Rethinking proportionate liability in arbitration

The late-2022 SA Court of Appeal case of Tesseract International Pty Ltd v Pascale Construction Pty Ltd [2022] SASCA 107 concluded that the common proportionate liability regimes around Australia are unlikely to have application within arbitral proceedings. The Court’s reasoning was based primarily on a finding that the proportionate liability laws were not intended by the relevant parliaments to apply within arbitration.

If the Court of Appeal’s approach is correct, it substantially undermines the attractiveness of arbitration as a method of resolving commercial disputes, particularly for professional consultants such as engineers. Further, if the applicability of statutory law within arbitration depends on an analysis of the intent of parliament on a statute-by-statute basis, it opens up a new way in which Australian Courts can potentially intervene in arbitration.