SFP Events Pty Ltd v Little Swamp II, Inc & Anor [2024] QSC 132

Andrew Orford | Petrina Macpherson | Abhishek Rishi

Key takeouts

Whether a binding arbitration agreement exists between parties cannot be determined separately from whether the main agreement actually applies to the parties. Section 7 of the International Arbitration Act 1974 (Cth) (Act) applies to stay proceedings so that these questions are determined by an arbitral tribunal under the competence-competence principle.

Although this decision involved the question of whether an arbitration agreement existed between a talent agent and an events producer, it is relevant to any arbitration agreement.

Facts

SFP Events Pty Ltd (SFP), a Townsville based events management company, entered into discussions with Creative Artists Agency, LLC (CAA), a talent agent and Little Swamp II (Little Swamp) to explore the possibility of John Fogerty (former lead singer of Creedance Clearwater Revival) headlining at a music festival to be held in Mackay in March 2024. Both CAA and Little Swamp are based in the United States.

SFP transferred US$700,000 deposit into CAA’s account on 17 January 2024 (initial deposit). Subsequently, CAA sent an agreement to SFP (agreement).

The agreement was executed by SFP on 29 January 2024 and contained an arbitration clause which stated that any claim or dispute arising out of the agreement would be settled by arbitration in Los Angeles, California (arbitration clause) in accordance with the commercial rules and regulations of the Judicial Arbitration and Mediation Services, Inc (JAMS). Upon signing the agreement, SFP received an automated email stating that the ‘final agreement’ was ‘fully executed’ and available for SFP’s records.

The agreement was sent to Little Swamp for signing, however, Little Swamp never signed.

On 23 February 2024, SFP sent an email to CAA revoking their ‘offer’ sent on 17 January 2024 and requesting an immediate return of the initial deposit.

SFP commenced proceedings seeking a declaration that the offer made by SFP to Little Swamp was validly withdrawn and that CAA refund the initial deposit.

On 25 March 2024, CAA submitted a demand for arbitration to JAMS seeking declarations that the dispute in Australia fell under the arbitration clause of the agreement and if SFP wanted to pursue any claims arising out of the agreement it should do so in arbitration.

On 18 April 2024, CAA and Little Swamp commenced interlocutory applications in the Supreme Court of Queensland for an order under section 7 of the Act that the whole of the proceeding be stayed and the dispute between the parties be referred to arbitration.

Requirement under the Act

The Act provides that if there is an arbitration agreement in writing, and a party applies to the court to stay proceedings, the court can stay the proceedings and refer the matter to arbitration.

The critical question in this case was whether there was an arbitration agreement in writing.

SFP submissions

SFP submitted that the existence of the agreement as a whole and the existence of an arbitration agreement for the purposes of the Act were two distinct queries. SFP contended that in signing and returning the agreement, SFP offered to be bound by those terms which Little Swamp failed to agree to before the offer was withdrawn.

SFP further submitted that the issue of whether there was a binding arbitration agreement should be determined by the court as it is a narrow question affecting the reality of arbitration before JAMS in California.

CAA submissions

CAA and Little Swamp argued that there was a mutual exchange of electronic communications between the parties comprising:

• the communication from CAA to SFP on 17 January 2024 containing the link to the agreement (which contained the arbitration clause);
•  the communication back to CAA via the link when SFP signed the agreement on 29 January 2024; and
• the email communication to SFP on 29 January 2024, copied to CAA with a link to the ‘final agreement’ which was ‘fully executed’,

and that this exchange included the arbitration clause which was a separable, concluded arbitration agreement. As a consequence, the question of whether the agreement existed and whether the arbitration agreement existed could not be determined separately.

Decision

Treston J granted the stay on proceedings commenced by SFP. Her Honour stated that contrary to SFP’s submissions, the court is not required to decide whether the arbitration agreement exists. The competence-competence principle is wide enough to permit the arbitral tribunal to decide whether the arbitration agreement came into existence. The court cannot decide on the arbitrator’s jurisdiction separately from figuring out whether the main agreement actually applies to the parties. The main agreement and the arbitration agreement are ‘bound up with each other’.

In coming to this conclusion, Treston J stated that the emphasis in modern arbitration law is to maximise the arbitrator’s opportunity to determine their own jurisdiction. The parties were ordered to attend arbitration in Los Angeles, California in accordance with the commercial rules and regulations of JAMS.