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TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the Federal Court of Australia [2013] HCA 5 (13 March 2013)
Last Updated: 13 March 2013
HIGH COURT OF AUSTRALIA
FRENCH CJ,
HAYNE, CRENNAN, KIEFEL, BELL AND GAGELER JJ
TCL AIR CONDITIONER (ZHONGSHAN) CO LTD PLAINTIFF
AND
THE JUDGES OF THE FEDERAL COURT OF
AUSTRALIA & ANOR DEFENDANTS
TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the
Federal Court of Australia
[2013] HCA 5
13 March
2013
S178/2012
ORDER
Application dismissed with costs.
Representation
B W Walker SC with N L Sharp for the plaintiff (instructed by Norton Rose
Australia)
Submitting appearance for the first defendant
A J Myers QC with D L Bailey for the second defendant (instructed by Browne
& Co Solicitors and Consultants)
Interveners
J T Gleeson SC, Acting Solicitor-General of the Commonwealth with
M J O'Meara and D M Forrester for the Attorney-General of the
Commonwealth,
intervening (instructed by Australian Government Solicitor)
W Sofronoff QC, Solicitor-General of the State of Queensland with
G J D del Villar for the Attorney-General of the State of
Queensland,
intervening (instructed by Crown Law (Qld))
M G Hinton QC, Solicitor-General for the State of South Australia with
D F O'Leary for the Attorney-General for the State of South
Australia,
intervening (instructed by Crown Solicitor (SA))
S G E McLeish SC, Solicitor-General for the State of Victoria with
G A Hill for the Attorney-General for the State of Victoria,
intervening
(instructed by Victorian Government Solicitor)
G R Donaldson SC, Solicitor-General for the State of Western Australia with M
J Paterson for the Attorney-General for the State of
Western Australia,
intervening (instructed by State Solicitor (WA))
J G Renwick SC with S Robertson for the Attorney-General for the State of New
South Wales, intervening (instructed by Crown Solicitor
(NSW))
A S Bell SC with J A Redwood for the Australian Centre for International
Commercial Arbitration Limited, the Institute of Arbitrators
and Mediators
Australia Limited and the Chartered Institute of Arbitrators (Australia)
Limited, as amici curiae (instructed by King
& Wood Mallesons)
Notice: This copy of the Court's Reasons for Judgment
is subject to formal revision prior to publication in the Commonwealth Law
Reports.
CATCHWORDS
TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the Federal Court
of Australia
Constitutional law – Judicial power of Commonwealth –
Constitution, Ch III – Section 16(1) of International
Arbitration Act 1974 (Cth) provided that UNCITRAL Model Law on International
Commercial Arbitration ("Model Law") has "force of law in Australia" –
Article 35 of Model Law provided that arbitral award shall be enforced upon
application to "competent court" – Where Federal
Court of Australia had no
power to refuse to enforce arbitral award for error of law on face of award
– Whether institutional
integrity of Federal Court impermissibly impaired
– Whether judicial power of Commonwealth vested in arbitral tribunals.
Words and phrases – "arbitral award", "institutional integrity",
"judicial power".
Constitution, Ch III.
International Arbitration Act 1974
(Cth), Pt III, ss 16(1), 19, Sched 2 Arts 5, 8, 28, 34, 35,
36.
FRENCH CJ AND GAGELER J.
Introduction
- The
International Arbitration Act 1974 (Cth) ("the IAA") gives the force of
law in Australia to the UNCITRAL Model Law on International Commercial
Arbitration adopted in
1985 and amended in 2006 ("the UNCITRAL Model Law") by
the United Nations Commission on International Trade Law
("UNCITRAL")[1].
In these reasons, "the Model Law" refers to the UNCITRAL Model Law as given the
force of law in Australia.
- An
application to enforce an arbitral award under Art 35 of the Model Law is a
"matter ... arising under [a law] made by the [Commonwealth]
Parliament" within
s 76(ii) of the Constitution. That is because rights in issue in the
application depend on Art 35 of the Model Law for their recognition and
enforcement and
because the Model Law is a law made by the Commonwealth
Parliament[2].
The Federal Court of Australia has original jurisdiction in a matter arising
under a law made by the Commonwealth Parliament, defined
under s 77(i) of
the Constitution by s 39B(1A)(c) of the Judiciary Act 1903 (Cth)
("the Judiciary Act"). The Federal Court is therefore a "competent court" to
which an application can be made under Art 35 of the Model Law. In an
application to enforce an arbitral award under Art 35 of the Model Law, the
Federal Court has power under s 23 of the Federal Court of Australia
Act 1976 (Cth) ("the Federal Court Act") to make such orders as are
"appropriate" in relation to the matter in which it has jurisdiction under
s 39B(1A)(c) of the Judiciary Act. These reasons will explain that
appropriate orders may include an order that the arbitral award be enforced as
if the arbitral
award were a judgment or order of the Federal Court.
- The
plaintiff, in this application in the original jurisdiction of the High Court
under s 75(v) of the Constitution for writs of prohibition and certiorari
directed to the judges of the Federal Court, argues that the jurisdiction
conferred on the
Federal Court in an application under Art 35 of the Model
Law is incompatible with Ch III of the Constitution. The facts and
procedural history are set out in the reasons for judgment of Hayne, Crennan,
Kiefel and Bell JJ.
- The
plaintiff's argument, as refined in oral submissions, reduces to the proposition
that the inability of the Federal Court under
Arts 35 and 36 of the Model
Law to refuse to enforce an arbitral award on the ground of error of law
appearing on the face of the
award either: undermines the institutional
integrity of the Federal Court as a court exercising the judicial power of the
Commonwealth,
by requiring the Federal Court knowingly to perpetrate legal
error; or impermissibly confers the judicial power of the Commonwealth
on the
arbitral tribunal that made the award, by giving the arbitral tribunal the last
word on the law applied in deciding the dispute
submitted to arbitration. The
undermining of the institutional integrity of the Federal Court is compounded,
the plaintiff argues,
because the arbitral award that is to be enforced by the
Federal Court, in spite of any legal error that may appear on its face,
is one
that Art 28 of the Model Law, or an implied term of the arbitration
agreement, requires to be correct in law.
- The
argument should be rejected. Chapter III of the Constitution does not
operate to limit the implementation of the UNCITRAL Model Law in Australia in
the manner propounded by the plaintiff. Article
35 of the Model Law neither
undermines the institutional integrity of the Federal Court nor confers judicial
power on an arbitral
tribunal. Neither Art 28 of the Model Law nor an
implied term of an arbitration agreement requires an arbitral award to be
correct
in law.
Model Law
- The
IAA requires that regard be had to its objects in the interpretation of the
Model Law[3].
The relevant object is to give effect to the UNCITRAL Model
Law[4]. The IAA
also specifically facilitates reference in the interpretation of the Model Law
to documents of UNCITRAL and of the UNCITRAL
working group for the preparation
of the UNCITRAL Model
Law[5].
- The
Model Law itself requires in its interpretation that regard be had "to its
international origin and to the need to promote uniformity
in its application
and the observance of good
faith"[6]. The
origin of some of its key provisions, including Arts 35 and 36, may be
traced to provisions of the Convention on the Recognition
and Enforcement of
Foreign Arbitral Awards adopted by the United Nations Conference on
International Commercial Arbitration in 1958
("the New York Convention"). The
New York Convention is adhered to by over 140 Contracting States. The New
York Convention is implemented
in Australia by Pt II of the IAA, which
applies to the exclusion of Arts 35 and 36 of the Model Law where both
would otherwise apply in relation to an
award[7]. The
Model Law applies without regard to the system of law that governs an
arbitration agreement. Articles 35 and 36 apply without
regard to the
place of arbitration or to the place of making an arbitral award.
- Those
considerations of international origin and international application make
imperative that the Model Law be construed without
any assumptions that it
embodies common law concepts or that it will apply only to arbitral awards or
arbitration agreements that
are governed by common law principles. The first of
those considerations makes equally imperative that so much of the text of the
Model Law as has its origin in the New York Convention be construed in the
context, and in the light of the object and purpose, of
the New York
Convention[8].
- In
common with the New York Convention, the Model Law nevertheless proceeds on a
conception of the nature of an arbitral award, and
a conception of the
relationship of an arbitral award to an arbitration agreement, identical in
substance to the conception that
has for centuries underpinned the understanding
of an arbitral award at common law as "a satisfaction pursuant to [the parties']
prior accord of the causes of action awarded upon" and as thereby "precluding
recourse to the original rights the determination of
which had been referred to
arbitration"[9].
That conception, in short, is that "the foundation of arbitration is the
determination of the parties' rights by the agreed arbitrators
pursuant to the
authority given to them by the
parties"[10].
The English law of arbitration, which has combined statute law with common law
since the seventeenth century, has at "every stage"
of its development
"approached the relationships between the parties and the arbitrator, and
between the parties and each other,
unequivocally in terms of private
law"[11]. The
same approach has been evident in the historical development of the statute law
and the common law governing arbitration in
Australia[12].
That is so notwithstanding the truth of the observation that performance of the
arbitral function is not "purely a private matter
of contract, in which the
parties have given up their rights to engage judicial power" and is not "wholly
divorced from the exercise
of public
authority"[13].
- The
conception is captured, and its international commercial significance is
explained, in the following
observation[14]:
"The
New York Convention and the [UNCITRAL] 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 [UNCITRAL] Model Law."
- The
analytical commentary published by the UNCITRAL Secretariat to accompany the
1985 draft of the UNCITRAL Model Law ("the UNCITRAL
analytical commentary")
spelt out that the UNCITRAL Model Law was "designed for consensual arbitration",
which the UNCITRAL analytical
commentary explained to mean "arbitration based on
voluntary agreement of the
parties"[15].
That design is reflected in the definition in the Model Law of an arbitration
agreement as "an agreement by the parties to submit
to arbitration all or
certain disputes ... between them in respect of a defined legal
relationship"[16]
and in the freedom that the Model Law gives to the parties both to determine the
composition of the arbitral
tribunal[17]
and to determine the procedure to be followed by the arbitral
tribunal[18].
The design is not inconsistent with default provisions within the Model Law
which fill gaps in the agreement between the
parties[19],
and which provide for court assistance to facilitate the process of
arbitration[20].
Nor is the design inconsistent with provisions of the Model Law incapable of
derogation by the agreement of the parties, directed
primarily to ensuring
equality and fairness in the arbitral
process[21] and
to the form and correction of an arbitral
award[22].
- The
design is followed through in Art 36 of the Model Law in providing, in
common with Art V of the New York Convention, for recognition
or
enforcement of an arbitral award to be refused at the request of a party against
whom the arbitral award is invoked, if and to
the extent that the party can
furnish proof to the competent court of one or more specified grounds of
refusal. Those grounds include:
that the arbitration agreement is not valid
under its governing
law[23]; that
the award deals with a dispute not contemplated by or not falling within the
terms of the submission to arbitration or contains
decisions on matters beyond
the scope of the submission to
arbitration[24];
and that the composition of the arbitral tribunal or the arbitral procedure was
not in accordance with the agreement of the
parties[25].
Whether one or more of those grounds is established is an objective question to
be determined by the competent court on the evidence
and submissions before it,
unaffected by the competence of an arbitral tribunal to rule on its own
jurisdiction under Art 16 of the
Model
Law[26].
Arbitration in this way remains "the manifestation of parties' choice to submit
present or future issues between them to arbitration"
in that, without "specific
authority" to do so, arbitrators "cannot by their own decision ... create or
extend the authority conferred
upon
them"[27].
- The
requirement of Art 28 of the Model Law, that the arbitral tribunal "decide
the dispute in accordance with such rules of law as
are chosen by the parties as
applicable to the substance of the dispute", is a further manifestation of the
same design. Article
28 was described in the UNCITRAL analytical
commentary as a "recognition or guarantee of the parties'
autonomy"[28]
and as allowing the parties to an arbitration agreement "to designate as
applicable to their case rules of more than one legal system,
including rules of
law which have been elaborated on the international
level"[29].
Its dual significance was elaborated in an explanatory note by the UNCITRAL
Secretariat on the UNCITRAL Model Law as amended in
2006 ("the UNCITRAL
Explanatory Note") as
follows[30]:
"It
grants the parties the freedom to choose the applicable substantive law, which
is important where the national law does not clearly
or fully recognize that
right. In addition, by referring to the choice of 'rules of law' instead of
'law', the Model Law broadens
the range of options available to the parties as
regards the designation of the law applicable to the substance of the dispute.
For example, parties may agree on rules of law that have been elaborated by an
international forum but have not yet been incorporated
into any national legal
system. Parties could also choose directly an instrument such as the United
Nations Convention on Contracts
for the International Sale of Goods as the body
of substantive law governing the arbitration, without having to refer to the
national
law of any State party to that Convention."
- The
working papers of the UNCITRAL working group for the preparation of the UNCITRAL
Model Law contain nothing to suggest that the
requirement of Art 28 for an
arbitral tribunal to decide "in accordance with" the substantive rules of law
chosen by the parties
was intended to encompass a requirement that the arbitral
tribunal apply those laws in a manner that a competent court would determine
to
be correct[31].
The working papers rather reveal that Art 28 was understood to adopt the
language of Art 42 of the Convention on the Settlement
of Investment
Disputes between States and Nationals of Other States ("the ICSID
Convention")[32].
The understanding of Art 42 of the ICSID Convention that prevailed in 1985
(and that has not since been doubted) is that a mis-application
(as distinct
from a non-application) of the rules of law chosen by the parties does not
amount to an excess of power leading to nullification
of an arbitral award
governed by the ICSID
Convention[33].
- The
plaintiff's argument that Art 28 limits the authority of the arbitral
tribunal to a correct application of the chosen rules of
law therefore finds no
foothold in the text of Art 28, runs counter to the autonomy of the parties
to an arbitration agreement which
infuses the Model Law, and of which
Art 28 is a particular guarantee, and is opposed by the drafting history of
Art 28. Article
28 is directed to the rules of law to be applied, not
the correctness of their application.
- The
plaintiff's alternative argument, that it is an implied term of every
arbitration agreement governed by Australian law that the
authority of the
arbitral tribunal is limited to a correct application of law, should also be
rejected. That argument is answered
by the combination of the autonomy of the
parties guaranteed by Art 28 of the Model Law and the absence from
Art 36 of any ground
to refuse recognition or enforcement of an arbitral
award under Art 35 for error of law. The one authority on which the
plaintiff
relies for that
argument[34]
concerned an arbitration agreement entered into against a statutory background
which allowed the resultant arbitral award to be set
aside for error of law
appearing on the face of the award under a common law rule. It will be
necessary to return to that common
law rule in addressing the relationship
between arbitration and judicial power. It is sufficient to note at this point
that Art
5 of the Model Law displaces the rule. The consequence is that no
term limiting an arbitral tribunal to a correct application of
law is to be
implied by force of Australian law in an arbitration agreement within the scope
of the Model Law. Nor is such a term
"necessary for the reasonable or effective
operation of [an agreement] of that nature" so as to be implied on the basis of
the presumed
or imputed intention of the
parties[35].
The presumed or imputed intention is ordinarily to the contrary: parties who
enter into an arbitration agreement for commercial
reasons ordinarily intend all
aspects of the defined relationship in respect of which they have agreed to
submit disputes to arbitration
to be determined by the same arbitral
tribunal[36].
- An
arbitral award that Art 35 of the Model Law requires to be recognised as
binding and enforced is the embodiment of a decision
on a dispute –
whether of fact or law or both – voluntarily submitted by the parties to
an arbitration agreement to an
agreed arbitral tribunal applying agreed
procedures. The arbitral award is recognised as binding and is enforced if and
to the extent
the decision is made within the scope of authority conferred on
the arbitral tribunal by the parties. It is conceivable that parties
might
choose in an arbitration agreement to limit the submission to arbitration so as
to exclude a question of
law[37].
However, it is neither the effect of Art 28 of the Model Law nor an implied
term of an arbitration agreement governed by Australian
law that the arbitral
tribunal must reach a correct conclusion on a question of law within the scope
of the submission to arbitration.
- The
statement in Art 35 of the Model Law that an arbitral award "shall be
recognized as binding and ... shall be enforced" subject
to the provisions of
Arts 35 and 36 is modelled closely on the obligation under Art III of
the New York Convention that "[e]ach Contracting
State shall recognize arbitral
awards as binding and enforce them" under conditions laid down in subsequent
articles of the New York
Convention. The UNCITRAL analytical commentary
explained that close modelling to be "the result of extensive deliberations on
basic
questions of policy" to which the prevailing answer was that the
provisions for recognition and enforcement were to operate "in full
harmony
with" the New York
Convention[38].
- The
UNCITRAL analytical commentary pointed out that Art 35 was drafted to bring
out a "useful distinction between recognition and
enforcement in that it takes
into account that recognition not only constitutes a necessary condition for
enforcement but also may
be standing alone", an example of which is "where an
award is relied on in other
proceedings"[39].
The UNCITRAL analytical commentary also pointed out a related temporal
distinction between recognition and enforcement: that "an
award shall be
recognized as binding ... means, although this is not expressly stated, binding
between the parties and from the date
of the award"; whereas enforcement is to
occur only "upon application in writing to the 'competent
court'"[40].
- The
working papers of the UNCITRAL working group for the preparation of the UNCITRAL
Model Law are also useful in clarifying the
implicit ambit of the statement in
Art 35 of the Model Law that an arbitral award "shall be recognized as
binding". The working
group considered two specific suggestions that
Art 35 be amended. One was to add "between the parties" after "binding" so
as to
"clarify that a decision which is founded on an arbitration agreement
between two (or more) parties cannot bind other persons" and
"also help to
convey the idea of res judicata, without using that term which is not
known in all legal systems although the concept seems to be commonly
shared"[41].
The other was "to indicate the exact point of time from which an award shall be
recognized as
binding"[42].
The working group rejected both suggestions on the basis that "there was no need
for express
statements"[43].
- Australia's
obligation as a Contracting State under Art III of the New York Convention
to "recognize arbitral awards as binding and
enforce them" is given effect in
Pt II of the IAA by s 8. Section 8(1) provides that,
subject to Pt II, "a foreign award is binding by virtue of this Act for all
purposes on the parties to the arbitration agreement in pursuance of which
it
was made". Section 8(3) provides that, subject to Pt II, "a foreign
award may be enforced in the Federal Court of Australia as if the award were a
judgment or order of that court".
- The
manner in which s 8 of the IAA implements Art III of the New
York Convention assists in the translation and application of Art 35 of the
Model Law. That is particularly
so having regard to the intention, revealed by
the UNCITRAL analytical commentary, that the UNCITRAL Model Law should operate
in
harmony with the New York Convention and that the operation of Art 35
with respect to recognition of an arbitral award should be
distinct from the
operation of Art 35 with respect to enforcement of an arbitral award.
- First,
s 8(1) of the IAA demonstrates that the requirement of Art 35 of the
Model Law that an arbitral award "shall be recognized as binding" is
appropriately and succinctly translated as part of the law of Australia to mean
that an arbitral award is binding by force of the
Model Law on the
parties to the arbitration agreement for all purposes, on and from the date the
arbitral award is made. The purposes for which
an arbitral award is recognised
as binding include reliance on the award in legal proceedings in ways that do
not involve enforcement,
such as founding a plea of former
recovery[44] or
as giving rise to a res judicata or issue
estoppel[45].
- Second,
the terms of s 8(2) of the IAA are indicative of a kind of order that may
be appropriate for the Federal Court to make under s 23 of the Federal
Court Act in relation to the matter in which it has jurisdiction under
s 39B(1A)(c) of the Judiciary Act on an application under Art 35 of
the Model Law for the enforcement of an arbitral award. An appropriate order,
although not necessarily
the only appropriate order, for the Federal Court to
make under s 23 of the Federal Court Act would be an order that the
arbitral award be enforced as if the arbitral award were a judgment or order of
the Federal Court.
- Section 54(1)
of the Federal Court Act provides that the Federal Court "may, upon application
by a party to an award made in an arbitration ... in relation to a matter
in
which the Court has original jurisdiction, make an order in the terms of the
award". The enforcement of an arbitral award under
Art 35 of the Model Law
might in a particular case fall within the scope of that power but will not in
every case fall within the
scope of that
power[46].
That is because the power conferred on the Federal Court by s 54(1) of the
Federal Court Act, which is modelled on the power conferred on the High Court by
s 33A of the Judiciary Act, arises only where the arbitration giving rise
to the award is in relation to a matter in which the Federal Court has original
jurisdiction:
that is, where the Federal Court would have jurisdiction
independently of the arbitral award to determine the dispute submitted
to
arbitration[47].
Chapter III and arbitration
- Chapter
III of the Constitution has been understood since 1918 to prevent the conferral
by the Commonwealth Parliament of the judicial power of the Commonwealth
other
than on a court referred to in s 71 of the
Constitution[48],
and since 1956 to prevent the conferral by the Commonwealth Parliament on a
court referred to in s 71 of the Constitution of any function that is not
within or incidental to the judicial power of the
Commonwealth[49].
- The
judicial power of the Commonwealth has defied precise definition. One dimension
concerns the nature of the function conferred:
involving the determination of a
question of legal right or legal obligation by the application of law as
ascertained to facts as
found "so that an exercise of the power creates a new
charter by reference to which that question is in future to be decided as
between
those persons or classes of
persons"[50].
Another dimension concerns the process by which the function is exercised:
involving an open and public enquiry (unless the subject-matter
necessitates an
exception)[51],
and observance of the rules of procedural
fairness[52].
Yet another dimension concerns the overriding necessity for the function always
to be compatible with the essential character of
a court as an institution that
is, and is seen to be, both impartial between the parties and independent of the
parties and of other
branches of government in the exercise of the
decision-making functions conferred on
it[53].
- Underlying
each of those dimensions of the judicial power of the Commonwealth is its
fundamental character as a sovereign or governmental
power exercisable, on
application, independently of the consent of those whose legal rights or legal
obligations are determined by
its exercise. That fundamental character of the
judicial power of the Commonwealth is implicit in the frequently cited
description
of judicial power as "the power which every sovereign authority must
of necessity have to decide controversies between its subjects,
or between
itself and its subjects", the exercise of which "does not begin until some
tribunal which has power to give a binding
and authoritative decision (whether
subject to appeal or not) is called upon to take
action"[54].
Judicial power "is conferred and exercised by law and coercively", "its
decisions are made against the will of at least one side,
and are enforced upon
that side in invitum", and it "is not invoked by mutual agreement, but
exists to be resorted to by any party considering himself
aggrieved"[55].
- Therein
is the essential distinction between the judicial power of the Commonwealth and
arbitral authority, of the kind governed
by the Model Law, based on the
voluntary agreement of the parties. The distinction has been articulated in the
following
terms[56]:
"Where
parties agree to submit their differences for decision by a third party, the
decision maker does not exercise judicial power,
but a power of private
arbitration. Of its nature, judicial power is a power that is exercised
independently of the consent of the
person against whom the proceedings are
brought and results in a judgment or order that is binding of its own force. In
the case
of private arbitration, however, the arbitrator's powers depend on the
agreement of the parties, usually embodied in a contract,
and the arbitrator's
award is not binding of its own force. Rather, its effect, if any, depends on
the law which operates with respect
to it."
The context of that articulation puts its reference to "private arbitration"
in appropriate perspective. The context was that of
a challenge to the capacity
of a statutory body consistently with Ch III of the Constitution to
exercise a statutory function to settle a dispute where so empowered by an
agreement entered into as a result of statutory processes.
The reference to
"private arbitration" was not to a private function, as distinct from a public
function, but rather to a function
the existence and scope of which is founded
on agreement as distinct from coercion.
- The
application of that distinction requires differentiation between recognition of
an arbitral award as binding on the parties by
force of Art 35 of the Model
Law and enforcement of an arbitral award by a competent court, on application,
under Art 35 of the Model
Law.
- The
making of an arbitral award, which is recognised as binding on the parties from
the time it is made by force of Art 35 of the
Model Law, is not an exercise
of the judicial power of the Commonwealth. That is because the existence and
scope of the authority
to make the arbitral award is founded on the agreement of
the parties in an arbitration agreement. The exercise of that authority
by an
arbitral tribunal to determine the dispute submitted to arbitration for that
reason lacks the essential foundation for the
existence of judicial power.
- The
enforcement of an arbitral award by a competent court, on application, under
Art 35 of the Model Law is an exercise of the judicial
power of the
Commonwealth. That is because the determination of an application under
Art 35 is always to occur in accordance with
judicial process and
necessarily involves a determination of questions of legal right or legal
obligation at least as to the existence
of, and parties to, an arbitral award.
Where a request is made under Art 36, determination of an application under
Art 35 must also
involve a question of whether the party making the request
has furnished proof of a ground for refusal. An order of the competent
court
determining the application on the merits then operates of its own force as a
court order to create a new charter by reference
to which those questions are in
future to be decided as between the parties to the application. That is so for
an order dismissing
the application just as it is for one ordering that the
arbitral award be enforced.
- Neither
of those conclusions is affected where an arbitral award within the scope of a
submission to arbitration contains an error
of law on its face. The arbitral
award, as recognised under Art 35 of the Model Law, remains one founded on the
agreement of the
parties in an arbitration agreement. A proceeding for the
enforcement of the arbitral award, on application under Art 35 of the
Model
Law, remains one that involves a determination of questions of legal right or
legal obligation resulting in an order that then
operates of its own force.
Except to the extent that it might, in a particular case, bear on proof of a
particular ground for refusing
enforcement under Art 36, an error of law on
the part of the arbitral tribunal in making the award is irrelevant to the
question
of legal right or legal obligation to be determined under Art 35
of the Model Law.
- The
inability of the Federal Court, as a competent court under Arts 35 and 36
of the Model Law, to refuse to enforce an arbitral
award on the ground of error
of law appearing on the face of the award does nothing to undermine the
institutional integrity of the
Federal Court. Enforcement of an arbitral award
is enforcement of the binding result of the agreement of the parties to submit
their
dispute to arbitration, not enforcement of any disputed right submitted to
arbitration. The making of an appropriate order for enforcement
of an arbitral
award does not signify the Federal Court's endorsement of the legal content of
the award any more than it signifies
its endorsement of the factual content of
the award.
- To
the extent that the argument of the plaintiff seeks to draw support from the
existence at common law of a rule that an arbitral
award could be set aside for
error of law on the face of the award, the argument overstates the scope for
historical considerations
to deprive functions conferred on a court by modern
legislation of the character of judicial
power[57]. The
argument also takes too undiscriminating an approach to the common law. Not
every common law rule reflected well on common
law courts. Very few common law
rules were the manifestation of some fundamental characteristic of judicial
power.
- The
common law rule that an arbitral award could be set aside for error of law on
the face of the award had no application where
the parties to an arbitration
agreement specifically agreed to submit a question of law for the determination
of an arbitral tribunal:
the arbitral award determining such a question of law
bound the parties and was enforceable by action in a common law court whether
or
not an error of law appeared on the face of the arbitral
award[58]. It
is therefore impossible to treat the common law rule as the manifestation of
some general principle that a common law court
would not recognise or enforce a
legally erroneous arbitral award, much less as a manifestation of some
fundamental characteristic
of the power exercised by a common law court.
- Common
law courts asserted no common law jurisdiction to supervise the conduct of
arbitrators[59].
The general common law principle, to which the particular common law rule was an
exception, was that "where a cause or matters in
difference [were] referred to
an arbitrator, whether a lawyer or a layman, [the arbitrator was] constituted
the sole and final judge
of all questions both of law and of
fact"[60].
- The
common law rule, moreover, was obscure in
origin[61] and
"operated haphazardly, because the ability of the court to exercise it depended
upon whether or not the arbitrator had chosen
to set out in the award itself the
legal reasoning on which he had based
it"[62]. It
had come to be regarded by common law courts themselves as a matter of regret by
the middle of the nineteenth
century[63], by
which time it appears to have been rejected in the United
States[64]. It
was described by the Privy Council in an appeal from the Supreme Court of New
South Wales in 1979 as "an accident of legal
history"[65].
- The
common law rule that an arbitral award could be set aside for error of law on
the face of the award therefore formed no part
of, and bore no meaningful
resemblance to, the supervisory jurisdiction of the Supreme Court of a State to
set aside an exercise
of administrative or judicial power for jurisdictional
error. It served no systemic end, and was a "defining characteristic" neither
of judicial power nor of any
court[66].
Conclusion
- The
plaintiff's argument that the conferral of jurisdiction on the Federal Court in
an application under Art 35 of the Model Law
is incompatible with
Ch III of the Constitution has no merit. The application for writs of
prohibition and certiorari directed to the judges of the Federal Court should
for that
reason be dismissed with costs.
- HAYNE,
CRENNAN, KIEFEL AND BELL JJ. The International Arbitration Act
1974 (Cth) ("the IA Act"), and the international conventions and law to which it
gives
effect[67],
facilitate the use of arbitration agreements and the curial recognition and
enforcement of arbitral awards made in relation to international
trade and
commerce[68].
- The
plaintiff ("TCL"), a company registered, and having its principal place of
business, in the People's Republic of China, entered
into a written distribution
agreement with the second defendant ("Castel"), a company registered, and having
its principal place
of business, in Australia ("the agreement"). The agreement
provided for the submission of disputes to arbitration in Australia.
Following
a commercial arbitration two awards were made requiring TCL to pay to Castel
$3,369,351 and costs of $732,500. In default
of payment, Castel applied under
the IA Act to the Federal Court of Australia to enforce the awards. In separate
proceedings, TCL applied to set aside those awards.
- Of
particular relevance is Pt III (ss 15-30A) of the IA Act. Headed
"International Commercial Arbitration", it concerns arbitration agreements and
the recognition and enforcement of arbitral
awards governed by the UNCITRAL
Model Law on International Commercial Arbitration ("the Model
Law")[69].
Section 16(1) of the IA Act gives "the force of law in Australia" to the
Model Law, the English text of which is contained in Sched 2 to the IA
Act.
- In
the proceedings in this Court's original jurisdiction, TCL submitted that
s 16(1) of the IA Act is beyond power because it infringes Ch III of
the Constitution. What follow are our reasons for rejecting TCL's submissions
and refusing to grant the relief sought by TCL.
Arbitration
- In
The Rule of Law, Lord Bingham of Cornhill described arbitration as
involving[70]:
"the appointment of an independent arbitrator, often chosen by the parties, to
rule on their dispute according to the terms of reference
they give him. This
can only be done by agreement, before or after the dispute arises, but where it
is done the arbitrator has authority
to make an award which is binding on the
parties and enforceable by the process of the
courts."
That description of private
arbitration[71],
and of the relationship between private arbitration and the courts, is as apt
for
Australia[72]
as it is for the United
Kingdom[73] and
the United States of
America[74].
Arbitration has a long history as an alternative method, distinct from
litigation, of resolving civil
disputes[75].
The features of private arbitration identified by Lord Bingham underpin the
widely shared modern policy of recognising and encouraging
private arbitration
as a valuable method of "settling disputes arising in international commercial
relations"[76],
a policy reflected in the objects of the IA
Act[77].
Parties from different legal systems can agree to resolve an international
commercial dispute by arbitration and choose both the
law (or laws) to be
applied and the processes to be followed.
- From
the 1920s onwards, various international conventions and laws dealing with
international commercial arbitration
agreements[78]
have been directed to encouraging a level of uniformity in national statutes
covering such matters as the international validity
of arbitration agreements,
the limits of curial assistance or intervention in the arbitral process and the
enforcement of
awards[79].
The IA Act gives effect to three of those international instruments, as
described below.
- Part II
(ss 3-14) of the IA Act, headed "Enforcement of foreign awards",
implements[80]
the New York
Convention[81].
Section 7[82]
of the IA Act provides for the recognition of arbitration agreements by
mandating a stay of court proceedings brought in breach of an arbitration
agreement governed by the New York
Convention[83].
Section 8 provides for the enforcement of "foreign awards" in Australia "as
if the award were a judgment or order" of the Federal Court or
a State or
Territory
court[84]. In
implementing Art V of the New York
Convention[85],
s 8 contains limited grounds upon which a court may refuse to enforce a
foreign
award[86].
- Part
III, as noted, concerns arbitral awards governed by the Model Law. Provisions
in Art 36(1) limiting the grounds upon which a court may
refuse to enforce
a foreign award, described in more detail below, are modelled on Art V of
the New York Convention. An account
of the development of the Model Law, and
before it the New York Convention, can be found in the reasons of French CJ
and
Gageler
J[87].
- Part IV
(ss 31-38) concerns arbitration agreements and the recognition and
enforcement of awards governed by the Convention on the Settlement of Investment
Disputes between States and Nationals of Other States
(1965)[88].
- Part V
(ss 39 and 40) is headed "General matters". Section 39 applies in
respect of all provisions of the IA Act governing the curial recognition
and enforcement of awards. Relevantly, s 39 provides that courts
exercising jurisdiction under the IA Act, including courts considering
exercising powers under the Model
Law[89], which
may include the Federal Court or a State or Territory court, must have regard to
the fact that "arbitration is an efficient,
impartial, enforceable and timely
method by which to resolve commercial disputes" and that "awards are intended to
provide certainty
and
finality"[90].
Enforcement
of arbitral awards under the Model Law
- Article
35 of the Model Law provides for the recognition and enforcement of arbitral
awards made in international commercial arbitrations
arising under relevant
arbitration
agreements[91].
A commercial arbitration is international if (among other circumstances) "the
parties to an arbitration agreement have, at the time
of the conclusion of that
agreement, their places of business in different
States"[92].
- Article 35(1)
of the Model Law provides:
"An arbitral award, irrespective of the country in which it was made, shall be
recognized as binding and, upon application in writing
to the competent court,
shall be enforced subject to the provisions of this article and of article 36."
The Federal Court is a "competent court" for
certain identified functions which a court performs pursuant to the Model
Law[93].
Further, s 16(1) of the IA Act enacts the Model Law as a federal statute.
Consequently, a controversy under the IA Act is a "matter" for the purposes of
s 76(ii) of the
Constitution[94]
and the Federal Court is a competent court for the purposes of Art 35 of
the Model
Law[95].
- Article 36(1)
provides for the only grounds on which recognition or enforcement of an award
may be refused by a competent court.
The grounds are primarily, but not
exclusively, concerned with the independence and impartiality of the arbitrator
and the fairness
of the arbitral process. Those grounds do not include a ground
of error of law: whether error generally or error apparent on the
face of the
award. They do, however, include the substantive ground of a competent court
finding that "the recognition or enforcement
of the award would be contrary to
the public policy of
[Australia]"[96].
For the avoidance of doubt, s 19 of the IA Act states that an award is
contrary to the public policy of Australia if its making "was induced or
affected by fraud or
corruption"[97]
or "a breach of the rules of natural justice occurred in connection with the
making of the ...
award"[98].
Article 5 limits the power of a court to intervene in matters governed by
the Model Law to those categories of curial intervention
provided for in the
Model Law.
- Article
34(1), relied upon by TCL in its separate proceedings in the Federal Court to
set aside the awards, provides that "[r]ecourse
to a court against an arbitral
award may be made only by an application for setting aside" the award and only
on the grounds set
out in Art 34(2), which substantially mirror those in
Art 36(1) limiting the grounds upon which a court may refuse to recognise
or
enforce a foreign award.
The issues
- TCL
applied in this Court's original jurisdiction for the issue of constitutional
writs of prohibition, directed to the judges of
the Federal Court, and of
certiorari, to remove into this Court to be quashed a decision of the Federal
Court (Murphy J) made on
23 January
2012[99].
- TCL
contends that to the extent that s 16(1) of the IA Act gives the force of
law in Australia to Arts 5,
8[100], 34,
35 and 36 of the Model Law, and designates the Federal Court as having
jurisdiction to recognise and enforce arbitral awards
governed by the Model Law,
it is invalid because of what TCL styled two "constitutional objections". Both
objections involved asserting
that the IA Act provided for the exercise of the
judicial power of the Commonwealth in a manner contrary to Ch III of the
Constitution.
- The
first objection is that the jurisdiction conferred under the IA Act requires
judges of the Federal Court to act in a manner which substantially impairs the
institutional integrity of that Court. The
second objection, a corollary of the
first, is that the IA Act impermissibly vests the judicial power of the
Commonwealth in arbitral tribunals because the enforcement provisions of the IA
Act render an arbitral award determinative.
- In
response, Castel submitted that curial recognition and enforcement of arbitral
awards has long been an unexceptional exercise
of judicial power. It was
contended that TCL's constitutional objections to the IA Act were misconceived
and that the relief sought should be refused.
- Castel's
response was supported by interventions by the Attorneys-General for the
Commonwealth, New South Wales, Victoria, South
Australia, Queensland and
Western Australia, pursuant to s 78A of the Judiciary Act 1903
(Cth). The Australian Centre for International Commercial Arbitration Limited,
the Institute of Arbitrators and Mediators Australia
Limited, and the Chartered
Institute of Arbitrators (Australia) Limited were granted leave to intervene as
amici curiae limited to
the filing of written submissions, which supported the
validity of the IA Act.
- On
21 August 2012 a single Justice of this Court referred TCL's application
for hearing by the Full
Court[101].
The judges of the Federal Court filed a submitting
appearance.
The facts and related proceedings below
- Under
the agreement, TCL granted Castel the exclusive right to sell in Australia air
conditioners manufactured by TCL. In July 2008
Castel submitted to arbitration
in Australia a dispute arising from contractual claims against TCL, seeking
damages. Following a
hearing, on 23 December 2010 an arbitral tribunal
constituted by Dr Gavan Griffith AO QC, the Honourable Alan Goldberg
AO and Mr
Peter Riordan SC ("the tribunal") made an award which upheld
Castel's claims and required TCL to pay Castel a sum of $3,369,351.
On
27 January 2011, the tribunal made a further award that TCL pay Castel
$732,500 in respect of the costs of arbitration.
- TCL
failed to pay Castel the amounts owing under the arbitral awards. On
18 March 2011, Castel applied to the Federal Court to enforce
the arbitral
awards. TCL opposed their enforcement on the ground that the Federal Court
lacked jurisdiction and on the alternative
ground that, if the Federal Court did
have jurisdiction, the arbitral awards should not be enforced as to do so would
be contrary
to public policy because of an alleged breach of the rules of
natural justice by the tribunal. TCL also applied in separate proceedings
in
the Federal Court to set aside the arbitral awards on the basis that they
were contrary to public policy because of that alleged
breach of the rules of
natural justice.
- On
23 January 2012, Murphy J ruled that the Federal Court had
jurisdiction under the IA Act to enforce the arbitral
awards[102].
Subsequently, his Honour rejected TCL's claims of a breach of the rules of
natural justice by the
tribunal[103].
Submissions
TCL
- TCL's
first objection – that the IA Act impairs the institutional integrity of
the Federal Court – was articulated in various ways. TCL submitted that
the effect
of the Model Law is to co-opt or enlist the Federal Court "into
providing assistance during the course of the arbitral proceeding
and in
enforcing the resulting awards" while denying the Federal Court "any scope for
reviewing substantively the matter referred
to arbitration, and the ability to
act in accordance with the judicial process". TCL submitted that this distorts
the institutional
independence of the Federal Court. The lack of "independence"
complained about was in respect of substantive review in order to
correct error,
or set aside an arbitral award when error of law appeared or was manifest on the
face of an award.
- TCL
further submitted that "[i]n a real sense, the judicial process has been wholly
delegated to the arbitral tribunal but the court
has retained no substantive
supervision over that process". TCL pointed out, correctly, that by the
combined operation of several
provisions of the Model
Law[104], the
Federal Court can be obliged to enforce an award "notwithstanding that an error
of law appears on the face of the [award]".
That circumstance was described as
"novel" and was said to prevent the Federal Court from performing its
"independent adjudicative
function", and to "constrain[] the court's
adjudicative function to an unacceptable degree". Thus, TCL's arguments
continued, the
IA Act "cuts across" what TCL described as "the court's
historical function in super-intending arbitrations" and, invoking Marbury v
Madison[105],
the IA Act was said to take away "from the courts their core province and
duty 'to say what the law is' in a constitutional system reliant upon the
separation of judicial power for the maintenance of the rule of law".
- In
relation to its second objection – that the IA Act impermissibly vests the
judicial power of the Commonwealth in arbitral tribunals – TCL relied
again on its contention that
no independent exercise of judicial power by the
Federal Court was required for the enforcement of an award. A significant
indicator
of this state of affairs was said to be the exclusion, to a
significant degree, of any curial power to supervise the arbitral process,
in
particular by conducting substantive review of an award.
- It
became clear in oral argument that one proposition underpinned TCL's submissions
in relation to both objections: namely, that
to avoid contravening Ch III
of the Constitution courts must be able to determine whether an
arbitrator applied the law correctly in reaching an award.
- In
further support of that proposition, it was submitted by TCL that Art 28(1)
of the Model Law, which provides that "[t]he arbitral
tribunal shall decide the
dispute in accordance with such rules of law as are chosen by the parties",
confines an arbitrator's authority
under an arbitration agreement to deciding a
dispute correctly and therefore an award founded on an erroneous
principle is not binding upon the
parties[106].
Alternatively, it was submitted that such a term could be implied into every
arbitration agreement.
Castel
- Castel
submitted that the source of the authority of an arbitral tribunal is the
private agreement of the parties, not the State.
Castel also submitted that a
valid arbitral award made pursuant to such an agreement precludes subsequent
recourse to the courts
to determine afresh the rights and obligations referred
to arbitration. The clear exclusion in the IA Act of a power to set aside an
award for error apparent on the face of the award was said to be consistent with
the general rule supporting
the finality of arbitral awards. Because, as a
matter of history, curial review of arbitral awards has always had limits, it
was
submitted that the IA Act's support of the finality of arbitral awards, save
in limited circumstances, cannot be characterised as
impairing the institutional
integrity of courts or as impermissibly vesting the judicial power of the
Commonwealth in arbitral tribunals.
Castel also pointed out that judicial
control over the arbitral process and arbitral awards is retained under the IA
Act in defined circumstances, including the circumstance of a breach of the
rules of natural justice in connection with the making of
the
award.
Article 28 of the Model Law
- Before
giving closer attention to TCL's constitutional objections, it is convenient to
consider TCL's submission based on Art 28(1)
of the Model Law. TCL
submitted that the authority of an arbitrator under a relevant agreement was
confined to determining a dispute
correctly. It was contended that parties
governed by Art 28(1) were not subjecting themselves to the risk of error
of law apparent
on the face of the award; therefore, no arbitral award could be
recognised or enforced under the Model Law if an award showed error
of law.
- Articles
28(1) and 28(2) are primarily directed to questions of choice of law. Article
28(3) permits an arbitral tribunal to decide
ex aequo et bono or as
amiable compositeur only if the parties have expressly authorised it to
do so. Article 28(4) requires arbitral tribunals to decide in accordance with
the terms of the agreement and to take into account the applicable usages of the
trade.
- Even
if any of these provisions can be understood as obliging arbitrators to decide a
dispute according to law, senior counsel for
TCL correctly accepted in argument
that the Model Law makes it plain that recognition and enforcement of an
arbitral award could
only be denied in limited circumstances. Legal error is
not one of those circumstances.
- TCL's
argument must be rejected: it depends on treating the language of part of
Art 28(1) as forming part of the agreement between
the parties, whilst
simultaneously treating the provisions of the Model Law regulating the
recognition and enforcement of awards
as not forming part of that
agreement.
- The
alternative argument advanced by TCL, that it is an implied term of every
arbitration agreement that the authority of an arbitrator
is limited to the
correct application of the law, must also be rejected. No term of the
kind asserted can be implied into an agreement to submit a dispute
to
arbitration. Implication of such a term (even if it could be said to be
reasonable and equitable) is not necessary to give business
efficacy to an
arbitration agreement and is not so obvious that "it goes without
saying"[107].
Judicial
power and arbitration
- The
exercise of judicial power is an assertion of the
sovereign[108],
public[109]
authority of a
polity[110].
Whilst it is "both right and important to observe that the determination of
rights and liabilities lies at the heart of the judicial
function"[111],
parties are free to agree to submit their differences or disputes as to their
legal rights and liabilities for decision by an ascertained
or ascertainable
third
party[112],
whether a person or a
body[113].
As will be explained, where parties do so agree, "the decision maker does not
exercise judicial power, but a power of private
arbitration"[114].
- An
agreement to submit disputes to arbitration does not, apart from statute, take
from a party the power to invoke the jurisdiction
of the courts to enforce that
party's rights by instituting an action to determine a dispute of a kind that
the parties have agreed
should be
arbitrated[115].
The jurisdiction of the courts is not and cannot be ousted by a private
agreement.
- However,
if parties do go to arbitration and the arbitrator makes an award, the making of
the award has legal significance in respect
of the parties' dispute and their
rights and liabilities. As the plurality in
Dobbs[116]
said: "if, before the institution of an action, an award was made, it
[the award] governed the rights of the parties and precluded them from
asserting in the Courts the claims which the award determined"
(emphasis added).
In such a case, the arbitrator's award governs the rights of the parties because
"[b]y submitting the claims to
arbitration, the parties confer upon the
arbitrator an authority conclusively to determine
them"[117].
- This
gives rise to the general rule that an award made by an arbitrator pursuant to
such authority is final and conclusive. Further,
the arbitrator's making of an
award in exercise of such authority both extinguishes the original cause of
action and imposes new
obligations on the parties in substitution for the rights
and liabilities which were the subject of the dispute referred to arbitration.
The former rights of the parties are discharged by an accord and satisfaction.
The accord is the agreement to submit disputes to
arbitration; the satisfaction
is the making of an award in fulfilment of the agreement to
arbitrate[118].
- It
follows that when an arbitral award is enforced by curial process, the
obligations sought to be enforced are those which are created
by the award in
substitution for the rights and liabilities which were the subject of the
dispute referred to arbitration. A party
may sue on an award as a cause of
action or, in some cases, as in this case, seek enforcement of the award
pursuant to the IA Act.
- The
proposition identified as underpinning TCL's submissions assumes, wrongly, that
the rights and liabilities which are in dispute
in an arbitration continue
despite the making of an award. That is, it assumes, wrongly, that the courts
will not give effect to
the discharge of those pre-existing rights and
liabilities by the accord and satisfaction which is effected by a reference to
arbitration
and the making of an award.
Finality and legality in
arbitral awards
- It
is the consensual foundation of arbitration which underpins the general rule,
settled since the middle of the nineteenth century,
that an award is final and
conclusive and cannot be challenged either at law or in equity on the ground
that the arbitrator has committed
an error of fact or of
law[119].
- Since
at least the late seventeenth century (and Statute 9 Will III c 15 for
"determining Differences by
Arbitration")[120],
the English law of arbitration provided statutory means for the direct
enforcement of arbitral awards. The courts could enforce
an arbitral award
unless arbitrators "misbehaved themselves" or the award or arbitration "was
procured by corruption or other undue
means"[121].
The making of a legal error was not identified as a form of misbehaviour.
Furthermore, the sole statutory ground upon which an
arbitration (and
inferentially an award) could be "set aside" was that the arbitration had been
"procured by corruption or undue
means"[122].
The
"mischief"[123]
to which the statute was directed was that procedures available for enlisting
the court's aid in enforcing arbitration agreements
were cumbersome and they did
not always provide a complete
remedy[124].
There was no statutory right to invoke curial process in respect of legal error.
But for the statutory exceptions mentioned, an
award could be enforced as final
and conclusive, regardless of any legal infirmity in the reasoning which
underpinned it.
- Notwithstanding
these limited statutory exceptions to the finality of an arbitral award, it
appears that by the turn of the eighteenth
century, the Court of King's Bench
had recognised a further exception: a supervisory jurisdiction to quash or set
aside an award
for error apparent on the face of the
award[125].
- Speaking
in 1978 of that common law jurisdiction, and of successive legislation from the
mid-nineteenth century providing statutory
means for review of awards, which
might have been expected to render that jurisdiction obsolete, Lord Diplock
said: "[t]he rival
claims of finality and legality in arbitral awards have been
debated in [England] for well over two hundred
years"[126].
- The
following year, in giving the advice of the Privy Council in Max Cooper
& Sons Pty Ltd v University of New South Wales ("Max
Cooper")[127],
Lord Diplock pointed
out[128]
that:
"One of the principal attractions of arbitration as a means of resolving
disputes arising out of business transactions is that finality can be
obtained without publicity or unnecessary formality, by submitting the dispute
to a decision maker of the parties' own choice.
From the arbitrator's award
there is no appeal as of right; it is only exceptionally that it does not put an
end to the dispute." (emphasis added)
- As
Lord Diplock also pointed
out[129],
there were at that time three "procedural means whereby the finality of an
arbitrator's award may be upset" if it could be demonstrated
to a court that the
arbitrator's decision resulted from applying faulty legal reasoning to the facts
as found. One means of upsetting
an award was the abovementioned common law
exception to the finality of an award. Lord Diplock explained the provenance
and limitations
of that
jurisdiction[130]:
"Before the Common Law Procedure Act, 1854 (Imp) the Court of
King's Bench exercised over awards of arbitrators a supervisory jurisdiction to
set aside the award for errors
of law apparent upon its face, analogous to that
which it asserted over inferior tribunals by use of the prerogative writ of
certiorari.
It treated the award itself as corresponding to the 'record' of an
inferior tribunal which alone was examinable for the purpose
of detecting errors
of law. This jurisdiction operated haphazardly, because the ability of the
court to exercise it depended upon
whether or not the arbitrator had chosen to
set out in the award itself the legal reasoning on which he had based it. If he
had
not, the court was powerless to intervene but, if he had and his legal
reasoning so set out in the award itself was erroneous, the
court could quash
the award."
- If
error on the face of an award was demonstrated and the award quashed, the
consequence was that the arbitration had to begin again
with a view to yielding
an award that revealed no error on its face. The court finding error could not
and did not reform the award
according to its view of the law. But if no error
on the face was demonstrated, the award would stand and be enforced, regardless
of whether legal error could be demonstrated by some means other than being
apparent on the face of the award.
- The
other two procedural means whereby the finality of an arbitrator's award might
be upset were statutory: statement of the whole
or part of the award in the
form of a special case for the opinion of the
court[131],
or statement in the form of a special case for the opinion of the court of any
question of law arising in the
reference[132].
- The
Common Law Procedure Act 1854 (Imp) had provided a new procedure
empowering an arbitrator to state an award in the form of a special case, being
the first
statutory provision for invoking curial process in respect of legal
error[133].
It enabled a judgment to be entered on the award in accordance with the opinion
of the court instead of the court quashing the
award in which case the
arbitration had to begin again. However, the new procedure was optional: it
was at the discretion of the
arbitrator and parties could, by their arbitration
agreement, exclude the power.
- Lord
Diplock
recorded[134]
that the preservation of the common law jurisdiction to set aside awards for
error, despite the institution of the new statutory
means of review under the
Common Law Procedure Act, was seen by some as a matter for
regret[135].
- As
to statutory means for review of an award, the Arbitration Act
1889 (UK) provided a discretion to a court to compel an arbitrator to
state, in the form of a special case for its opinion, a question
of law arising
in the course of the
reference[136].
Parties could not contract out of the special case procedure. Australian
arbitration legislation followed this
lead[137].
- Generally
speaking, Australian arbitration law, both before and after Federation, was
closely modelled on English legislation and
followed common law
developments[138].
In 1904,
Griffith CJ[139]
referred both to the general rule that an arbitral award was final and
conclusive and to the common law exception to finality: "The
law is clearly
settled ... that when a cause or matters in difference are referred to an
arbitrator, whether a lawyer or a layman,
he is constituted the sole
and final judge of all questions both of law or of fact" unless error is
apparent on the face of the award (emphasis added). If the award "on
the face
of it is good" it ought to
stand[140].
- Under
the special case procedure it was possible for a party to apply to the court to
obtain a curial determination of a question
of law arising in the reference.
But, if an arbitrator was not compelled to state a question of law for the
opinion of the court,
it remained open to the arbitrator to refrain from giving
any reasons for decision or to provide a statement of reasons that was
not to
form part of the award. And in either of those cases, there could be no error
of law appearing on the face of the award.
- Further,
an authority given to an arbitrator to decide a specific question of law could
not, in general, be interfered with, since
the authority was validly exercised
even though the award showed on its face that the decision was erroneous; but an
authority to
decide given more generally could result in an award which could be
set aside for error provided the court was not required to go
behind the
award[141].
- It
follows that the curial supervision of the legal correctness of arbitral awards
depended upon matters of chance and caprice, such
as the precise terms of
reference; whether the parties to the reference refrained from seeking judicial
intervention; and upon the
way in which the arbitrator chose to render the
award. Further, the development and continued
application[142]
of elaborate rules governing whether an error appeared on the face of the award,
coupled with the refusal to permit the admission
of evidence extrinsic to the
face of the award to demonstrate legal error, reveals that the courts neither
had, nor asserted, any
general or broad supervision over the correctness of the
legal reasoning underpinning an arbitral award.
- The
power of an Australian court to set aside an award, governed by State or
Territory law, for error apparent on the face of the
award remained unaffected
until well into the twentieth century. That occurred notwithstanding misgivings
about the retention of
the
power[143]
which echoed regrets expressed in England when statutory means of review for
legal error were first
instituted[144].
- It
was that sequence of developments which led Lord Diplock in
Max Cooper to describe the survival of the common law jurisdiction
to review for legal error in New South Wales (as at 1979), and in England
until
the passing of the Arbitration Act 1979 (UK), as "an anomaly of legal
history"[145].
For the sake of completeness, it can be noted that the abolition of the common
law jurisdiction in the Arbitration Act 1979 (UK), referred to by Lord
Diplock, was described by Lord Steyn in Vitol SA v Norelf
Ltd[146]
as follows:
"The primary purpose of the Act of 1979 was to reduce the extent of the court's
supervisory jurisdiction over arbitration awards.
It did so by substituting for
the special case procedure a limited system of filtered appeals on questions of
law."
- Provisions
denying the Supreme Court of New South Wales "jurisdiction to set aside or remit
an award on the ground of error of ...
law on the face of the
award"[147]
and replacing that jurisdiction with a statutory means of review for legal error
were considered by this Court in Westport Insurance Corporation
v Gordian Runoff
Ltd[148].
- For
present purposes, it is sufficient to note that the common law jurisdiction to
set aside an award for error of law apparent on
the face of the award was an
exception to the general rule that parties must abide by their agreement to
accept an arbitrator's determination.
No impairment of
institutional integrity
- The
first objection of TCL, concerning the institutional integrity of the Federal
Court, invoked the constitutional principle enunciated
in Kable
v Director of Public Prosecutions (NSW)
("Kable")[149]
in connection with the Supreme Court of a State. The legislation considered in
Kable was found to be repugnant to, or incompatible with, the
institutional integrity of the Supreme Court of New South Wales because of
the
nature of the task that the legislation required the Court to perform. The
plurality in Forge v Australian Securities and Investments
Commission[150]
explained that the principle recognised in
Kable[151]
"is one which hinges upon maintenance of the defining characteristics of a
'court'". The plurality
continued[152]:
"[I]f the institutional integrity of a court is distorted, it is because the
body no longer exhibits in some relevant respect those
defining characteristics
which mark a court apart from other decision-making
bodies."
- The
defining characteristic of a court upon which TCL fastened was judicial
independence, which was said to be "distorted" by the
absence of scope for
substantive review of an award for error of law when the Federal Court
determines the enforceability of an award
under the IA Act. The submission
fails to take into account the consensual foundation of private arbitration.
This failure underpinned TCL's misunderstanding
of the relationship between
private arbitration and courts.
- If
it is right to apply directly to a court created by the federal Parliament the
doctrines enunciated in Kable with respect to State courts, there is no
distortion of the institutional integrity of the Federal Court.
- A
court undertaking the task of enforcing an award pursuant to the IA Act has
power to refuse to enforce an award, or under Art 34 to set aside an award,
in a multiplicity of circumstances, including the
circumstance that an "award is
in conflict with the public policy of
[Australia]"[153].
Those provisions are protective of the institutional integrity of courts in the
Australian judicial system which are called upon
to exercise jurisdiction under
the IA Act.
- As
explained above, the enlistment of judicial power in enforcing an arbitral award
occurs at a point in time when the obligations
sought to be enforced are those
which are created by an award. It has also been shown that as a matter of
history, the common law
jurisdiction to set aside an award for error on the face
of the award was an exception to the general rule concerning the finality
of
awards, and that it operated in haphazard and anomalous ways. Those
circumstances make it plain that the absence of a specific
power to review an
award for error of law does not distort judicial independence when a court
determines the enforceability of an
award. Nor can the presence of such
jurisdiction be said to be a defining characteristic of a court. It is also
plain that the
absence of a supervisory jurisdiction to correct errors of law by
arbitrators raises no separation of powers issue. The doctrine
of the
separation of powers is directed to ensuring an independent and impartial
judicial branch of government to enforce lawful
limits on the exercise of public
power.
- Finally,
judicial independence mandates independence from the legislature and the
executive. Judicial independence does not compel
the federal legislature to
balance the "rival claims of finality and legality in arbitral
awards"[154]
in any particular way. The Federal Court's determination of the enforceability
of an award, upon criteria which do not include a
specific power to review an
award for error, serves the legitimate legislative
policy[155]
of encouraging efficiency and impartiality in arbitration and finality in
arbitral awards. The problem with the legislation considered
in each of
Kable[156]
and
Totani[157]
was that the relevant State courts were enlisted or co-opted by the executive to
perform a task which did not engage the courts'
independent judicial power to
quell
controversies[158].
There is no analogy between those cases and the long understood relationship
between private arbitration and the courts in which
the courts enforce an
arbitral award, which is the determination of the parties' original controversy.
Historical considerations
can support a conclusion "that the power to take [a
particular] action is within the concept of judicial power as the framers of
the
Constitution must be taken to have understood
it"[159]. As
observed by Gummow J in
Totani[160],
the enforcement of an arbitral award resembles the enforcement of a foreign
judgment by a local court. A consensual submission
to a statutory review
jurisdiction is
similar[161].
In each case enforcement depends on an anterior decision or determination which
was not made in the exercise of federal judicial
power.
No
delegation of judicial power
- The
submission by TCL that the judicial power of the Commonwealth was delegated
under the IA Act to arbitral tribunals in contravention of the requirements of
Ch III of the Constitution invoked the principle established in R v
Kirby; Ex parte Boilermakers' Society of
Australia[162].
That submission also reflected a failure to acknowledge the consensual
foundation of private arbitration which governs the relationship
between private
arbitration and the courts.
- Contrary
to TCL's submission, the conclusion that an arbitrator is the final judge of
questions of law arising in the arbitration
does not demonstrate that there has
been some delegation of judicial power to arbitrators. The determination of a
dispute by an
arbitrator does not involve the exercise of the sovereign power of
the State to determine or decide
controversies[163].
- To
conclude that a particular arbitral award is final and conclusive does no more
than reflect the consequences of the parties having
agreed to submit a dispute
of the relevant kind to arbitration. As has already been noted, one of those
consequences is that the
parties' rights and liabilities under an agreement
which gives rise to an arbitration can be, and are, discharged and replaced by
the new obligations that are created by an arbitral award. This Court explained
in
CFMEU[164]:
"Where parties agree to submit their differences for decision by a third party,
the decision maker does not exercise judicial power,
but a power of private
arbitration. Of its nature, judicial power is a power that is exercised
independently of the consent of the
person against whom the proceedings are
brought and results in a judgment or order that is binding of its own force. In
the case
of private arbitration, however, the arbitrator's powers depend on the
agreement of the parties, usually embodied in a contract,
and the arbitrator's
award is not binding of its own force. Rather, its effect, if any, depends on
the law which operates with respect
to it."
That
passage illuminates the distinction between the power exercised by an arbitrator
and the impermissible delegation of the judicial
power of the Commonwealth
considered in Brandy v Human Rights and Equal Opportunity
Commission[165].
- Whilst
an arbitrator's powers and authority are no doubt supplemented by such statutory
provisions in the IA Act as apply to a relevant agreement, that supplementation
does not detract from the consensual foundation of arbitration.
- These
conclusions stand unaffected no matter what may be the ambit of permitted
judicial review of an arbitral award. If, as was
the case for so many years,
there could be judicial review for error apparent on the face of the award, the
award would nonetheless
be the ultimate product of the parties' agreement to
submit their differences or dispute to
arbitration.
Conclusions
- Correctly
understood, the task of the Federal Court to determine the enforceability of
arbitral awards, by reference to
criteria[166]
which do not include a specific power to review an award for error, is not
repugnant to or incompatible with the institutional integrity
of that Court. An
arbitral award made in the exercise of a power of private arbitration does not
involve any impermissible delegation
of federal judicial power. In giving the
force of law in Australia to Arts 5, 8, 34, 35 and 36 of the Model Law,
s 16(1) of the IA Act does not contravene Ch III of the
Constitution.
Orders
- The
application of TCL must be refused with costs.
[1] Section 16(1) of the IAA.
[2] LNC Industries Ltd v BMW
(Australia) Ltd [1983] HCA 31; (1983) 151 CLR 575 at 581; [1983] HCA 31.
[3] Sections 39(1)(b) and 39(2)(a) of
the IAA.
[4] Section 2D(e) of the IAA.
[5] Section 17 of the IAA.
[6] Article 2A(1) of the Model
Law.
[7] Section 20 of the IAA.
[8] Article 31 of the Vienna
Convention on the Law of Treaties (1969).
[9] Dobbs v National Bank of
Australasia Ltd [1935] HCA 49; (1935) 53 CLR 643 at 653-654; [1935] HCA 49.
[10] Associated Electric and Gas
Insurance Services Ltd v European Reinsurance Co of Zurich [2003] 1 WLR 1041
at 1046 [9].
[11] Mustill and Boyd, The Law
and Practice of Commercial Arbitration in England, 2nd ed (1989) at 4. See
also Blackaby et al, Redfern and Hunter on International Arbitration, 5th
ed (2009) at [1.02].
[12] Law Reform Commission of New
South Wales, Report on Commercial Arbitration, Report No 27,
(1976) at [1.6], [9.1.1].
[13] Westport Insurance
Corporation v Gordian Runoff Ltd [2011] HCA 37; (2011) 244 CLR 239 at 261-262 [20]; [2011]
HCA 37.
[14] Comandate Marine Corp v Pan
Australia Shipping Pty Ltd [2006] FCAFC 192; (2006) 157 FCR 45 at 94-95 [192]- [193].
[15] UNCITRAL analytical commentary,
Art 1 [15].
[16] Article 7 of the Model Law.
[17] Articles 10(1) and 11 of the
Model Law.
[18] Article 19(1) of the Model Law.
[19] See, eg, Arts 10(2), 11(3),
13(2), 17, 17B, 19(2), 20(1), 21, 22(1), 23, 24(1), 25, 26, 28(2) and 29 of the
Model Law.
[20] Articles 17J and 27 of the
Model Law. See also ss 23 and 23A of the IAA.
[21] Article 18 of the Model
Law.
[22] Articles 31 and 33(2) of the
Model Law.
[23] Article 36(1)(a)(i) of the
Model Law and Art V.1(a) of the New York Convention.
[24] Article 36(1)(a)(iii) of the
Model Law and Art V.1(c) of the New York Convention.
[25] Article 36(1)(a)(iv) of the
Model Law and Art V.1(d) of the New York Convention.
[26] Dallah Real Estate and
Tourism Holding Co v Ministry of Religious Affairs of the Government of
Pakistan [2011] 1 AC 763 at 808-813 [20]-[30].
[27] Dallah Real Estate and
Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan
[2011] 1 AC 763 at 810 [24].
[28] UNCITRAL analytical commentary,
Art 28 [3].
[29] UNCITRAL analytical commentary,
Art 28 [4].
[30] UNCITRAL Explanatory Note at
[39].
[31] Holtzmann and Neuhaus, A
Guide to the UNCITRAL Model Law on International Commercial Arbitration:
Legislative History and Commentary, (1989) at 764-807.
[32] Holtzmann and Neuhaus, A
Guide to the UNCITRAL Model Law on International Commercial Arbitration:
Legislative History and Commentary, (1989) at 789.
[33] Schreuer, The ICSID
Convention: A Commentary, (2001) at 555-558.
[34] Minister for Works (WA) v
Civil and Civic Pty Ltd [1967] HCA 18; (1967) 116 CLR 273 at 284; [1967] HCA 18.
[35] Byrne v Australian Airlines
Ltd [1995] HCA 24; (1995) 185 CLR 410 at 422; [1995] HCA 24. See Esso Australia
Resources Ltd v Plowman (1995) 183 CLR 10 at 30-31, 34; [1995] HCA 19.
[36] Comandate Marine Corp v Pan
Australia Shipping Pty Ltd [2006] FCAFC 192; (2006) 157 FCR 45 at 87-93 [162]- [187]; Fiona
Trust & Holding Corporation v Privalov [2007] 4 All ER 951 at 956-958
[5]-[14].
[37] cf Tuta Products Pty Ltd v
Hutcherson Bros Pty Ltd [1972] HCA 4; (1972) 127 CLR 253 at 262; [1972] HCA 4.
[38] UNCITRAL analytical commentary,
Art 35 [1].
[39] UNCITRAL analytical commentary,
Art 35 [4].
[40] UNCITRAL analytical commentary,
Art 35 [4].
[41] Holtzmann and Neuhaus, A
Guide to the UNCITRAL Model Law on International Commercial Arbitration:
Legislative History and Commentary, (1989) at 1029.
[42] Holtzmann and Neuhaus, A
Guide to the UNCITRAL Model Law on International Commercial Arbitration:
Legislative History and Commentary, (1989) at 1029.
[43] Holtzmann and Neuhaus, A
Guide to the UNCITRAL Model Law on International Commercial Arbitration:
Legislative History and Commentary, (1989) at 1033.
[44] Spencer Bower and Handley,
Res Judicata, 4th ed (2009) at [20.02].
[45] Administration of Papua and
New Guinea v Daera Guba [1973] HCA 59; (1973) 130 CLR 353 at 453; [1973] HCA 59;
Spencer Bower and Handley, Res Judicata, 4th ed (2009) at [8.27].
[46] contra Castel Electronics
Pty Ltd v TCL Air Conditioner (Zhongshan) Co Ltd [2012] FCA 21; (2012) 201 FCR 209 at 221
[58].
[47] Minister for Home and
Territories v Smith [1924] HCA 41; (1924) 35 CLR 120 at 126-127; [1924] HCA 41.
[48] Waterside Workers'
Federation of Australia v JW Alexander Ltd (1918) 25 CLR 434; [1918] HCA
56.
[49] R v Kirby; Ex parte
Boilermakers' Society of Australia (1956) 94 CLR 254; [1956] HCA 10;
affirmed Attorney-General of the Commonwealth of Australia v The Queen
[1957] HCA 12; (1957) 95 CLR 529; [1957] AC 288.
[50] R v Trade Practices
Tribunal; Ex parte Tasmanian Breweries Pty Ltd [1970] HCA 8; (1970) 123 CLR 361 at 374;
[1970] HCA 8. See Attorney-General (Cth) v Breckler (1999) 197 CLR 83 at
110 [41]; [1999] HCA 28.
[51] Russell v Russell (1976)
134 CLR 495 at 505, 520, 532; [1976] HCA 23.
[52] Bass v Permanent Trustee Co
Ltd [1999] HCA 9; (1999) 198 CLR 334 at 359 [56]; [1999] HCA 9; Re Refugee
Review Tribunal; Ex parte Aala [2000] HCA 57; (2000) 204 CLR 82 at 101 [42]; [2000] HCA
57.
[53] South Australia v Totani
[2010] HCA 39; (2010) 242 CLR 1 at 43 [62]; [2010] HCA 39.
[54] Huddart, Parker & Co Pty
Ltd v Moorehead [1909] HCA 36; (1909) 8 CLR 330 at 357; [1909] HCA 36. See
Attorney-General (Cth) v Breckler (1999) 197 CLR 83 at 110-111 [43].
[55] Waterside Workers'
Federation of Australia v JW Alexander Ltd [1918] HCA 56; (1918) 25 CLR 434 at 452.
[56] Construction, Forestry,
Mining and Energy Union v Australian Industrial Relations Commission [2001] HCA 16; (2001)
203 CLR 645 at 658 [31]; [2001] HCA 16. See also Hi-Fert Pty Ltd v Kiukiang
Maritime Carriers Inc (No 5) (1998) 90 FCR 1 at 14.
[57] R v Quinn; Ex parte
Consolidated Foods Corporation [1977] HCA 62; (1977) 138 CLR 1 at 11-12; [1977] HCA 62;
White v Director of Military Prosecutions [2007] HCA 29; (2007) 231 CLR 570 at 595
[48]- [49]; [2007] HCA 29.
[58] Melbourne Harbour Trust
Commissioners v Hancock (1927) 39 CLR 570; [1927] HCA 26.
[59] Bremer Vulkan Schiffbau und
Maschinenfabrik v South India Shipping Corporation Ltd [1981] AC 909 at
978-979.
[60] Hodgkinson v Fernie
[1857] EngR 940; (1857) 3 CB (NS) 189 at 202 [140 ER 712 at 717].
[61] Mustill and Boyd, The Law
and Practice of Commercial Arbitration in England, 2nd ed (1989) at 439.
[62] Max Cooper & Sons Pty
Ltd v University of New South Wales [1979] 2 NSWLR 257 at 261.
[63] Hodgkinson v Fernie
[1857] EngR 940; (1857) 3 CB (NS) 189 at 202, 205 [1857] EngR 940; [140 ER 712 at 717, 718]; Hogge v
Burgess (1858) 3 H&N 293 at 297 [1858] EngR 638; [157 ER 482 at 484].
[64] Burchell v Marsh [1854] USSC 40; 58 US
344 (1854).
[65] Max Cooper & Sons Pty
Ltd v University of New South Wales [1979] 2 NSWLR 257 at 262.
[66] cf Kirk v Industrial Court
(NSW) (2010) 239 CLR 531 at 581 [98]; [2010] HCA 1.
[67] International Arbitration
Act 1974 (Cth), s 2D(d), (e) and (f).
[68] International Arbitration
Act 1974 (Cth), s 2D(b) and (c).
[69] Adopted by the United Nations
Commission on International Trade Law ("UNCITRAL") on 21 June 1985 and
amended by UNCITRAL on 7 July
2006.
[70] (2010) at 86.
[71] The term "private arbitration"
refers to arbitration undertaken in fulfilment of an agreement to submit a
dispute to arbitration.
Private arbitration is distinguishable from arbitration
concerned with the enforcement of public rights derived from statute, such
as
arbitration to resolve industrial law disputes.
[72] Dobbs v National Bank of
Australasia Ltd ("Dobbs") [1935] HCA 49; (1935) 53 CLR 643 at 652-654; [1935] HCA
49; Minister for Works (WA) v Civil and Civic Pty Ltd [1967] HCA 18; (1967) 116 CLR 273
at 284; [1967] HCA 18; Construction, Forestry, Mining and Energy Union v
Australian Industrial Relations Commission ("CFMEU") [2001] HCA 16; (2001) 203 CLR
645 at 658 [31]; [2001] HCA 16; Westport Insurance Corporation v Gordian
Runoff Ltd [2011] HCA 37; (2011) 244 CLR 239 at 261-262 [19]- [20]; [2011] HCA 37.
[73] Fiona Trust & Holding
Corporation v Privalov [2007] 4 All ER 951 at 956 [5].
[74] Stolt-Nielsen SA v
AnimalFeeds International Corp 176 L Ed 2d 605 at 624 (2010).
[75] Mustill and Boyd, The Law
and Practice of Commercial Arbitration in England, 2nd ed (1989),
Ch 29. See also Stephen, "Historical Origins of Arbitration", (August,
1991) The Arbitrator 45; Jones, Commercial Arbitration in
Australia, (2011) at 4-11 [1.150]-[1.200].
[76] Stated in the preamble to the
Resolution of the General Assembly of the United Nations of 11 December 1985,
approving the Model
Law adopted by UNCITRAL.
[77] International Arbitration
Act 1974 (Cth), s 2D(a), (b) and (c).
[78] For present purposes the most
important are: the Geneva Protocol on Arbitration Clauses in Commercial Matters
(1923) ("the Geneva
Protocol"); the Geneva Convention on the Execution of
Foreign Arbitral Awards (1927) ("the Geneva Convention"); the United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958)
(commonly, "the New York Convention"); and the Model
Law.
[79] See generally Blackaby et al,
Redfern and Hunter on International Arbitration, 5th ed (2009),
Ch 1; Born, International Commercial Arbitration, (2009),
vol 2, Ch 25; Binder, International Commercial Arbitration and
Conciliation in UNCITRAL Model Law Jurisdictions, 3rd ed (2009); Holtzmann
and Neuhaus, A Guide to the UNCITRAL Model Law on International
Commercial Arbitration: Legislative History and Commentary, (1989)
at 1-17.
[80] International Arbitration
Act 1974 (Cth), s 2D(d).
[81] Adopted in 1958 by the United
Nations Conference on International Commercial Arbitration at its 24th meeting
(s 2D(d)). The English text is contained in Sched 1 to the
IA Act. Article VII(2) of the New York Convention provides that that
Convention replaces the Geneva Protocol and the Geneva Convention
as between
States which are parties to the New York Convention.
[82] Implementing Art II of the New
York Convention.
[83] An "arbitration agreement" for
the purposes of Pt II is defined in s 3(1).
[84] International Arbitration
Act 1974 (Cth), s 8(3) and (2).
[85] Which sets out the limited
grounds upon which a court may refuse to enforce an award. This provision
followed in some respects
and expanded the limited grounds for the same purpose
set out in the Geneva Convention, Arts 1 and 2.
[86] International Arbitration
Act 1974 (Cth), s 8(5) and (7).
[87] See [7]-[11] above.
[88] Signed by Australia on 24 March
1975 (ss 2D(f) and 31(1)). The English text is contained in Sched 3
to the IA Act.
[89] International Arbitration
Act 1974 (Cth), s 39(1)(a)(iii) and (iv).
[90] International Arbitration
Act 1974 (Cth), s 39(2)(b)(i) and (ii).
[91] International Arbitration
Act 1974 (Cth), s 16(2) (implementing Model Law, Art 7(1)).
[92] Model Law, Art 1(3)(a).
[93] International Arbitration
Act 1974 (Cth), s 18.
[94] See Ruhani v Director of
Police [2005] HCA 42; (2005) 222 CLR 489 at 515 [64] per McHugh J, 528-529 [111]-[113]
per Gummow and Hayne JJ; [2005] HCA 42.
[95] Judiciary Act 1903
(Cth), s 39B(1A)(c).
[96] Model Law, Art
36(1)(b)(ii).
[97] International Arbitration
Act 1974 (Cth), s 19(a).
[98] International Arbitration
Act 1974 (Cth), s 19(b).
[99] Castel Electronics Pty Ltd v
TCL Air Conditioner (Zhongshan) Co Ltd [2012] FCA 21; (2012) 201 FCR 209.
[100] Article 8 permits a
court to refer to arbitration a matter brought before the court which is the
subject of an arbitration agreement.
[101] High Court Rules 2004 (Cth),
r 25.03.3.
[102] Castel Electronics Pty
Ltd v TCL Air Conditioner (Zhongshan) Co Ltd [2012] FCA 21; (2012) 201 FCR 209.
[103] Castel Electronics Pty
Ltd v TCL Air Conditioner (Zhongshan) Co Ltd (No 2) [2012] FCA
1214.
[104] Articles 5, 34, 35 and
36.
[105] [1803] USSC 16; 5 US 137 (1803).
[106] In its entirety
Art 28(1) reads: "The arbitral tribunal shall decide the dispute in
accordance with such rules of law as are chosen
by the parties as applicable to
the substance of the dispute. Any designation of the law or legal system of a
given State shall
be construed, unless otherwise expressed, as directly
referring to the substantive law of that State and not to its conflict of laws
rules."
[107] BP Refinery (Westernport)
Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283.
[108] Huddart, Parker & Co
Pty Ltd v Moorehead [1909] HCA 36; (1909) 8 CLR 330 at 357 per Griffith CJ; [1909] HCA
36.
[109] Westport Insurance
Corporation v Gordian Runoff Ltd [2011] HCA 37; (2011) 244 CLR 239 at 261 [19] per
French CJ, Gummow, Crennan and Bell JJ.
[110] Re Wakim; Ex parte
McNally [1999] HCA 27; (1999) 198 CLR 511 at 573 [108] per Gummow and Hayne JJ; [1999]
HCA 27.
[111] South Australia v Totani
("Totani") [2010] HCA 39; (2010) 242 CLR 1 at 86 [220] per Hayne J; [2010] HCA
39.
[112] Dobbs [1935] HCA 49; (1935) 53 CLR
643 at 652, 654; CFMEU (2001) 203 CLR 645 at 658 [31].
[113] References in these reasons
to "an arbitrator" include an arbitral tribunal.
[114] CFMEU [2001] HCA 16; (2001) 203 CLR
645 at 658 [31].
[115] Dobbs [1935] HCA 49; (1935) 53 CLR
643 at 652-653, citing Kill v Hollister [1799] EngR 393; (1746) 1 Wils KB 129 [95 ER 532];
Thompson v Charnock [1799] EngR 612; (1799) 8 TR 139 [101 ER 1310]; Czarnikow
v Roth, Schmidt & Co [1922] 2 KB 478.
[116] [1935] HCA 49; (1935) 53 CLR 643 at
653.
[117] Dobbs [1935] HCA 49; (1935) 53 CLR
643 at 653. See also Minister for Works (WA) v Civil and Civic Pty Ltd
[1967] HCA 18; (1967) 116 CLR 273 at 284; CFMEU (2001) 203 CLR 645 at
658 [31].
[118] Dobbs [1935] HCA 49; (1935) 53 CLR
643 at 653. See also McDermott v Black [1940] HCA 4; (1940) 63 CLR 161 at 183-185;
[1940] HCA 4; Doleman & Sons v Ossett Corporation [1912] 3 KB
257 at 267.
[119] Mustill and Boyd, The Law
and Practice of Commercial Arbitration in England, 2nd ed (1989) at 439.
[120] Commonly, "the first
Arbitration Act".
[121] 9 Will III c 15,
s 1.
[122] 9 Will III c 15,
s 2.
[123] Heydon's Case [1584] EngR 9; (1584)
3 Co Rep 7a at 7b [76 ER 637 at 638].
[124] Mustill and Boyd, The Law
and Practice of Commercial Arbitration in England, 2nd ed (1989) at
432-435.
[125] Kent v Elstob [1802] EngR 348; (1802)
3 East 18 [102 ER 502]; In re Jones and Carter's Arbitration [1922] 2 Ch
599.
[126] "The Alexander Lecture",
(1978) 44(3) Arbitration 107 at 107.
[127] [1979] 2 NSWLR 257.
[128] [1979] 2 NSWLR 257 at
260.
[129] [1979] 2 NSWLR 257 at
260-261.
[130] [1979] 2 NSWLR 257 at
261.
[131] See, for example,
Arbitration Act 1902 (NSW), s 9(a).
[132] See, for example,
Arbitration Act 1902 (NSW), s 19.
[133] Common Law Procedure Act
1854 (Imp), s 5.
[134] Max Cooper [1979] 2
NSWLR 257 at 261.
[135] Hodgkinson v Fernie
[1857] EngR 940; (1857) 3 CB (NS) 189 at 202, 205 [1857] EngR 940; [140 ER 712 at 717, 718].
[136] Arbitration Act 1889
(UK), s 19.
[137] See, for example,
Arbitration Act 1902 (NSW), s 19; Arbitration Act 1895 (WA),
s 21.
[138] Law Reform Commission of New
South Wales, Report on Commercial Arbitration, Report No 27, (1976)
at 43-44 [1.16], 172-178 [9.6.1]-[9.6.12].
[139] Goode v Bechtel
[1904] HCA 27; (1904) 2 CLR 121 at 126; [1904] HCA 27.
[140] [1904] HCA 27; (1904) 2 CLR 121 at 126.
[141] Melbourne Harbour Trust
Commissioners v Hancock [1927] HCA 26; (1927) 39 CLR 570 at 581 per Knox CJ and Gavan
Duffy J, 585-586 per Isaacs J, 590 per Rich J, 590-591 per
Starke J; [1927] HCA 26, referring to Kelantan Government v Duff
Development Co [1923] AC 395; see also Minister for Works (WA) v Civil
and Civic Pty Ltd [1967] HCA 18; (1967) 116 CLR 273 at 284 per Kitto J; Tuta
Products Pty Ltd v Hutcherson Bros Pty Ltd [1972] HCA 4; (1972) 127 CLR 253 at 262-263;
[1972] HCA 4.
[142] See, for example,
Melbourne Harbour Trust Commissioners v Hancock [1927] HCA 26; (1927) 39 CLR 570 at
586; Gold Coast City Council v Canterbury Pipe Lines (Aust) Pty Ltd
(1968) 118 CLR 58; [1968] HCA 3; Manufacturers' Mutual Insurance Ltd
v Queensland Government Railways (1968) 118 CLR 314; [1968] HCA 52;
Tuta Products Pty Ltd v Hutcherson Bros Pty Ltd [1972] HCA 4; (1972) 127 CLR 253.
[143] Tuta Products Pty Ltd v
Hutcherson Bros Pty Ltd [1972] HCA 4; (1972) 127 CLR 253 at 258 per Barwick CJ,
266-267 per Windeyer J.
[144] See [90] above.
[145] [1979] 2 NSWLR 257 at 261;
see also Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping
Corporation Ltd [1981] AC 909 at 978.
[146] [1996] AC 800 at 814.
[147] Commercial Arbitration
Act 1984 (NSW), s 38(1).
[148] [2011] HCA 37; (2011) 244 CLR 239.
[149] (1996) 189 CLR 51; [1996]
HCA 24.
[150] [2006] HCA 44; (2006) 228 CLR 45 at 76
[63]; [2006] HCA 44.
[151] [1996] HCA 24; (1996) 189 CLR 51; see also
Fardon v Attorney-General (Qld) (2004) 223 CLR 575; [2004] HCA 46 and
North Australian Aboriginal Legal Aid Service Inc v Bradley [2004] HCA 31; (2004)
218 CLR 146 at 164 [32]; [2004] HCA 31.
[152] [2006] HCA 44; (2006) 228 CLR 45 at 76
[63].
[153] Article 34(2)(b)(ii).
[154] Lord Diplock, "The Alexander
Lecture", (1978) 44(3) Arbitration 107 at 107.
[155] International Arbitration
Act 1974 (Cth), s 39(2).
[156] [1996] HCA 24; (1996) 189 CLR 51 at 98-99,
106-108, 116-122, 133-134.
[157] [2010] HCA 39; (2010) 242 CLR 1 at 52 [82],
66 [142], 88-89 [226], 157 [428], 172-173 [479]-[481].
[158] [2010] HCA 39; (2010) 242 CLR 1 at 63 [131]
per Gummow J.
[159] R v Davison [1954] HCA 46; (1954) 90
CLR 353 at 382 per Kitto J; [1954] HCA 46.
[160] [2010] HCA 39; (2010) 242 CLR 1 at 64
[136].
[161] Attorney-General (Cth) v
Breckler (1999) 197 CLR 83 at 110-111 [43]-[44]; [1999] HCA 28.
[162] [1956] HCA 10; (1956) 94 CLR 254 at 270 per
Dixon CJ, McTiernan, Fullagar and Kitto JJ; [1956] HCA 10.
[163] Huddart, Parker & Co
Pty Ltd v Moorehead [1909] HCA 36; (1909) 8 CLR 330 at 357 per Griffith CJ.
[164] [2001] HCA 16; (2001) 203 CLR 645 at 658
[31].
[165] (1995) 183 CLR 245; [1995]
HCA 10. Cf Attorney-General (Cth) v Breckler (1999) 197 CLR 83 at
110-111 [42]-[43].
[166] Resulting from the combined
operation of Arts 5, 34, 35 and 36 of the Model Law.
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