The Federal Court Role In International

Jurisdiction of the Federal Court of Australia

Under the International Arbitration Act 1974 (Cth) and Div 28.5 of the rules, the Federal Court has extensive jurisdiction. One of the Sub-areas of the Commercial and Corporations National Practice Area (NPA) is International Commercial Arbitration (Redfern and Hunter, 2004). There exists a group of judges who have expertise that is special in international commercial arbitration who are allocated matters of international commercial arbitration. Generally, arbitration is normally described as an efficient method of resolving commercial disputes that is also impartial and enforceable.

This court also has jurisdiction to hear and further determine matters that arise under the constitution through the operation of s 39B of the Judiciary A0ct 1903. s39B(1A)c of the Judiciary Act is central to the Courts civil jurisdiction (Allsop, 2002).

The Applicable Law for the Contract

In Australia, the provisions governing international arbitration are found in the International Arbitration Act (1904). The key elements of this legislation include:

Model Law as the Procedural Law

The model law is designated by the IAA as the mandatory procedural law for all international arbitrations that sit in Australia (Cartledge, 2013).

Confidentiality Statutory Duty

Parties are required to refrain from disclosing information that is confidential except in those circumstances that are limited as set out by the IAA. Even though arbitration sittings are by their nature private, they are not necessarily confidential. In Esso Australia Resources Ltd v Plowman, it was ruled by the Australian high court that in Australia, a general obligation of confidence in arbitral proceedings did not arise (Garnett and Nottage, 2010). The agreements expressly reached by the parties, including through incorporation reference to rules that were procedural containing provisions for confidentiality was required. With amendments of the legislation in 2015 and pursuant to the IAA sections 22 and 23C, unless other agreements are reached by the parties, a statutory duty of confidence applies.

Limits to and Guidance on Judicial Intervention

Limits and guidance to the exercise of judicial powers in relation to arbitration is provided by IAA. Courts are required to have regard to the objects of the Model law and the fact that that arbitration is a timely, enforceable, impartial and efficient method of resolving commercial disputes, whenever they are exercising powers or performing functions.

The Federal Arbitration Act creates a strong national policy that favours enforcement of arbitration clauses. According to the Act, arbitration clauses are to be enforced in all those cases where there exists a maritime transaction or where a transaction that crosses border lines is involved. In those instances where the Federal Arbitration Act is not applicable, the place where the arbitration clause is enforceable is determined by the State law (Bray and Walsh, 1998).

With respect to arbitration clauses, courts will always examine the clauses terms at issue so as to ensure that it is both substantively and procedurally fair to both parties. As such, even though the best practice involves reading and understanding of contract forms before signing them, through the court system, some relief is available through unconscionable provisions.

Some courts, for example, require that a contract for interstate commerce be in existence if the Federal Arbitration Act has to apply. As such, if a contract is not covered in the Federal Arbitration Act, it will be up to State Law to determine whether the arbitration clause is enforceable. Different methods are used by jurisdictions in the determining of the State`s law to apply. The commonly used choice of law methods are:

That state where the law is made. The state that has been specified in the contract. That state whereby the contract specifies arbitration should take place. That state whose relationship to the arbitration provision is most significant.

Submission

I am writing to oppose the stay of proceedings requested by DMF in the Federal Court of Australia. Pursuant to my advice, my client believes he is entitled to a stay of proceedings in the Federal Court of Australia. I am also writing in the hopes of settling this matter without a hearing.

Overview

On 28 August 2017, DMF commenced arbitral proceedings against BWU for the balance of purchase monies still outstanding of AUD$900,000. These proceedings were commenced by DMF filing a Notice of Arbitration with the Australian Centre for International Commercial Arbitration (“ACICA”). In the recent case of Bluegold Investment Holdings Ltd v Kwan Chun Fun Calvin, HCA 1492/2015, Hong Kong’s Court of First Instance stayed the proceedings in favour of arbitration, even though the Plaintiff was claiming against the Defendant under a guarantee which contained a non-exclusive jurisdiction clause in favour of the Hong Kong courts.
Clause 21 provides that any dispute, controversy or claim arising out of, relating to or in connection with this contract, including any question regarding its existence, validity or termination, shall be resolved by arbitration in accordance with the International Arbitration Rules used in Brisbane, Australia. The seat of arbitration shall be Brisbane, Australia. The number of arbitrators shall be one.
Clause 31 provides that the rights and obligations of the parties under this agreement shall be governed by and construed in accordance with the law of Queensland. Any dispute under this agreement shall be submitted to the jurisdiction of competent Australian courts. Due to a shipping accident caused by the captain’s negligence, on the ‘Southern Star’, the ship on which the goods were carried, the cookie dough and recipe books were badly water damaged and unable to be sold. Only the DVDs and baking accessories were delivered on time. On 19 September 2017, BWU commenced proceedings against DMF in the Federal Court of Australia for recovery of damages for late delivery in the sum of AUD$800,000.

Advice to BWU

The arbitration rules set by ACICA contain provisions on the appointment of arbitrators which are similar to other different institutional rules. A good example is that the rules provide that have 15days after the receipt by the respondent of the Notice of Arbitration to agree on the number of arbitrators (Luttrell and Moens, 2009). When such agreements are not available, ACICA normally determines the appropriate number of arbitrators, all relevant circumstances taken into account. Parties are usually free to appoint the arbitrator they so wish and in the event they do not agree, ACICA makes the appointment.

When thirty days after the notice of the appointment of the first arbitrator have passed or when one of the parties fails to give notice of its appointment, the powers of ACICA of appointing an arbitrator are usually activated. ACICA in its appointment of an arbitrator is always bound to rank independence and impartiality above all other considerations in the process of selection (Mistelis and Shore, 2010). This provisions are reflective of the reasoning of the French Court of Cassation in the case of Ducto, in that the powers of ACICA of appointment are usually conditional upon there being a lack of agreements among the correspondents. Parties may reach an agreement to opt out of this article of the rules of ACICA, meaning ACICA is only capable of appointing arbitrators in the event the parties have not reached an agreement otherwise in writing. This condition is however not as significant as it appears. Practically, parties that are not able to agree on forming sides to carry out the appointment of an arbitrator will not be able to reach an agreement to preclude ACICA from exercising its powers of appointment in line with Article 11.2.

Clause 21 provides that “Any dispute, controversy or claim arising out of, relating to or in connection with this contract, including any question regarding its existence, validity or termination, shall be resolved by arbitration in accordance with the International Arbitration Rules used in Brisbane, Australia. The seat of arbitration shall be Brisbane, Australia. The number of arbitrators shall be one.” As such, there exists no other issue in appointing a sole arbitrator. Some of the advantages that exist in sitting international arbitrations in Australia include; Australia`s long lasting reputation of neutrality, a political environment that is quite stable

under the rule of law, many experienced counsels and arbitrators who are very well experienced in the field and a legislative framework that is consistent with the most recent amendments to the 2006 revision to the UNICTRAL Model Law and norms that are accepted internationally. Ad hoc arbitration that is properly structure is observed to be more cost effective. An heavy burden is usually placed on the arbitrator by the ad hoc process to organise and also administer the arbitration. The only disadvantage that is tied to the ad hoc process is that the willingness of both parties to agree on the procedures of arbitration determines the effectiveness of the process. Ad hoc arbitration is however more flexible when compared to institutional arbitration and this provides the parties with an opportunity of decide on the procedures for resolving the dispute themselves. This however requires a high level of expertise, cooperation and effort from the involved parties so as to determine the arbitration rules.
From time to time, misunderstanding among parties may be witnessed especially in those instances where the parties are from different nationalities and as such with different jurisdictions. Another advantage with ad hoc arbitration is that the parties to the dispute do not have to pay any fees to arbitration institutions. The parties only cater for costs of acquiring arbitrators, lawyers and the subsequent costs that are incurred in carrying out the proceedings. It is however good to note that even though ad hoc arbitration is more flexible, it only becomes cost effective if there is the required cooperation between the parties, the procedures of arbitration are clearly understood by the parties and if experienced arbitrators are in charge of the process of arbitration.

f. The arbitrator may proceed to determine his own jurisdiction. However, the parties are also at liberty to agree to go straight to the court so as to have the question determined (ibid). The arbitrator also has powers of giving permission for the issue to be taken to court and the court may agree to accept the issue at this stage. Unless agreed otherwise by the parties, under Article 17 of the Model Law, International tribunals are free to grant interim measures that direct either of the parties to; Restore or maintain the status quo awaiting their dispute to be determined. To take any actions that would prevent imminent or current harm on the process of arbitration. To preserve any evidence that may be deemed relevant for resolving the dispute.

Take a deeper dive into The Exercises Correctly Without Proper with our additional resources.

References

• Action, A.C.R.A.C. and Guide, E.T., 2012, Federal Court of Australia.
• Allsop, J., 2002, ‘Federal Jurisdiction and the Jurisdiction of the Federal Court of Australia in 2002,’ Australian Bar Review, 23, p.29.
• Bray, M. and Walsh, P., 1998, ‘Different Paths to Neo‐Liberalism? Comparing Australia and New Zealand,’ Industrial Relations: A Journal of Economy and Society, 37(3), pp.358-387.
• Cartledge, V., 2013, Federal Court of Australia.
• Garnett, R. and Nottage, L., 2011, ‘2010 Amendments to the International Arbitration Act: A New Dawn for Australia,’ The Asian Int'l Arb. J., 7, p.29.
• Luttrell, S. and Moens, G., 2009, Commentary on the Arbitration Rules of the Australian Centre for International Commercial Arbitration. [eBook] pp.36-48. Available at:[Accessed 13 Oct. 2018].
• Nottage, L. and Miles, K., 2009, ‘Back to the Future for Investor-State Arbitrations: Revising Rules in Australia and Japan to Meet Public Interests,’ J. Int'l Arb., 26, p.25.
• Redfern, A. and Hunter, M., 2004, Law and practice of international commercial arbitration, Sweet & Maxwell.