In the recent decision of Qube Re Services (No 2) Pty Limited v Martinus Rail Pty Ltd [2026] 717, the Court rejected an argument that the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act) attracted the public policy ground for refusing enforcement of an arbitral award under section 36(1)(b)(ii) of the Commercial Arbitration Act 2010 (NSW) (Arbitration Act).

Following three SOP Act adjudications in 2023 and 2024, Qube was required to pay Martinus almost $80 million for work relating to the Moorebank Intermodal Terminal Project. We previously reported on the decisions of the Supreme Court and the Court of Appeal in relation to those adjudications here and here, and the High Court’s refusal to grant Qube leave to appeal here.

The parties subsequently commenced ‘final rights’ arbitral proceedings to determine their substantive contractual entitlements.  In the arbitration, Qube successfully obtained rulings on separate questions concerning contractual time-bar provisions.  The arbitrator concluded that a number of Martinus’ claims were contractually barred and issued three final partial awards requiring Martinus to repay Qube approximately $26.4 million.

Qube applied to the Supreme Court of NSW under s. 35 of the Arbitration Act seeking to enforce the partial awards as judgments of the Court.  Martinus resisted enforcement, arguing that enforcement would be contrary to public policy because it undermines the “pay now, fight later” objective of the SOP Act.

Justice Peden ultimately rejected Martinus’ arguments and enforced the partial awards.  In reaching this finding, her Honour held that:

• The public policy exception under s. 36 of the Arbitration Act is confined to circumstances where enforcement would offend fundamental principles of morality and justice.  The Court adopted authorities emphasising the high threshold required to invoke the exception and found there was no meaningful distinction between the public policy concepts applied in domestic and international arbitration contexts.
• While the SOP Act embodies a significant legislative policy designed to facilitate cash flow in the construction industry, it does not constitute a fundamental conception of morality and justice sufficient to engage the public policy exception.
• Even if the SOP Act were capable of constituting relevant public policy, enforcement of the awards would not offend that policy, noting that Martinus had already received the benefit of the SOP Act’s interim payment regime, and the arbitrator’s awards were made as part of final rights proceedings which were expressly contemplated by the SOP Act framework.

The Court therefore enforced the partial Awards and ordered costs.

The decision can be viewed here.