Commercial Arbitration Practice Note (CA-1)

J L B Allsop, Chief Justice 21 December 2021

National Practice Area Practice Note

1. Introduction

1.1 This practice note outlines arrangements for the management within the National Court Framework (NCF) of applications in the Court that concern commercial arbitration (Commercial Arbitration), being:

  • international commercial arbitration under the International Arbitration Act 1974 (Cth);
  • domestic commercial arbitration under the State and Territory Commercial Arbitration Acts where applicable; and
  • the exercise by the Court of its powers under ss 53A, 53AA, 53AB and 54 of the Federal Court of Australia Act 1976 (Cth) (FCA Act).

1.2 In the case of applications for registration of judgments (as distinct from arbitral awards), the Foreign Judgments Practice Note (GPN-FRGN) provides guidance.

1.3 This practice note does not apply to:

(a) the appointment of a referee under s 54A of the FCA Act or the appointment of an assessor, although such appointments might be appropriate where parties are unable to agree on arbitration (see Referees and Assessors Practice Note (GPN-REF) (forthcoming));

(b) the statutory arbitration processes provided for in competition laws that govern access to essential facilities (e.g., under Pt IIIA of the Competition and Consumer Act 2010 (Cth)) which are covered by the Commercial and Corporations National Practice Area (see Commercial and Corporations Practice Note (C&C-1)); and

(c) arbitrations under the Fair Work Act 2009 (Cth).

1.4 This practice note:

(a) is to be read together with the:

  • Central Practice Note (CPN-1), which sets out the fundamental principles concerning the NCF of the Federal Court and key principles of case management procedure and is an essential guide to practice in this Court in all proceedings; and
  • FCA Act and the Federal Court Rules 2011 (Cth) (Rules) (in particular, Pt 28);

(b) takes effect from the date it is issued and, where practicable, applies to proceedings filed before that date; and

(c) is intended to set out guiding principles and is not to be inflexibly applied.

2. Importance of Commercial Arbitration

The Full Court has explained the importance of international commercial arbitration in commerce as follows:

The New York Convention and the Model Law deal with one of the most important aspects of international commerce – the resolution of disputes between commercial parties in an international or multinational context, where those parties, in the formation of their contract or legal relationship, have, by their own bargain, chosen arbitration as their agreed method of dispute resolution. The chosen arbitral method or forum may or may not be the optimally preferred method or forum for each party; but it is the contractually bargained method or forum, often between parties who come from very different legal systems. An ordered efficient dispute resolution mechanism leading to an enforceable award or judgment by the adjudicator, is an essential underpinning of commerce …

The recognition of the importance of international commercial arbitration to the smooth working of international commerce and of the importance of enforcement of the bilateral bargain of commercial parties in their agreement to submit their disputes to arbitration was reflected in both the New York Convention and the Model Law.

(See Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192; 157 FCR 45 at [192]-[193], quoted in TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia [2013] HCA 5; 251 CLR 533 at [10].)

3. Overview of the Court's Commercial Arbitration related Jurisdiction and Powers

3.1 The Court's arbitration jurisdiction has three main aspects:

(a) applications relating to international commercial arbitration;

(b) the exercise of a jurisdiction by which, with the consent of the parties, the Court may refer the whole or part of a proceeding, otherwise within the Court's jurisdiction, to arbitration; and

(c) applications for orders in the terms of an award.

3.2 As to the first aspect, international commercial arbitration, the Court has a number of powers under the International Arbitration Act, including:

(a) staying court proceedings and referring matters to arbitration and recognising and enforcing foreign awards under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards which forms Sch 1 to the International Arbitration Act (New York Convention), as provided by ss 7 and 8 (see section 9 below for further guidance on staying proceedings);

(b) powers in supervision and support of international commercial arbitrations and recognising, enforcing or setting aside awards under the UNCITRAL Model Law on International Commercial Arbitration which forms Sch 2 to the International Arbitration Act (Model Law), including for orders concerning:

(i) referral of a matter in court that is the subject of an international arbitration agreement to arbitration (Art 8);

(ii) the appointment and termination of an arbitrator (Arts 11 and 14, ss 18(1)-(3));

(iii) challenges against an arbitrator on the basis that the arbitrator lacks impartiality or independence or the necessary qualifications (Art 13, s 18(3));

(iv) whether an arbitral tribunal has jurisdiction to deal with the issues before the tribunal (Art 16, s 18(3));

(v) the recognition and enforcement of an interim measure (Arts 17H and 17I, s 18(4));

(vi) court-ordered interim measures (Art 17J);

(vii) assisting an arbitral tribunal to take evidence (Art 27, ss 18(4) and 23A, 23F and 23G, and rr 28.46-48 of the Rules);

(viii) recourse against an award, i.e., setting it aside (Art 34 and s 18(3), unless the New York Convention applies – see s 20);

(ix) recognition and enforcement of awards (Arts 35 and 36 and s 18(4), unless the New York Convention applies – see s 20);

(x) with the permission of the arbitral tribunal, issuing subpoenas for a person to attend for examination before the arbitral tribunal or to produce documents to the arbitral tribunal (s 23); and

(c) recognising and enforcing awards under the Convention on the Settlement of Investment Disputes which forms Sch 3 to the International Arbitration Act (Investment Convention), as provided by s 35.

(See section 8 below for further guidance on enforcing awards.)

3.3 As to the second aspect, referrals to arbitration, there are two distinct types of referral with differing consequences:

(a) referrals, which would generally be accompanied by a stay of the court proceedings, as referred to in s 7(2) of the International Arbitration Act and Art 8(1) of the Model Law referred to above; and

(b) referrals under the express statutory power in s 53A of the FCA Act to refer proceedings (other than criminal proceedings) in the Court or any part of them or any matter arising out of them to arbitration, but only with the consent of the parties. In such arbitrations, the arbitrator can refer a question of law to the Court (s 53AA) and a party may apply to the Court to review an award on a question of law (s 53AB). Also, application can be made to register an award in such an arbitration which award then has the force and effect of an order of the Court (r 28.13 of the Rules). (See section 6 below for further guidance on s 53A referrals.)

3.4 The Court also has powers under the State and Territory Commercial Arbitration Acts where the relevant provisions are picked-up and applied as surrogate federal law, for example where a stay of domestic proceedings (i.e., between Australian parties) in federal jurisdiction is sought such that the International Arbitration Act does not apply but a State or Territory Act does apply (e.g., Hancock Prospecting Pty Ltd v Rinehart [2017] FCAFC 170; 257 FCR 442 at [396]).

3.5 As to the third aspect, applications for orders in the terms of an award, these may be made under s 54 of the FCA Act in respect of awards made in arbitrations which were referred by the Court under s 53A and in relation to a matter in which the Court has original jurisdiction but which was not so referred. In respect of the latter, r 28.14 of the Rules applies.

4. Operation of the Commercial Arbitration NPA Sub-area

4.1 The operation of the Commercial Arbitration NPA sub-area will be consistent across the Court nationally and will be conducted in accordance with a national allocations system with a dedicated group of judges with specialist expertise in the NPA who will be allocated Commercial Arbitration cases. A list of the Commercial Arbitration NPA judges is available on the Court's website.

4.2 The Commercial Arbitration NPA, as with all other NPAs, will be overseen and managed by National Coordinating Judges who will harmonise procedures for Commercial Arbitration cases so that they are dealt with expeditiously and consistently by the Court nationally.

4.3 The individual docket system referred to in paragraph 4.1 of the Central Practice Note that generally applies in the Court shall be modified in the case of the Commercial Arbitration NPA.

4.4 Upon filing, an original Commercial Arbitration proceeding (as distinct from an interlocutory proceeding filed in an existing matter that is already in a judge’s docket) will be provisionally allocated to one of two Commercial Arbitration National Coordinating Judges who will be responsible for case managing the proceeding and for dealing with it to the extent that the application is short or confined.

4.5 Save for cases of greater urgency, all Commercial Arbitration cases will be returned for a first case management hearing within approximately 14 days after the commencement of the application. Parties should expect that a date for final hearing of the application will usually be allocated at the first case management hearing.

4.6 Parties with urgent applications may contact the Court in accordance with the procedures specified on the Court website and all such Commercial Arbitration applications will be promptly referred to a Commercial Arbitration NPA judge.

4.7 In the case of applications likely to be able to be decided without or with limited oral evidence and without extended hearing, they will be heard by a Commercial Arbitration National Coordinating judge as expeditiously as the case deserves. Such hearings may be conducted remotely or in person, depending on the circumstances. Typical examples of such applications are applications for the appointment of arbitrators, for the issuing of subpoenas, for the stay of proceedings in giving effect to agreements to arbitrate, and recognition and enforcement of arbitral awards.

4.8 More complex or involved applications requiring more preparation and longer hearing times will be docketed to a Commercial Arbitration NPA judge who will then be responsible for case managing, hearing and determining the matter. Typical examples of such applications would include applications to recognise and enforce awards that are opposed on substantive grounds (e.g., on the ground that the making of the award was affected by fraud or corruption as provided for by s 8(7A)(a) of the International Arbitration Act) and to set awards aside.

5. Applications concerning International Arbitrations

Applications under the International Arbitration Act and its schedules should be made in accordance with Division 28.5 of the Rules.

6. Court Referrals to Arbitration under s 53A with the consent of the parties

6.1 Referral to arbitration of matters commenced within the jurisdiction of the Court may occur with the consent of the parties (FCA Act, s 53A).

6.2 Parties to commercial proceedings should, in appropriate cases, confer about the possibility of consenting to such a referral and give specific consideration to making applications to the Court for a referral to arbitration under s 53A.

6.3 It is to be expected that any such reference will deal with matters that are usually addressed by parties in making a private reference to arbitration. It will identify the agreed arbitrator/s or the agreed procedure for the appointment of the arbitrator/s and any rules that are to be observed by the parties (and the arbitrator/s). Those rules may be, for example, the ACICA or UNCITRAL Arbitration Rules, but the referral is not required to be on the basis of those rules and can be subject to other rules of the parties’ choosing. The Court acknowledges that there are independent arbitral institutions whose services may be used for the appointment of arbitrators and the administration of arbitrations.

6.4 Orders for referral to an identified arbitrator/s will be made subject to acceptance by the arbitrator/s of the reference which will itself require the identification of terms that will govern the remuneration, removal and liability of the arbitrator. A model set of orders is in Annexure A to this practice note.

6.5 A prospective arbitrator should confirm that they are impartial and independent, and they should disclose to the parties any facts or circumstances that exist that may give rise to doubts as to their impartiality or independence. The parties and prospective arbitrators may be assisted by the IBA Guidelines on Conflicts of Interest in International Arbitration in that regard.

6.6 In an appropriate case, a proceeding may be commenced in the Court in anticipation of an application for the whole or part of the proceeding to be referred to arbitration. In such a case, the originating application must be in respect of a matter that is within the Court's jurisdiction. The proceeding may be commenced by application and a short form affidavit which describes the matter sufficiently to establish jurisdiction and to identify the ambit of what is to be referred to arbitration, but otherwise defers any further articulation of the dispute in anticipation of an application for an order referring the whole or part of the dispute to arbitration by consent of the parties. The anticipated referral may need to await the joinder of other parties to the dispute.

6.7 Parties seeking to invoke the power of the Court to refer the whole or part of an existing proceeding to arbitration should bring an interlocutory application in the substantive proceeding.

6.8 If the parties wish, in an appropriate case a referral to arbitration may be to a judge of the Court sitting as arbitrator, subject to suitable arrangements being made between the Chief Justice and the Attorney-General for the Commonwealth as to the availability of the judge to accept the referral. In such a case, reasons would generally be published. See The Bamburi [1982] 1 Lloyd’s Rep 312 as an example of such a referral to a judge, albeit in another jurisdiction.

6.9 The arbitration will proceed in accordance with the terms of the referral which may provide for part of the dispute (such as a claim to statutory relief) to be determined by the Court depending upon the outcome of the arbitral award.

6.10 The Court has express statutory power in respect of any arbitration referred by the Court under s 53A, where an award has not yet been made and the arbitrator has requested that a question be referred to the Court for determination, to give leave to refer the question to the Court (FCA Act, s 53AA). Leave must not be granted unless the Court is satisfied that the determination of the question of law by the Court might result in substantial savings in costs to the parties. If the matter is of sufficient importance, the Chief Justice may direct that any such question be determined by a Full Court (FCA Act, s 20(1A)).

7. Submission to arbitration without Court referral

7.1 Parties are at liberty to agree to submit their dispute to arbitration by concluding a submission to arbitration agreement without a referral by the Court under s 53A of the FCA Act. In that event, the parties could agree to discontinue any proceeding in the Court that had already been commenced, or seek orders by consent staying such a proceeding.

7.2 In order to submit their dispute to arbitration without referral, the parties will need to consider and agree such matters as the seat of the arbitration, the appointment of arbitrators, the applicable procedural rules (for example, the ACICA or UNCITRAL Arbitration Rules) and the applicable law. If the seat of the arbitration is in Australia, the submission may also record agreement on the facts that would determine whether the arbitration is international and thereby governed by the Model Law under the International Arbitration Act (see Art 1 of the Model Law), or otherwise governed by one or other of the State or Territory Commercial Arbitration Acts.

8. Enforcement of Arbitral Awards

8.1 Applications to enforce a foreign arbitral award under the New York Convention and s 8 of the International Arbitration Act shall be made in accordance with r 28.44 of the Rules – noting that a “foreign award” is an award made in a country other than Australia (International Arbitration Act, s 3). The same procedure should be followed in applications to enforce an award under Chapter VIII of the Model Law.

8.2 Applications to enforce an arbitral award under the Investment Convention and s 35(4) of the International Arbitration Act shall be made in accordance with r 28.49 of the Rules.

8.3 Annexure B to this practice note sets out the expected procedure to be followed to give effect to rr 28.44(3) and 28.49(3) of the Rules that provide that certain applications to enforce arbitral awards can be made without notice. That procedure may also be suitable for applications to enforce arbitral awards under Art 35 of the Model Law.

8.4 A party to an award made in an arbitration that was referred by the Court under s 53A of the FCA Act, or in relation to a matter in which the Court has original jurisdiction, can apply for an order in the terms of the award (FCA Act, s 54). In the case of an arbitration that was referred by the Court, r 28.13 of the Rules should be followed. In the case of an arbitration that was not referred by the Court but the matter the subject of the arbitration is otherwise in the jurisdiction of the Court, r 28.14 should be followed.

9. Stay applications

9.1 A stay application to enforce a foreign arbitration agreement under s 7 of the International Arbitration Act or Art 8 of the Model Law, or an equivalent stay under a State or Territory Commercial Arbitration Act, should be brought by filing an originating application in accordance with Form 51 as required by r 28.43 of the Rules.

9.2 Depending on the circumstances, the stay application may be referred for hearing by one of the Commercial Arbitration National Coordinating judges or a Commercial Arbitration NPA judge, or it may be heard by the docket judge for the principal proceeding to which the application relates, if that judge is a Commercial Arbitration NPA judge.

J L B ALLSOP
Chief Justice
21 December 2021

 

 

 

Annexure A

EXAMPLE OF ORDERS FOR REFERRAL TO ARBITRATION UNDER s 53A

No.      of 20   

Federal Court of Australia
District Registry: [State]
Division: [Division]

[Name of First Applicant] [if 2 or more add "and another" or "and others"]
Applicant[s]

[Name of First Respondent] [if 2 or more add "and another" or "and others"]
Respondent[s]

THE COURT ORDERS BY CONSENT THAT:

1. Pursuant to s 53A(1)(a) of the Federal Court of Australia Act 1976 (Cth), the whole of the proceeding is referred to arbitration.

[or] Pursuant to s 53A(1)(a) of the Federal Court of Australia Act 1976 (Cth), the following part of the proceeding is referred to arbitration, namely:

(a) [set out with precision the part/s of the proceeding referred to arbitration]

(b) …

2. The arbitration referred to in Order 1 be conducted subject to the following terms:

(a) The arbitral tribunal shall be constituted by [the name/s of the arbitrator/s or the procedure for appointment];

(b) The seat of the arbitration shall be [city];

(c) The [arbitral rules] shall apply.

 


Annexure B

PROCEDURE FOR EX PARTE APPLICATIONS TO ENFORCE ARBITRAL AWARDS

1. In an appropriate case, an application to enforce an arbitral award may be made without notice to any person: rr 28.44(3) and 28.49(3) of the Rules. If an award creditor has not been formally notified by an award debtor of an intention to object to enforcement of the award with particulars of the basis for that position and the award creditor is not otherwise aware of any reasonably arguable basis upon which the award debtor may object then it will usually be appropriate for an application to enforce the award to be made without notice to the award debtor. If so, the affidavit in support of the application should depose to those matters and any other matters considered relevant. A duty of candour will apply to an award creditor who brings an application without notice.

2. If the Court is satisfied that an application to enforce an award made without notice to any person should be allowed, it will be usual for the order to be expressed in terms that:

(a) require notice to be given to the award debtor that unless an application is commenced to oppose the making of the order within 28 days of notice being given, the court will make the order to enforce the award;

(b) provide for a return date;

(c) state that, upon an affidavit being provided establishing to the satisfaction of the Court that notice has been given in accordance with the procedures for notice provided for by the arbitration agreement (or followed in the course of the arbitration) and the absence of an application by the award debtor, the Court will make an order enforcing the award without requiring formal service of the application.

3. Otherwise, the Court will require the application to proceed on notice which may mean that the party seeking to enforce the award will need leave to serve the application out of the jurisdiction.

4. If an order of the kind described above has been made on an application to enforce an award made without notice and the award debtor wishes to claim that an order enforcing the award should not be made then prior to the specified return date the award debtor should bring an interlocutory application in the proceedings to enforce the award. The application should be supported by affidavit. The affidavit should include a description of the nature of the grounds relied upon by the award debtor including the particular provisions relied on (i.e., in s 8 of the International Arbitration Act and Art V of the New York Convention or Art 35 of the Model Law). The affidavit should also state whether or not an application has been commenced to set aside or suspend the award and provide details of any such application and when it was made.

5. In any case, the usual form of order made upon a successful application to enforce a foreign arbitral award (including where the award debtor does not oppose the making of the order on the return date of an application made without notice) may be a declaration to the effect that pursuant to s 8(3) or s 35(4) of the International Arbitration Act the applicant is entitled to enforce against the respondent the foreign arbitral award (as then described) as if the award were a judgment of the Court (where those provisions apply) and an order that there be judgment in favour of the applicant against the respondent in terms stated in the order (being terms provided for in the award).


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