Australia Case Update: Arbitrability of Intracorporate Disputes (Ikon Group Limited (No 2) [2015] NSWSC 981)


Case Citation: In the matter of Ikon Group Limited (No 2) [2015] NSWSC 981 (available here)
New South Wales Supreme Court, Australia
Justice Brereton
Date of Decision:
13 May 2015 (Ex Tempore)
Relevant Legislation: International Arbitration Act 1974 (Cth); Corporations Act 2001 (Cth)

IAA Lead Editor for Australia Alex Ferguson and Samuel Seow examine the case of Ikon Group Limited (No 2) [2015] NSWSC 981. This New South Wales Supreme Court decision affirms the position under Australian law for the arbitrability of intracorporate disputes; even where (a) such disputes involve a party’s statutory rights; and (b) some of the relief sought pursuant to the relevant corporate statutory regime can only be granted by the court.



In the absence of explicit parliamentary guidance, courts in the region have grappled with the question of whether intracorporate disputes including claims of breach of director duties and minority shareholder oppression disputes may be subject to arbitration.

In the decision of Ikon Group Limited (No 2) [2015] NSWSC 981, the New South Wales Supreme Court granted a stay of proceedings in favour of arbitration, affirming the Australian position for the arbitrability of certain disputes involving the corporations statutory regime, namely, the Corporations Act 2001 (Cth). This is notwithstanding the fact that the relief sought by the plaintiff included orders which were to be made pursuant to the Corporations Act (such as an order to relief a corporation from civil liability) which could only be granted by a competent court.



The underlying litigation in Ikon Group Limited (No 2) involved proceedings commenced by the plaintiff, Ikon Group Limited, over certain actions of the defendants, as directors of a joint venture company. Two of the defendants sought to stay such court proceedings in favour of arbitration; citing an arbitration clause included in an addendum to the joint venture agreement (the “Addendum”) concluded between the plaintiff and some of the defendants.

The relevant arbitration clause in the Addendum sought to refer “[a]ny and all Disputes including any question regarding the existence, validity or termination of any of the JV Documents or the Third Addendum…” to arbitration under the LCIA Rules, with the substantive law being that of England and Wales. Further, the joint venture agreement defined the term “Disputes” (as used in the arbitration clause) as “any dispute or difference [arising] out of, or in relation to or in connection with the JV Documents or any of them or the Third Addendum”.


As there was no dispute as to the validity of the arbitration agreement or the principles of a stay of proceedings under the International Arbitration Act 1974 (Cth), the primary question for the court was articulated by Brereton J as being whether: “the proceedings… involve the determination of a matter that … is capable of settlement by arbitration”.[1]



Was the Dispute within the Perimeters of the Arbitration Agreement

Brereton J noted that in addressing the arbitrability of the dispute, regard ought to be had to the respective cases of both parties. Highlighting the fact that the plaintiff’s claim invoked a breach of a provision of the joint venture agreement, his Honour provided that it was “beyond argument that [the] dispute [is] arising out of, relates to or is in connection with the joint venture documents”.[2]

His Honour further observed that the defence raised by some of the defendants also involved provisions of the joint venture agreement, affirming the position that the dispute at hand was indeed encompassed by the arbitration agreement in question.[3]

Interaction between Statutory and Contractual Rights

The Court went on to note that the contractual elements of the dispute overlapped with the parties’ statutory rights under the Corporations Act.[4] However, Brereton J felt this to be an irrelevant consideration in ascertaining the objective arbitrability of the dispute. Relying on a recent decision of the New South Wales Court of Appeal in Rinehart v Welker [2012] NSWCA 95, Brereton J held that it was “beside the point that the rights sought to be invoked by the plaintiff may be statutory rights” under the Corporations Act.

His Honour went further to find that it was “besides the point” that an arbitrator might not be able to grant the same relief as a Court was empowered to under the Corporations Act, citing, as an example, the plaintiff’s seeking of relief under s 13224 Corporations Act for inter alia a reprieve from civil liability resulting from the defendants’ actions. In this regard, Brereton J relied on the ratio of Brennan and Dawson JJ in the High Court decision of Tanning Research Laboratories Inc v O’Brien [1990] HCA 8 in finding that “where the ultimate question or relief” cannot itself be referred to arbitration but relies on a determination of an arbitration proceeding, the “appropriate course” is to stay court proceedings until “the underlying questions of fact and of law can be determined by the arbitrator”.[5] The Court can “then deal with the remaining issues or claims for relief in light of the outcome of the arbitration”.[6]

Non-Parties to the Arbitration Clause

Last, the Court acknowledged that two of the defendants (the fourth and fifth defendant), who were directors of the joint venture company, were not parties to the relevant arbitration agreement and as such the claims against them were not amendable to referral to arbitration.[7] As such, the Court limited its orders to stay the various claims for reliefs to those against the proper parties of the arbitration agreement.



A consistent approach to the arbitrability of intracorporate disputes may be useful in encouraging foreign investment and trade. This is particularly so where foreign investors may be wary of local courts and may desire a neutral platform for dispute resolution. The decision of Ikon Group Limited (No 2) builds on Australian jurisprudence establishing the objective arbitrability of intracorporate disputes involving statutory rights.

It is noted that there exists some diversity in views on the arbitrability of intracorporate disputes across the international arbitration community. To minimise costly parallel or satellite litigation, parties keen on arbitration as a mode of dispute should be conscientious to ensure that, where possible, all necessary entities are party to the relevant arbitration agreement. As an additional safeguard, and particularly where cross-border enforcement is anticipated, parties may also wish to include explicit waivers of any rights to contest arbitration or enforcement proceedings on the basis of objective arbitrability.

This article may be cited as follows: Alex Ferguson and Samuel Seow, “Australian Case Update: Arbitrabilty of Intracorporate Disputes (Ikon Group Limited (No 2) [2015] NSWSC 981)”, International Arbitration Asia (16 August 2015) < Intracorporate-Disputes>.

[1] [2].

[2] [14].

[3] [16].

[4] [23].

[5] [24].

[6] [24].

[7] [24].


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