Read the case, then answer the question below.

In Full Joy Foods Pty Ltd v Australian Dairy Park Pty Ltd., the Court was asked to decide on a challenge to an arbitration award.

At the centre of the dispute was an agreement dated 27 March 2017 between two Australian companies for the supply by Dairy Park (Seller) to Full Joy (Buyer) of infant milk products into China. The sale price was expressed to be CIF USD Cost Insurance Freight, which means that the sale price includes those three elements so that the CIF Seller must also supply insurance and arrange carriage of the goods to their destination.

A shipment of products (described as Step 1, Step 2 and Step 3 products) was made. Before export, the Seller had the products tested and obtained the necessary documents for export. The Buyer paid the purchase price. When the goods arrived at Tianjin, the Chinese authorities also tested the goods and reported that one of the products (Step 1 Product) was contaminated with bacteria. They denied entry to all of the products, which were eventually returned to Australia. The Seller produced a new batch of Step 1 product which was shipped to China and cleared Customs without incident. Nevertheless, the Buyer refused to accept any more product under the contract based on the default under the first shipment.

In due course, the Buyer commenced arbitration under the contract claiming damages and a refund of the purchase price in respect of the shipment of Step 2 and Step 3 product.

Among other things, the Buyer alleged that under the contract:

(The respondent) will ensure that the goods supplied to the Purchaser will confirm to import country standards and be fit for human consumption.

The arbitrator published his Award finding in favour of the Seller. In summary, the arbitrator concluded that the Seller had complied with its CIF obligations, and title and risk in the product had passed on shipment or latest on the negotiation of shipping documents.

In this case, the Buyer alleged that the arbitrator had relied on a matter not properly put in issue (that is, the significance of CIF) and the Buyer had not been afforded an opportunity to present its case which was accordingly not under the public policy of the state, as a denial of natural justice.

In its closing submission, despite the arbitrators request, the Buyer did not refer to the relevance of CIF to the contract.

The Sellers submissions, on the other hand, referred to CIF, but the Buyers submissions, in reply again, did not.

In his Award, the arbitrator focused on whether the product had been delivered in accordance with the contract. The arbitrator cited parts of the ICC definition, including the transfer of risks. In considering the nature of obligations under a contract designated CIF, the arbitrator assumed that the ICC definition was relevant.

In challenging the Award, the Buyers main grounds of complaint was that the arbitrator assumed the Incoterms definition of CIF was relevant (even though Incoterms were not referenced in the contract. They were expressed in the sale price.)

The judge found that it could have come as no surprise to the applicant that the arbitrator might treat the meaning of CIF by reference to the Incoterms and that to do so was by no means irrational or unlikely.

Question: Do you agree with the Courts judgement? Discuss.

[Suggestions: contract terms / sale price / CIF / liability / risk / fairness]