The arbitration proceeded before a panel of three arbitrators upon a set of detailed pleadings which extended to more than 60 pages.
The hearing commenced on 14 July 2008 and continued until 22 July, with representation by senior counsel, witnesses being sworn and cross-examined on their written statements, many documents being in evidence and a full transcript provided.
In many respects, therefore, the arbitration proceeded along the lines of the conduct of a commercial cause in a superior court.
This complexity of the arbitration will be relevant when considering the content of the requirement in s 29(1)(c) of the Arbitration Act that the arbitrators provide a statement of the reasons for the making of the award.
The primary judge in Oil Basins had, as the Court of Appeal put it, properly held that
in order to provide reasons of the standard required by s 29(1)(c), it was necessary for the arbitrators to decide and give reasons for deciding whether 'overriding royalty' was a technical term with a meaning usually understood by persons in the oil and gas industry and, if so, whether the context of the royalty agreement or the surrounding circumstances implied that the parties intended a different meaning from the technical meaning.
In this case, the arbitrators were obliged to explain succinctly why the various integers in that complex statutory provision were satisfied….
There is no indication of factual findings in the Reasons which supported the inapplicability of the proviso, nor, indeed, of those considerations tending to support its application.
Other grounds namely a manifest error of law were also established.