Last year, IPwars reported on Hammerschlag J’s ruling that arbitrators under the Commercial Arbitration Acts 1984 (here and here (repealed and replaced by a 2010 Act)e.g.) can settle disputes about (1) the ownership of improvements under a technology licence agreement and (2) the licence fees payable if the technology be exploited in various ways in the future.

The arbitrator has now made an award finding that the patents owned by Lloyd or its subsidiary Solfast, the Solfast and Asura patents, were improvements covered by the licence and so should be assigned to Larkden.

Larkden has secured from Hammerschlag J orders enforcing that award and so requiring Lloyd to transfer ownership to Larkden.

Section 35 of the Commercial Arbitration Act 2010 (NSW) provides that an arbitrator’s award must be recognised and is enforceable subject to the formal requirements of s 35 and substantive grounds in s 36. The substantive grounds are:

Grounds for refusing recognition or enforcement

(1)Recognition or enforcement of an arbitral award, irrespective of the State or Territory in which it was made, may be refused only:

(a)at the request of the party against whom it is invoked, if that party furnishes to the Court proof that:

(i)a party to the arbitration agreement was under some incapacity, or the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication in it, under the law of the State or Territory where the award was made, or

(ii)the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present the party’s case, or

(iii)the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognised and enforced, or

(iv)the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the State or Territory where the arbitration took place, or

(v)the award has not yet become binding on the parties or has been set aside or suspended by a court of the State or Territory in which, or under the law of which, that award was made, or

(b)if the Court finds that:

(i)the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State, or

(ii)the recognition or enforcement of the award would be contrary to the public policy of this State.

Lloyd argued that the award in relation to the Solfast patents fell foul of s 36(1)(a)(iii) because the shares in Solfast, originally owned by Lloyd, had been transferred to GENV. Hammerschlag J found this was untenable: the transfer of shares in Solfast was void and set aside under s 267(1) of the Corporations Act. In addition, although developed by Solfast, the Solfast patents were improvements within the meaning of the licence because Lloyd had developed the patents through the medium of Solfast.

Lloyd’s second argument was predicated on s 36(1)(b)(ii) contending that some of the orders in the award were too vague and uncertain to be enforceable. This allegation included the order that Lloyd take all necessary steps to ensure that [Lardken]’s interests in the prosecution of the Assigned Patent Applications are protected and secured.

Hammerschlag J rejected this ground too. The orders were not vague and uncertain. Further, his Honour doubted they would offend public policy as not sufficiently concerning “the State’s basic notions of morality and justice”.

Larkden Pty Limited -v- Lloyd Energy Systems Pty Limited [2011] NSWSC 1331

The arbitrator.