Deeds were central to those parties defences,[8] and to find otherwise would give the arbitration clause uncertain operation, would lead to duplicity of proceedings and would frustrate the purpose of the statutory definition of ‘party’ in the CCA.[9]

Interestingly, the Court granted the Australian Centre for International Commercial Arbitration (ACICA) leave to be heard as amicus curiae, as principles raised by the appeal were important to the integrated statutory framework for both domestic and international commercial arbitration in Australia. ACICA submitted that the question should not be determined purely by common law, and that the principles in Fiona Trust should be followed. In its submissions, ACICA also framed the Court’s jurisdiction to refer parties to an arbitration agreement arising under section 8 of the CAA as high as a duty to refer,[10] and stated that the governing role of the Model Law[11] mandates a reading of the Deeds which would require the action to be referred to arbitration.[12] The Court did not comment on the submissions made by ACICA, nor follow its recommendation to apply Fiona Trust, but ACICA’s ultimatum was nonetheless achieved.

For now, we bid farewell to the Rinehart v Hancock dispute, as it will be determined behind closed doors. We may never know the outcome (aside any reports in the media), unless of course any arbitration decision is appealed. Watch this space…

[1] The CCA’s are enacted in substantially the same form in each State and Territory and integrate the domestic regime with that governing international arbitrations in Australia under the International Arbitration Act 1974 (Cth)

[2] Commercial Arbitration Act 2010 (NSW)

[3] at [32]

[4] at [44]

[5] UNCITRAL Model Law on International Commercial Arbitration 1985

[6] Fiona Trust & Holding Corporation v Privalov [2007] 4 All ER 951

[7] at [21]

[8] at [71]

[9] at [73]

[10] Written Submissions as Amicus Curiae by the Australian Centre for International Commercial Arbitration Limited, at [12]

[11] UNCITRAL Model Law on International Commercial Arbitration 1985

[12] Written Submissions as Amicus Curiae by the Australian Centre for International Commercial Arbitration Limited, at [39]