Background
Qube Re Services (No 2) Pty Limited, as trustee of the Moorebank Industrial Terminals Assets Trust, had paid Martinus Rail Pty Ltd almost $80 million under adjudication determinations made pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW). Those payments concerned work on the Moorebank Intermodal Terminal Project and were interim payments pending final resolution of the parties’ contractual rights.
In their subsequent arbitration, Qube sought restitution on the ground that contractual time bars defeated a number of Martinus’s claims. Martinus elected not to have its argument under s 34 of the Security of Payment Act determined with the separate questions. The arbitrator issued three partial awards, finding relevant claims contractually barred and ordering restitution. The Third Partial Award specified $26,439,381.58, inclusive of interest to 5 June 2026.
Qube sought enforcement under s 35(1) of the Commercial Arbitration Act 2010 (NSW). Martinus opposed enforcement under s 36(1)(b)(ii), arguing that repayment before determination of its s 34 argument would offend the Security of Payment Act’s “pay now, fight later” policy.
The Court’s Holding
Peden J held that the policy embodied in the Security of Payment Act was not the kind of fundamental public policy contemplated by s 36(1)(b)(ii). The public-policy exception applies narrowly to principles fundamental to the legal system, and its high threshold does not differ merely because the arbitration is domestic rather than international. A mandatory statute does not necessarily embody a fundamental conception of morality and justice.
Even if the Security of Payment Act’s policy qualified, enforcement would not offend it. Martinus had received the adjudicated payments pending a final-rights determination, and the arbitrator was entitled to resolve that dispute in stages. Martinus remained able to pursue its s 34 argument and other counterclaims later, but its decision to exclude that argument from the separate questions did not prevent final awards on the issues actually submitted.
The Court rejected the characterization of the awards as interim: they finally determined the separate questions and could not be revisited. It enforced the partial awards dated 22 May and 4 June 2026 as judgments, entered judgment for Qube for $26,439,281.58, awarded post-judgment interest under s 101 of the Civil Procedure Act 2005 (NSW) from 6 June 2026, and ordered Martinus to pay Qube’s costs.
Key Takeaways
- The public-policy exception to enforcement of a domestic arbitral award is narrow and requires conflict with principles fundamental to the legal system.
- A statute’s mandatory character does not, by itself, make its policy “public policy” for purposes of s 36(1)(b)(ii) of the Commercial Arbitration Act.
- A partial award finally resolving defined separate questions is enforceable even though other claims or defences remain for determination in the arbitration.
Why It Matters
The decision reinforces judicial restraint in reviewing arbitral awards and confirms that courts will not use the public-policy exception to revisit the merits or sequencing of a domestic arbitration. Parties that agree to final determination of separate questions may be bound by the resulting partial awards while other issues continue.
For construction disputes, the ruling also distinguishes the Security of Payment Act’s interim payment regime from final-rights proceedings. “Pay now, fight later” does not prevent an arbitrator from finally determining particular contractual issues in stages and ordering restitution of amounts paid through adjudication.