Procedural fairness sets a high bar: Victorian court enforces $1.5m award despite fairness challenge 

What you need to know

• The latest arbitration enforcement decision in the Victorian Supreme Court continues the longstanding policy of minimal intervention by the courts.
• The refusal grounds under s 36 are exhaustive and narrow. Enforcement proceedings are not a rehearing of the merits.
• A party's conduct of its case in arbitration will be relevant to the question of enforcement, which should not be refused on the basis of the party's own failures or strategic choices.

What you need to do

• Be confident in the finality and enforceability of arbitral awards. The threshold for resisting enforcement on procedural fairness grounds is high, and courts will not conduct a merits review.
• Seek and take up opportunities to present your case. The court's review under s 36 will not rescue a party from its own forensic decisions.
• Raise objections with the tribunal. A party who agitated a procedural error before the tribunal will be in a stronger position on any enforcement challenge.

Simple Investments Pty Ltd v Bradley St Development Vic Pty Ltd [2026] VSC 510

Courts do not rehear arbitrations. They enforce awards unless the limited grounds for refusing to do so as set out in section 36 of the Commercial Arbitration Act 2011 (Vic) are satisfied. One such ground is a denial of procedural fairness.

In Simple Investments, the process adopted by the arbitrator was unusual but the question was whether it crossed the line into procedural unfairness. The Victorian Supreme Court found that it was not crossed. The respondents had not demonstrated any real unfairness or real practical injustice resulting from the conduct of the arbitration.

The facts

Simple Investments and Bradley St Development entered a joint venture agreement in 2015 for the construction and sale of residential properties. The joint venture funds flowed through a bank account controlled by Arram Developments. Carlo Marra was Arram Developments’ sole director and shareholder, and was also a director of Bradley St Development.

Simple Investments alleged that Mr Marra diverted amounts from the joint venture account to accounts he controlled. In late 2019, Simple Investments referred the dispute to arbitration. The hearing took place over three days in December 2024. The arbitrator issued an interim award in September 2025 and a final award in January 2026.

The arbitrator found that Marra had misappropriated the funds and ordered Arram Developments to repay $679,599 to the joint venture. The final award fixed costs at $560,200.30. The respondents did not pay. Simple Investments applied under s 35 of the Commercial Arbitration Act 2011 (Vic) to enforce both awards.

The respondents resisted enforcement on three of the grounds in s 36 of the Act:

• they were unable to present their case because the misappropriation claim was pleaded contingently and only quantified at $679,599 in the draft award, after the hearing closed;
• the misappropriation claim fell outside the parties’ agreed list of issues and the arbitrator exceeded his mandate in determining it; and
• enforcement would offend public policy, because the respondents had been denied procedural fairness.

Croft J rejected all three arguments.

Minimal curial intervention

A party that loses an arbitration may feel the arbitrator got it wrong. But s 36 does not give the court power to correct errors of fact or law. The court’s task on enforcement is narrow: it asks whether the process was fair, not whether the outcome was right.

As stated by Croft J (at [96]):

"It is not the Court’s role to step in each time it perceives some ‘defect’ in the tribunal’s decision, and supplant that decision with one of its own. Just as the parties must honour the consensual process of arbitration to which they voluntarily agreed, so too must a Court respect the parties’ agreement and, by extension, the arbitral tribunal’s autonomy, its fact finding process, and its conclusions on fact and law. … [T]he longstanding policy of minimal curial intervention contemplated by the Model Law requires the courts show appropriate deference to the tribunal’s decision‑making process."

In TCL Air Conditioner (Zhongshan) Company Ltd v Castel Electronics Pty Ltd (2014) 232 FCR 361, the Full Federal Court set the threshold: the party resisting enforcement must demonstrate “real unfairness” or “real practical injustice” with “tolerable clarity and expedition.” That task must be able to be done in "short compass" and not through a detailed re-examination of the facts.

Sufficiency of the pleadings

The respondents said they lacked a fair opportunity to meet the misappropriation claim because Simple Investments pleaded it contingently, following a taking of accounts. As there was no taking of accounts and the specific sum of $679,599 first appeared after the hearing in the draft award, the respondents said they never had a chance to answer a case in that form.

The Court rejected that argument. Croft J found that the misappropriation allegation appeared squarely in the amended points of claim, which sought repayment of “any amounts found to have been misappropriated.” Simple Investments’ witness evidence directly alleged that Marra had misappropriated joint venture funds for his personal benefit. Therefore, the Court concluded the respondents knew the case they had to meet.

As to the quantification without a taking of accounts, Croft J found that the respondents controlled the supplier invoices and bank records that were the only documents capable of explaining the transfers. Despite a discovery order and repeated requests over several years, those documents were never produced. In its post-hearing written submissions, Simple Investments argued that the arbitrator should infer from that failure that the entire sum of $679,599 was misappropriated. The arbitrator accepted that submission and inference.

Croft J held that the arbitrator doing so did not amount to a denial of procedural fairness. The respondents had the opportunity to lead evidence on both liability and quantum but elected not to do so. The “deficient” particulars in Simple Investments' pleadings were, on the Court's findings, a product of the respondents’ own forensic decision to withhold the documents that would have allowed a precise quantification. The arbitrator’s decision to draw the adverse inference was one he was entitled to make, putting aside whether it was correct.

The list of issues does not confine the arbitrator

The respondents also argued that the misappropriation claim fell outside the parties’ agreed list of issues and therefore exceeded the scope of the submission to arbitration. If a matter falls outside the scope of submission, s 36(1)(a)(iii) permits the court to refuse enforcement.

Croft J held that the list of issues does not define the boundaries of the arbitration. The “overriding consideration” is whether the matter was properly pleaded. Because the misappropriation claim appeared in the amended points of claim, it fell within the scope of the arbitration regardless of what the list said. His Honour cited CNG v G [2024] HKCFI 575, where Mimmie Chan J said: “a list of issues is not an exam paper.” The tribunal can determine any claim within the pleaded case, unless the parties clearly agree otherwise.

Atypical but not unfair

Croft J acknowledged that the arbitrator’s process was unusual. He ordered a list of issues and then determined a claim outside it. He quantified the misappropriation without a taking of accounts. But the test for procedural unfairness is not whether the court would have made different procedural decisions. It is whether the parties received basic procedural fairness.

Croft J put it this way: “Whilst his decisions vis-à-vis the parties’ list of issues, and the non-taking of accounts, may fairly be described as atypical, it was not, in my view, injurious to the Respondents, and cannot be described as a denial of procedural fairness.”

The public policy ground

While courts have struggled to define the scope of the public policy ground under s 36(1)(b)(ii), they have made clear that its threshold is high. Enforcement must “shock the conscience” or violate the forum’s most basic notions of morality and justice (PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] 1 SLR(R) 597).

In Simple Investments, the respondents conceded that their public policy argument was not independent of the procedural fairness grounds. Accordingly, once the procedural fairness arguments failed, public policy added nothing.

Raising objections

Croft J endorsed the principle in China Machine New Energy Corp v Jaguar Energy Guatemala LLC [2020] SGCA 12 that an aggrieved party that later seeks to set aside or resist enforcement is “armed with better prospects” if it can show that it agitated the issue before the tribunal. A party that sees a fatal procedural failure should raise it promptly and seek a remedy while the arbitration continues.

The respondents here did raise objections after the draft award, so the principle was not decisive on the facts. But Croft J's comments are a useful reminder of the importance of preserving and pursuing procedural objections during the arbitration.

Authors: Adam Firth, Partner and James Kim, Lawyer.