Australia has a federal system of government, in which powers are divided between a central government and individual States. Each State and Territory is a separate jurisdiction and has its own hierarchy of courts. The High Court of Australia unites the various court hierarchies. It is the ultimate court of appeal for all Australian courts.
State and Territory Supreme Courts hear monetary claims above a certain threshold (typically, from A$750,000), or claims for equitable relief. Each State Supreme Court has an appellate division, or Court of Appeal, which hears appeals from the Supreme Court and lower courts in the State system.
Most of the States have two further levels of inferior courts. In addition, some States have established specialist courts of limited statutory jurisdiction, designed to hear specific categories of disputes.
The jurisdiction of the Federal Court of Australia (Federal Court) covers almost all civil matters arising under Australian federal law. All civil matters are heard by a judge alone. Appeals from a single judge are heard by the Full Federal Court – a court constituted by three Federal Court judges.
The Federal Circuit Court hears less complex disputes. There are also a range of tribunals created under Commonwealth law. For example, the Administrative Appeals Tribunal.
In the Federal and several State jurisdictions, legislation has been enacted to impose pre-litigation requirements on persons involved in civil disputes. While generally a failure to comply with pre-litigation requirements will not invalidate the proceedings, the court may take this into consideration when awarding costs associated with the proceedings. In the Federal Court, the parties to a dispute are required to file a “genuine steps statement”, which outlines the steps taken to attempt to resolve the dispute.
Proceedings are commenced by way of originating process. Once service has been effected and the defendant entered an appearance, the parties exchange pleadings (such as a statement of claim and defence), which serve to define the issues in dispute.
Once the parties have closed their pleadings, the parties will give discovery (or “disclosure”). Subpoenas may be used to obtain documents from third parties. In most jurisdictions, discovery and inspection takes place before the parties serve the evidence on which they intend to rely at trial.
Each party will then prepare its evidence for use at the final hearing, often utilising written witness statements or affidavits in place of oral evidence in chief – there is no deposition procedure in Australia. Where relevant, parties may also engage expert witnesses to give evidence concerning fields of specialised knowledge. Most Australian jurisdictions have Codes of Conduct with which expert witnesses must comply. Occasionally, the court will direct both parties’ experts to prepare a joint report, setting out their areas of agreement and disagreement.
Throughout the proceedings, the parties will attend court at regular intervals for case management. At directions hearings, orders will be made to govern the conduct of the matter.
Once all the parties’ evidence has been prepared and all the interlocutory disputes resolved, the case proceeds to a final hearing. Most civil cases are heard by a judge sitting alone, who will usually deliver a written judgment.
Australian courts have broad case management powers which are generally defined by the relevant court rules. Judges have a wide discretion to manage cases as they see fit to ensure that the real issues in dispute are identified and the matter is progressed to trial as soon as possible.
Australian court systems have, over time, introduced methods of court-instigated “management” of litigation. The reforms have involved shifting control of aspects of the conduct of litigation from lawyers to the courts, and a focus on case management orders designed to “… facilitate the just, quick and cheap resolution of the real issues in the dispute or proceedings” (described as the “overriding purpose rule”).
While parties may apply to the court for a wide range of interim orders, including orders for evidence, discovery, the issue of subpoenas and the referral of the matter to mediation, parties must have regard to the overriding purpose. In a 2013 per curium decision, the High Court of Australia made clear its view that it is the duty of the parties and their lawyers to assist the court in furthering the overriding purpose and “unduly technical and costly disputes about non-essential issues are clearly to be avoided”. Australian courts have wide discretion to impose sanctions (which may include adverse costs orders) on a party that has not complied with court orders or directions. Each court has its own case allocation system. The Federal Court has adopted the individual docket system where cases are allocated to judges and the case will ordinarily stay with the same judge from commencement until it is finalised. Cases requiring particular expertise are allocated to a judge who is a member of a specialist panel.
The Docket judge monitors the parties’ compliance with the court’s directions, deals with interlocutory issues and ensures that the proceedings progress according to timetable. The judge may direct the parties to participate in alternative dispute resolution processes, such as referrals to mediation.
In many State and Territory courts, cases are allocated to judges in particular divisions or lists according to the subject matter of the claim. For example, the Supreme Court of New South Wales has established a Commercial List to deal with disputes arising out of commercial transactions involving substantial amounts of money or issues of importance to trade and commerce. The list system provides litigants with judges with specialist expertise and access to a relatively high level of case management where needed.
The Federal Court and most state Supreme Courts have also instituted specific “Fast Track” or Expedition Lists. The principal object of these lists is to ensure that urgent matters can be heard and determined quickly.
The case management principles applied in the fast track lists are innovative. Their primary objective is to speed appropriate matters through the court lists and limit parties’ exposure to delay and wasted costs by adhering to strict time limits. Recent practices which have been adopted in appropriate cases include limited discovery, interlocutory applications without hearing (otherwise known as ‘on the papers’) and stop-watch hearings.
The Australian class action regime has become a key feature of the Australian legal landscape. Outside of North America, Australia is the place where a corporation is next most likely to find itself defending a class action.
The Australian class action regime comprises essentially identical rules in the federal court system and the courts of New South Wales and Victoria. This regime has some important features:
(a) There is no certification requirement – that is, no threshold requirement that the proceedings be judicially certified as appropriate to be brought as a class action. Once a class action has been commenced, it continues until finally resolved by judgment or settlement, unless the defendant can convince the court to terminate the proceedings on certain limited grounds.
(b) There is no requirement that common issues predominate over the individual issues.
(c) The Australian rules expressly allow for the determination of “sub-group” or even individual issues as part of a class action.
(d) A representative plaintiff can define the class members by description. This means that a person who meets the criteria set out in the class definition will be a class member unless they “opt out” of the proceedings. If a class member fails to opt out by the specified date, they are a class member in the proceedings. Thus, a person may be a class member and bound by the outcome of the proceedings without their knowledge or consent, simply on the basis that they fall within a class definition.
Despite a slow adoption of the procedure (which was first introduced in 1992), class actions are now firmly embedded in the Australian legal landscape. Developments in the class action landscape cannot be viewed without considering the developments in litigation funding in Australia (discussed further below). A key driver of the Australian class action industry has been the emergence of the litigation funding enterprises.
There are three arms of government in Australia – the legislature (responsible for debating and voting on new laws), the executive (responsible for enacting and upholding laws) and the judiciary (responsible for enforcing laws). The judiciary is independent of the other two arms and it is part of the judiciary’s role to decide upon whether the other two arms of government act within their powers. The separation of powers is mandated by Australia’s Constitution.
Courts in Australia apply the rules of natural justice. Natural justice has been defined as a condition governing the exercise of a statutory power. In adjudicating the exercise of a statutory power, a court will have regard to whether the procedure adopted in exercising that power was reasonable and fair – the concept of “procedural fairness”.
The elements of procedural fairness include providing prior and adequate notice of a decision, sufficient information and a reasonable opportunity or real chance to present a case to a tribunal or make representations to a decision-maker, and whether or how a hearing should be held.
See also the speech of Justice Alan Robertson (4 September 2015, see http://www.fedcourt.gov.au/publications/judges-speeches/justice-robertson/robertson-j-20150904).
In broad terms, the uniform Evidence Acts govern privilege issues on occasions when evidence is adduced at trial, while the common law governs questions concerning privilege which arise pre-trial.
At common law, there are three elements necessary to establish legal professional privilege over communications passing between a legal adviser and client:
- the communication must pass between the client and the client’s legal adviser;
- the communication must be made for the dominant purpose of enabling the client to obtain legal advice, or for the purpose of actual or contemplated litigation; and
- the communication must be confidential.
The uniform Evidence Acts create a privilege for confidential communications made or prepared for the dominant purpose of a lawyer providing:
(a) legal advice; or
(b) professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is, or may be, or was, or might have been, a party.
“Dominant” in this context means the ruling or prevailing purpose. The purpose or intended use for which a document is brought into existence will be a question of fact.
Legal professional privilege may be waived or lost where there is conduct inconsistent with the maintenance of the privilege.
A third stream of privilege exists in the form of “without prejudice privilege”. This involves communications between parties which are generally aimed at settlement. These communications cannot be put into evidence without the consent of parties in the event that negotiations are unsuccessful.
Disclosure, or ‘discovery’, is an interlocutory procedure whereby a party is able to obtain from an opponent the disclosure and subsequent production of documents which are relevant to a fact in issue in the proceedings. Disclosure must be made of the existence of all documents which the party has in its possession, custody or power.
General discovery involves discovery of all documents relevant to a fact in issue. While most jurisdictions permit an order for general discovery to be made, the courts and the parties may seek to limit the documents to be discovered to those falling within a particular category or class.
In the Federal Court, a party must not apply for an order for discovery unless it will facilitate the just resolution of the proceedings as quickly, inexpensively and efficiently as possible. In practice (depending on the complexity of the case), discovery may still be very large, expensive and time-consuming for all parties.
In most jurisdictions, where an order for discovery is made by the court, the parties are required to compile and exchange lists of discoverable documents. Documents that are not relevant to a fact in issue do not need to be disclosed. After the lists have been exchanged, the documents will be produced for inspection by the other party. In large and complex cases, discovery will often be exchanged on an electronic basis, in accordance with a pre-agreed protocol.
Documents obtained on discovery are not able to be used for any purpose other than the proceedings in which they were disclosed. The “Harman Undertaking” is the implied undertaking given to the court by any party obtaining documents on discovery (or by virtue of some other compulsory process) that it will not use such documents (or any other information gained from them) for any collateral purpose.
The court rules in each jurisdiction provide that a party to proceedings can apply for an order for discovery against a non-party. In the alternative, a party may choose to seek documents from a non-party by way of subpoena. While a party cannot seek general disclosure from a non-party through a subpoena, it can request documents that relate to narrowly defined categories – the issuing party can only legitimately ask for documents which are relevant to the issues in dispute in the proceedings. Whether a subpoena has legitimate forensic purpose turns on whether the documents would materially assist the issuing party in relation to the proceedings. If a subpoena is in terms which are too broad, it is liable to be set aside.
Commercial litigation often involves the disclosure of commercially sensitive documents. While confidentiality is not a basis for resisting production, parties will often enter into confidentiality and non-disclosure agreements to manage the exchange of such documents (for example, by agreeing to limit access to commercially sensitive documents to a party’s external legal counsel, or a tightly controlled group of individuals for the purposes of obtaining instructions).
If a case proceeds to hearing (at which stage, confidential documents may be put into evidence or otherwise disclosed in court) the parties can apply to the court for suppression and non-publication orders.
Australian courts have broad discretion over the costs of all proceedings. In effect, a court may make whatever order as to costs is justified in the circumstances; however, there are general court rules that govern the exercise of that power.
Ordinarily, costs follow the event, which means a successful litigant receives costs in the absence of special circumstances justifying some other order. A party is usually entitled to costs of any issue on which it succeeds, assessed on an ordinary basis. The onus is on the unsuccessful party to show the presence of “special circumstances” sufficient for the court to depart from the rule that costs follow the event.
There are two main classes of costs:
(a) those that arise by virtue of the retainer with the client and are governed by contract (“solicitor/client” costs); and
(b) those that arise by order of the court, which may either be on an ordinary basis (“party/party” costs) or an indemnity basis (“solicitor/client” costs). Indemnity costs are usually awarded against a party in circumstances where that party has engaged in unreasonable behaviour in connection with the conduct of the proceedings.
Class action proceedings are unique in many ways. One of the characteristics peculiar to class actions is that a successful respondent can only recover costs against the lead applicant, as group members are immune from having costs orders awarded against them. This immunity is underpinned by important policy considerations, including affordable access to justice. However, it means that respondents will often be forced to defend an action at considerable costs, with no ability to recover those costs if they are successful. That dynamic can impact many aspects of the proceedings, including settlement negotiations. It shifts the balance of power in favour of applicants.
An offer of settlement may entitle the party making the offer to obtain costs on an indemnity basis. The offer may not be the only issue that determines the court’s decision on this issue, but it is certainly a key factor.
There are two types of offers of settlement, namely:
(a) more “informal” offers – commonly referred to as Calderbank offers; and
(b) offers made in accordance with the court rules – referred to as offers of compromise.
A Calderbank letter refers to an informal offer of compromise made on a “without prejudice” basis between the parties, in accordance with the principles set out in Calderbank v Calderbank  WLR 586 and subsequent authorities.
Although such letters are “without prejudice”, the courts may have regard to them on the question of costs, and can order a party who rejected the offer of settlement to pay the successful party’s legal costs:
(a) on an ordinary basis, up to the time the offer was made; and
(b) on an indemnity basis, from the date the Calderbank offer was made (unless the party who rejected the offer can establish that it was reasonable to reject it).
The provisions regarding (formal) offers of compromise are found in the court rules. Although the court retains a discretion to decide whether or not to award costs, the rules provide that, subject to this discretion, the rejection of a more favourable offer made in compliance with the rules will entitle the offeror to a higher proportion of costs from the day the offer was made.
Security for costs orders are usually sought where the defendant alleges that the plaintiff will not hold enough funds to satisfy a costs order. The defendant asks the court to order the plaintiff to provide “security” to “protect” the defendant from this occurrence. The usual forms of security include:
(a) money paid into court;
(b) payment into an interest-earning bank account under the control of a third party or solicitor for the plaintiff, who has given an undertaking regarding the circumstances when the money will be released;
(c) a bank guarantee in favour of the court to be held by the court until further order; or
(d) a deed of guarantee pursuant to which another entity agrees to guarantee payment of the amount to satisfy the costs order.
The making or refusal of an order for security for costs is discretionary. The court must consider and weigh the totality of the circumstances.
Where an applicant or plaintiff fails to pay security in accordance with a court order, the court will order that the proceedings be stayed until the security is given.
Security for costs applications have had a chequered history in class action litigation. The Full Federal Court decision of Madgwick v Kelly (2013) 212 FCR 1 has made it clear that security for costs applications are not prohibited in representative proceedings.
Australian lawyers are currently prohibited from entering into contingency fee arrangements with their clients under which their professional fees are calculated by reference to the amount of any judgment or settlement received by the client. While there have been recent calls to remove the prohibition on contingency fees for lawyers, legislative reform in this area is yet to occur.
Importantly, the prohibition on contingency only applies to lawyers. Litigation funders are not so constrained, and have found a very profitable role in the Australian legal (and in particular, class action) market.
Australian lawyers are, however, permitted to enter into conditional costs agreements (where payment is conditional upon a successful outcome) which involve the payment of a premium or “uplift” fee calculated against legal fees (rather than by reference to any judgment or settlement amount). Such “no win, no fee” arrangements are common in Australian class actions.
Litigation funding agreements are commercial arrangements under which the funder agrees to pay the fees and out-of-pocket expenses of the lawyer representing the plaintiffs. The funder will also agree to satisfy any adverse costs orders. In return for accepting this risk, the funder will take a portion of any judgment or settlement, usually one-third to two-thirds, calculated after the costs of the proceedings have been reimbursed.
While initially a matter of some debate, the validity of litigation funding was established by the High Court in 2006 and subsequently reaffirmed in 2012.
The flourishing litigation funding industry that has emerged as a result of the light-touch legislative scheme in Australia has been active, particularly in class actions and in an insolvency context. Concerns have been raised as to whether the current regulatory arrangements can ensure the proper protection of consumers, management of conflicts, and proper financial supervision and capital adequacy. These concerns may drive regulatory reform in this area.
Despite the light-touch legislative scheme and High Court authority in favour of litigation funding, the growth of the industry has not occurred unchecked. For example, the Victorian Court of Appeal recently held that a particularly novel funding model amounted to an abuse of process, and stayed the proceedings as a result. Recent changes to the Federal Court Class Actions Practice Note requires visibility to be given to the Court, class members and the other parties to litigation funding agreements. Details of costs agreements must also be provided to the Court and class members.
A well-known feature of plaintiff firms in class actions in Australia is the “no win, no fee” retainer its solicitors often enter into with group members in a class action, who otherwise could not afford to fund the litigation. In the result of a win, the retainer agreement often contains provision for the payment of an “uplift” fee, in addition to professional costs. Subject to the court supervision inherent in the class action regime in Australia, this arrangement is permissible.
Usually in litigation in Australia, where a respondent does not expect to be able to recover costs from a plaintiff, it has an option to make an application for security for costs. The involvement of third-party funders with no pre-existing interest in the proceedings, but who stand to benefit substantially from any recovery from the proceedings, is a material consideration in the courts considering whether to grant security for costs. The courts proceed on the basis that funders who seek to benefit from litigation should bear the risks and burdens that the process entails.
Australian courts have a wide discretion in determining whether to grant injunctive relief. An injunction is a court order that restrains a person from performing a particular act (prohibitory injunction) or requires a person to perform a specified act (mandatory injunction). Injunctions may have an effect for a limited time, or permanently, and may be granted before proceedings are commenced, during a proceeding, or as final relief.
When seeking an interlocutory injunction, an applicant is required to prove that there is a serious question of law to be tried, and that the balance of convenience favours the granting of the injunction sought. The court will have regard to factors including whether damages would otherwise be an adequate remedy and whether the grant of an injunction would preserve the status quo. Typically, such applications are made on ex parte basis and without notice to the other party.
With very few exceptions, the court will refuse to grant an interlocutory injunction unless the plaintiff provides what has become known as “the usual undertaking as to damages”. In essence, this is an undertaking to compensate the defendant for any damage suffered as a consequence of the injunction, if it turns out that the injunction should not have been granted (because the plaintiff fails to prove its case at the final hearing).
Courts may also grant other interim orders including freezing orders (sometimes referred to as “Mareva orders”), and search orders (known as “Anton Piller orders”).
Orders for preliminary discovery are generally made where the applicant has made reasonable inquiries but still has insufficient information for the purpose of determining a prospective defendant’s liability or whereabouts for the purpose of commencing proceedings, or deciding whether or not to commence proceedings against the prospective defendant.
Successful plaintiffs have a range of mechanisms available for the enforcement of judgments.
The most common mechanism for enforcing a judgment against companies is issuing a statutory demand. If the judgment debtor company does not respond to a statutory demand within 21 days, the successful plaintiff can apply to the Supreme Court to have the company wound up on the basis that it is insolvent (unable to pay its debts).
Where the judgment debtor is an individual, there are a range of mechanisms including applying to have the judgment debtor declared bankrupt; garnishee orders to have money taken from the judgment debtor’s bank accounts or wages; and writs authorising the sheriff to seize and sell property belonging to the judgment debtor.
The enforcement of foreign judgments in Australia is governed by a statutory regime and common law principles. Enforcing a foreign judgment in Australia depends on where the judgment was issued and the type of judgment that was issued.
Australia is not a party to the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters 1971. However, Australia has reciprocal arrangements for the enforcement of judgments with a number of countries.
Australia has a statutory scheme in the Foreign Judgments Act 1991 (Cth) for the recognition and enforcement of judgments entered in foreign countries with which Australia has reciprocal arrangements. The Foreign Judgments Regulations 1992 (Cth) list the countries to which the statutory scheme applies.
The Foreign Judgments Act applies to enforceable money judgments that are obtained either on a final or interlocutory basis. Non-monetary judgments must be enforced at common law.
Where no international treaty or statutory arrangement operates, a foreign judgment may be enforced under common law principles. A judgment may be enforceable at common law provided the Australian court is satisfied the foreign court has exercised jurisdiction in the international sense, which includes in circumstances where:
(a) the defendant voluntarily submitted to the foreign court’s jurisdiction; or
(b) the defendant was ordinarily resident in the foreign jurisdiction, or present in the foreign jurisdiction at the time that the defendant was served with the originating process.
Provided that the relevant Australian court is satisfied that the jurisdiction of the foreign court to make the order can be shown, prima facie, the judgment will then be entitled to recognition at common law. Generally, the only objections that the defendant can raise against enforcement of the judgment are that:
(a) the judgment was obtained by fraud;
(b) the foreign court acted contrary to natural justice; or
(c) the foreign judgment is contrary to Australian public policy.
Australian courts may make two kinds of transnational freezing orders:
(a) orders which apply to foreign assets in aid of Australian judicial proceedings (sometimes called worldwide orders); and
(b) orders which apply to Australian assets in aid of foreign judicial proceedings.
In relation to the first category, Australian courts have jurisdiction to make freezing orders and ancillary orders against those over whom they have personal jurisdiction, even if they reside overseas and even in relation to overseas assets. An important long-arm service rule provides: “An application for a freezing order or an ancillary order may be served on a person who is outside Australia (whether or not the person is domiciled or resident in Australia) if any of the assets to which the order relates are within the jurisdiction of the court”. In order to prevent harassment of a respondent in multiple actions around the world, the Australian example form of freezing order contains several undertakings that must be given by the claimant to the court. These reflect “Dadourian guidelines” laid down by the English Court of Appeal.
In relation to the second category, the primary elements for obtaining such an order from an Australian court are:
(a) a foreign judgment or “good arguable case” in a foreign court;
(b) a sufficient prospect of registration or enforcement of the foreign judgment or prospective judgment in the Australian court;
(c) a danger that the foreign judgment will go unsatisfied; and
(d) satisfaction of discretionary matters (such as the effects on the respondent and third parties and the diligence and expedience of the applicant in bringing the application).
For example, in Davis v Turning Properties Pty Ltd (2005) 222 ALR 676, a freezing order was granted in support of a freezing order from a Bahamas court made over the defendant’s assets worldwide, including its assets in Australia. It was the first time that such an application had been made in Australia.
Australia is a party to the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters 1965, which governs the international service of process on a defendant who resides in Australia.
The primary method for taking evidence in Australia for a foreign proceeding is through the Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters (Hague Evidence Convention).
Australian authorities will not accept any Letters of Request that require a person to state what documents relevant to the proceedings are or have been in their possession, or produce any documents, other than particular documents specified in the Letter of Request which the requested court believes to be in their possession. Given the strict statutory regime regarding pre-trial discovery in Australia, any veiled request for pre-trial discovery that circumvents that process is likely to be rejected.
Australian law also permits the taking of evidence without compulsion and the giving of evidence by video link testimony, provided it is otherwise consistent with evidentiary requirements of the relevant court.
Australian courts will generally respect an exclusive jurisdiction clause if it is consistent with the construction of the relevant contract. However, an exclusive jurisdiction clause does not necessarily prevent an Australian court from exercising jurisdiction where there is a strong case for the court to do so, namely, where the party would be deprived of a legitimate juridical advantage available in an Australian court.
Australia offers an established and hospitable environment for international commercial arbitration, with highly experienced legal practitioners and arbitrators.
Australia has been a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) since 1975, is a signatory to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the Washington Convention) and was one of the first countries to adopt the UNCITRAL Model Law on International Commercial Arbitration (the Model Law) in 1989.
International arbitration is governed by Commonwealth legislation: the International Arbitration Act 1974 (Cth) (IAA). The IAA incorporates the UNCITRAL Model Law. Unless parties have excluded the Model Law by an agreement in writing, the Model Law will apply to international arbitrations seated in Australia. If parties exclude the Model Law, the arbitration will still be governed by the IAA as the curial law. In addition to giving force of law in Australia to the Model Law, the IAA implements the New York Convention and the Washington Convention.
In 2010, amendments were made to the IAA to enhance the efficacy and cost-effectiveness of international commercial arbitration. For example, one amendment specified that Australian courts have no residual discretion to refuse enforcement of an arbitral award on any grounds other than those provided in ss8(5) and 8(7) (which reproduce the grounds embodied in Art 5 of the New York Convention).
While Australian courts have in the past taken a rather conservative approach to the enforcement of foreign arbitral awards, they are developing a strong track record of enforcement. International arbitral awards are now almost universally enforceable in Australia without the need to reopen the substance of the dispute in court.
In 2013, the Australian Commercial Disputes Centre (ACDC) and the Australian International Disputes Centre (AIDC) became the Australian Disputes Centre (ADC), aiming to provide an alternative dispute resolution (ADR) centre of excellence that is the “first choice for businesses, government and the community to resolve or learn how to resolve conflicts and disputes”. The ADC has a history of co-operation with leading ADR providers including the Australian Centre for International Commercial Arbitration (ACICA) and the Chartered Institute of Arbitrators (Australia) Limited (CIArb).
ACICA is the sole default appointing authority competent to perform the arbitrator appointment functions under the IAA. ACICA has a standard set of arbitration rules (including an expedited option) which are to a large degree based on the UNCITRAL Arbitration Rules 1985. However, these Australian rules are not compulsory and parties are free to (and commonly do) use foreign procedural rules.
In 2010, a scheme of uniform Commercial Arbitration Acts based upon the UNCITRAL Model Law was also introduced to apply to domestic arbitration. The new scheme was adopted to minimise court intervention and promote finality in arbitral awards, while simultaneously endeavouring to enhance the arbitration process.
Alternative dispute resolution mechanisms, including arbitration and mediation, are increasingly popular in commercial matters in Australia. Indeed, some of the Australian courts are now directing parties to use specific alternative dispute resolution mechanisms to attempt to resolve or narrow issues in dispute. In addition, there are a number of tribunals in each jurisdiction which have been established to deal with disputes in a specific area and provide affordable alternative dispute resolution mechanisms.
There has been an increasing focus by the judiciary on the costs of litigation, which in turn has promoted a greater use of alternative dispute resolution in Australia. In the Federal Court, the parties to a dispute are required to file a “genuine steps statement”, which outlines the steps taken to constitute a sincere and genuine attempt to resolve the dispute. In the Commercial List of the Supreme Court of New South Wales, it is common for the court to order that the parties mediate before the matter is set down for hearing.
Many contractual agreements now contain alternative dispute resolution clauses which require the parties to attempt to resolve the dispute in a specific way, prior to the commencement of proceedings. In Australia, the court may order that the proceedings be stayed until such time as the process referred to in the dispute resolution clause is completed. A dispute resolution clause may, however, be deemed to be unenforceable where the clause is found to be so vague as to be uncertain in terms of setting out the method by which to resolve the dispute.
An arbitration award is binding on the parties and will be enforced by the Australian courts. An application for enforcement can be made to the courts in Australia. The relevant legislation applicable will depend on whether it is classified as domestic arbitration or international arbitration.
In practice, the arbitrators of choice for major commercial arbitrations in Australia are usually retired judges of the High, Federal or Supreme Courts. One consequence of this is that the conduct of the arbitration can sometimes involve many of the formalities of a legal proceeding.
There are no laws or rules that govern the conduct of alternative dispute resolution mechanisms such as mediation or expert determination. Settlement agreements reached at mediation do not require court sanction and will be binding and enforceable upon the parties if a valid contract has been formed. Whether an expert determination is binding and enforceable will depend on the process adopted by the parties and the terms of the particular clause.
The major dispute resolution institutions in Australia are ACICA and the Australian Disputes Centre, which provides a range of training, professional development, case management and consultancy services in relation to alternative dispute resolution.
Australia has important Federal regulatory authorities, which have their own prescribed areas of responsibility, including:
- the Australian Competition and Consumer Commission (ACCC) is the Federal regulatory authority responsible for ensuring individuals and businesses comply with Australian competition, fair trading, and consumer protection laws;
- the Australian Securities and Investments Commission (ASIC)oversees Australian corporations and financial markets. In particular, ASIC regulates the provision of consumer credit, financial products and financial services;
- the Australian Prudential Regulation Authority (APRA) is the prudential regulator of the Australian financial services industry, which is responsible for regulating the conduct of banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, private health insurance, friendly societies, and most of the superannuation industry; and
- the Therapeutic Goods Administration (TGA) is Australia’s regulatory agency for therapeutic goods including medicines, medical devices, blood and blood products.
Australia also has a process whereby the Governor General of Australia can establish a Royal Commission for the purpose of investigating a reporting on certain matters. The Royal Commissions Act 1902 (Cth) grants the Royal Commission considerable powers to, for example, compel the attendance of persons to give evidence, or produce documents or information. On 14 December 2017, a Royal Commission was established to inquire into and report on misconduct in the banking, superannuation and financial services industry.