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[2013] VSC 550
Supreme Court of Victoria
2013-10-18
CROFT J
Original judgment source is linked above.
ARBITRATION - Application for leave to appeal from orders made by Victorian Civil and Administrative Tribunal - Appeal on question of law - Whether Victorian Civil and Administrative Tribunal is a "court" and therefore obliged to refer the parties to arbitration in a matter which is the subject of an arbitration agreement - Director of Housing v Sudi [2011] VSCA 266 - Commercial Arbitration Act 2011, ss 2, 6 and 8; Victorian Civil & Administrative Tribunal Act 1998, s 77.
RETAIL LEASES - Extent to which other agreement or arrangement would be void if it were contained in a retail premises lease - Retail Leases Act 2003, s 94.
1 This is an application for leave to appeal under s 148(1) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) ("the VCAT Act") against part of the orders of the Victorian Civil and Administrative Tribunal ("VCAT"), constituted by Senior Member Riegler, made on 18 October 2012 in VCAT Proceeding R43 of 2012, in which the Applicant in this proceeding, Subway Systems Australia Pty Ltd ("SSA"), and Subway Realty Pty Ltd ("SR") were respondents and the Respondents, Aaron Ireland and Lynette Ireland ("Irelands") in this proceeding were the applicants. This proceeding in VCAT is referred to in these reasons for judgment as "the VCAT proceeding"; and the Reasons of Senior Member Riegler as the "VCAT Reasons".
2 The part of the orders appealed against is as follows:
"2. The respondents' [SSA and SR] application for Orders dated 18 May 2012 is dismissed."[1]
3 The draft Notice of Appeal sets out the questions of law upon which the proposed appeal is brought and, or alternatively, which are said to be involved in the order appealed against, as follows:
(a) Whether VCAT is a "court" for the purposes of s 8(1) of the Commercial Arbitration Act 2011 ("the CAA").
(b) Whether VCAT was bound to refer the dispute between the Irelands and SSA to arbitration pursuant to s 8 of the CAA.
4 The grounds of appeal as set out in the draft Notice of Appeal are that VCAT was in error in finding that the Tribunal is not a "court" for the purposes of s 8(1) of the CAA and, further, in not finding that the Tribunal was bound to refer the dispute between the Irelands and SSA to arbitration, pursuant to s 8 of the CAA. On this basis, the Applicant, SSA, seeks, on leave to appeal being granted, orders that the appeal be allowed; the order appealed against to be set aside; that the VCAT proceedings be permanently stayed; and the Irelands pay the costs of the appeal. The usual order for such further or other relief as the court deems appropriate is also sought.
"(1) A party to a proceeding may appeal, on a question of law, from an order of the Tribunal in the proceeding-
(a) to the Court of Appeal, if the Tribunal was constituted for the purpose of making the order by the President or a Vice President, whether with or without others; or
(b) to the Trial Division of the Supreme Court in any other case-
if the Court of Appeal or the Trial Division, as the case requires, gives leave to appeal."
It follows from these provisions that any appeal is dependent upon two important qualifications. First, that the appeal be "on a question of law" and the second qualification is that the court "gives leave to appeal".
6 The legislative policy underlying these provisions is that "VCAT decisions should not generally be disturbed when cases have been decided in that forum other than on questions of law and where there is something about the decision bearing upon the question of law which warrants a grant of leave to appeal."[2] It follows that "[t]his Court is not entitled to enter into the fact finding exercise which the legislature has deliberately entrusted to a specialist tribunal."[3]
7 The leave requirement under s 148 is designed to maintain this position. As Pagone J said in Commissioner of State Revenue v Frost:[4]
"3 The requirement for leave under s 148(1) of the VCAT Act 'is a safeguard that the appeal is on a pure question of law and that the grounds supporting the question of law articulated for determination by the Court do found the subject matter of the appeal'.[5] It also confers a discretion about whether to grant leave[6] which an applicant must persuade the Court to exercise in its favour. What must be shown will depend upon the particular case bearing in mind the statutory criteria being a grant of leave and not special leave.[7] It will ordinarily be necessary (in addition to a clearly articulated question of law)[8] for an applicant to make out a prima facie case[9] and in an appropriate case it may be necessary for the applicant to show that the question upon which leave is sought has public or general importance.[10]"
8 The parties to these proceedings do not contend that the present application raises other than important issues, questions of law, in relation to the position of VCAT as a "court" or otherwise under the provisions of s 8(1) of the CAA. Further, in arguing against the position advanced by SSA, the Irelands sought to raise significant matters, again questions of law, in relation to the operation of the provisions of the Retail Leases Act 2003 (Vic) ("the RLA") with respect to the VCAT jurisdiction which were said to impinge upon the issues raised in this proposed appeal. Additionally, there is no suggestion by any of the parties to the present proceedings that the proposed appeal involves any issue of fact and, consequently, it is not a situation where the Court would, in any sense, be trespassing on the jurisdiction deliberately entrusted to VCAT as a result of embarking on a fact-finding exercise. The application and the proposed appeal are clearly confined to questions of law.
9 Having regard to this position and the manner in which the parties have conducted these proceedings it is appropriate that the hearing of this application for leave should also be treated as the hearing of the appeal.
"2. Definitions and rules of interpretation (cf Model Law Art 2)
(1) In this Act-
...
the Court means, subject to section 6(2), the Supreme Court.
...
(1) The functions referred to in sections 11(3) and (4), 13(4), 14(2), 16(9), 17H, 17I, 17J, 19(6), 27, 27A, 27B, 27H, 27I, 27J, 33D, 34 and 34A are, subject to subsection (2), to be performed by the Supreme Court.
(2) If-
(a) an arbitration agreement provides that the County Court or the Magistrates' Court is to have jurisdiction under this Act; or
(b) the parties to an arbitration agreement have agreed in writing that the County Court or the Magistrates' Court is to have jurisdiction under this Act and that agreement is in force-
the functions are to be performed, in relation to that agreement, by the County Court or the Magistrates' Court, as the case requires.
Note
This section differs from the Model Law to the extent that it relates to functions conferred on the Court with respect to domestic arbitrations that are not referred to in the Model Law.
...
(1) A court before which an action is brought in a matter which is the subject of an arbitration agreement must, if a party so requests not later than when submitting the party's first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.
(2) Where an action referred to in subsection (1) has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court."
11 It will be seen that there are differences in these provisions in the capitalisation or non-capitalisation of the letter "c" in the word "court". In s 2(1), capitalisation is used in defining the reference to the Supreme Court. Similarly, in s 6, capitalisation is used in the specific references to the Supreme Court, the County Court and the Magistrates' Court. In contrast, the word "court" as used in s 8 is not capitalised at all.
12 SSA submits that there are cases in which the word "court" is used in legislation, where that term has not been defined, and has been construed as including VCAT or some other statutory tribunal. It is also conceded that there are cases in which the term has not been construed in this way. Similar submissions were put to Senior Member Riegler in VCAT as is indicated in the Senior Member's response in his reasons:[11]
"45. I accept that there is authority supporting the proposition that, in some cases, the reference to a 'court' will include the Tribunal. In particular, Nettle J made the following comments in Moorabool Shire Council v J & B Taitapanui concerning s 471B of the Corporations Act 2001 (Cth):
Authority makes plain that the reference to "court" in s 471B is not to be construed in a strict sense, but in a fashion that is broad enough to cover a proceeding in a tribunal such as the Victorian Civil and Administrative Tribunal: See the Recent Decision of Merkel J in Australian Liquor Hospitality and Miscellaneous Workers' Union v Homecare Transport Pty Ltd [3] and also earlier decisions concerned with the comparable provisions in of the Companies Code such as Revasal Pty Ltd (in Liq) [4] and Mowbray College and Exhibit Design and Construction Pty Ltd (in Liq) [5]
13 SSA also made reference in its submissions to a variety of cases in which VCAT or some other statutory tribunal was found to be a "court" and also to cases in which the converse position was reached; submissions which are helpfully set out in full:[13]
"34. Examples of legislation in relation to which VCAT or some other statutory tribunal has been found to be a court include:
(a) section 440D(1) of the Corporations Act 2001 (Cth), which imposes a moratorium on proceedings against a company in administration: Sarandis (Vic) Pty Ltd v Mulberry's Australia Pty Ltd [2002] VCAT 390;
(b) section 471B of the Corporations Act 2001 (Cth), which prohibits a party from bringing or proceeding with a proceeding in 'a court' against a company while it was being wound up in insolvency. In Moorabool Shire Council v J & B Taitapanui [2002] VSC 418, Nettle J, as his Honour then was, held that 'court' in s 471B of the Corporations Act 2001 included VCAT; and
(c) section 61(1) of the Suitors' Fund Act 1951, which provided that where an appeal against a decision of a 'court' succeeds, the Supreme Court may grant to the respondent to the appeal an indemnity certificate. In Australian Postal Commission v Dao (No 2) (1986) 6 NSWLR 497, the NSWCA held that the Equal Opportunity Tribunal was a 'court' within the meaning of that section.
(a) section 77(iii) of the Constitution and section 39(2) of the Judiciary Act 1903 (Cth), which invest federal jurisdiction in state courts. Thus, it has been held that VCAT cannot rule on the validity of a state law under s 109 of the Federal Constitution: Porter v Multi Group Distribution Services Pty Ltd [2000] VCAT 2647; and
(b) section 86(2) of the Trade Practices Act 1974 (Cth), which conferred federal jurisdiction on 'the several courts of the States' in relation to matters arising under certain parts of the Act. In Re Maltall Pty Ltd and Bevendale Pty Ltd (1998) 14 VAR 368, Macnamara DP held that VCAT was not a 'court' for this purpose.
14 More particularly, SSA refers to passages from Sarandis and Moorabool Shire Council:[14]
"37. In Sarandis (Vic) Pty Ltd v Mulberry's Australia Pty Ltd [2002] VCAT 390, Deputy President Macnamara, as his Honour then was, said at [20]:
One of the evident purposes of Part 5.3A of the Corporations Law was the imposition of a moratorium, during the period of administration, on the enforcement of creditors' claims. If "court" in s 440D(1) was construed so as to exclude the Tribunal, a litigant in the Tribunal who claimed damages for breach of contract against a company would have been free to pursue a proceeding after the company went into voluntary administration but a litigant in the Federal Court, the Supreme Court, the County Court or the Magistrates' Court who had exactly the same kind of claim against the same company would not have been free to pursue the proceeding there. No rational justification exists for allowing a litigant in the Tribunal that advantage over other litigants. A construction of the word "court" in s 440D(1) that allowed that result would be absurd.
Authority makes plain that the reference to "court" in s 471B is not to be construed in a strict sense, but in a fashion that is broad enough to cover a proceeding in a tribunal such as the Victorian Civil and Administrative Tribunal: see the recent decision of Merkel J in Australian Liquor Hospitality and Miscellaneous Workers' Union v Homecare Transport Pty Ltd (in Liq)[15] and also earlier decisions concerned with the comparable provisions of the Companies Code such as Revasal Pty Ltd (in Liq)[16] and Mowbray College and Exhibit Design and Construction Pty Ltd (in Liq)[17].
... the intention of s 471B, just as it was the intention of the earlier forms of legislation, to provide a relatively broad ranging means of enabling a party to obtain leave to proceed against a company in liquidation in all forms of litigation where it is just that the party should have access to a means of recovery provided for in the proceedings which would not be available to it in a winding up of the company.
On the basis of these cases and others to which reference was made, SSA submits that, in the words of McHugh JA in Australian Postal Commission v Dao (No 2):[18]
"the word 'court' should likewise be given a liberal and beneficial construction to accord with the purpose and policy of the Act."
15 The Irelands submit, on the other hand, that the authorities relied upon by SSA do not support the contention that VCAT is a "court" for the purposes of s 8(1) of the CAA. In particular, reference is also made to the judgment of McHugh JA and to the sentence which follows the passage from that judgment to which SSA refers, and which is set out above. The sentence which follows is:[19]
16 Additionally, the Irelands submit that the dominant legislative intention or "purposive" approach adopted by the courts in this context is apparent in cases such as the Moorabool Shire Council case and also, more particularly, in Australian Liquor, Hospitality and Miscellaneous Workers Union v Homecare Transport Pty Ltd[20] where Merkel J identified a range of judicial functions performed by the Australian Industrial Relations Commission ("the AIRC") and concluded, nevertheless, that this body was not a court.[21] With reference to the operation of the Corporations Act, Merkel J said in that case:[22]
"[22] There are, however, two further matters. The first is that the legislature can be taken to have assumed that State industrial tribunals of the kind found to be courts in Rochford[23] and Helm[24] would be courts for the purposes of s 440D and 471B of the Corporations Act. There is nothing to indicate that the legislature, in enacting s 58AA of the Corporations Act, intended to change the law in that regard. In those circumstances it is most unlikely that the legislature would intend to treat the AIRC, which has a broader power and capacity to make awards affecting the property and affairs of a corporation than its State counterparts, in any different manner.
[23] The second matter is that it is difficult to discern any reason for excluding an industrial tribunal, such as the AIRC, from the ambit of s 440D and s 471B. Indeed, given the capacity of awards to be made in respect of employees' entitlements, which may prejudice the rights of other unsecured creditors, I would expect a positive legislative intent to include the AIRC and similar industrial tribunals within the purview of the s 471B."
Reliance is also placed by the Irelands on the decision of Kenny J in Commonwealth v Anti Discrimination Tribunal (Tasmania),[25] in which the Anti Discrimination Tribunal was held not to be a court. Additionally, reliance is placed on the more recent decision of the Victorian Court of Appeal in Director of Housing v Sudi[26] where VCAT was held not to be a court "in the sense in which the word 'court' is generally understood in administrative law".[27]
17 SSA does, however, submit that the cases cited by the Irelands in which tribunals were held not to be a court for particular purposes are of little assistance in the present context. In particular, it is said that Director of Housing v Sudi[28] involved the question whether VCAT had the power to examine whether the administrative decision of the Director of Housing to seek an order for possession of property was lawful, as distinct from determining the merits of the application itself. This raised the question whether the VCAT jurisdiction extended to something in the nature of a judicial review jurisdiction; a jurisdiction which the Court of Appeal held, unanimously, was not conferred upon VCAT.
18 In relation to Commonwealth v Anti Discrimination Tribunal (Tasmania),[29] SSA submits that the passage in the judgment of Kenny J to which the Irelands refer concerned the question whether the Tasmanian Anti Discrimination Tribunal could exercise judicial power in relation to a complaint made against the Commonwealth. The point is made by SSA that the relevance of this decision is thereby limited in the present context because here the word requiring interpretation - the word "court" - is found in a piece of ordinary legislation, not the Constitution or the related provisions of the Judiciary Act 1903 (Cth). Hence, questions with respect to the exercise of judicial power and related constitutional issues do not arise. The same submission with respect to relevance is made by SSA in relation to ABY, ABZ v Patient Review Panel (Health and Privacy),[30] which also concerned the question whether VCAT was a "court of a State" within the meaning of those words in s 39(2) of the Judiciary Act 1903 (Cth). Again, issues arose with respect to the exercise of the judicial power of the Commonwealth.
"Kenny J reasoned as follows. Chapter III of the Constitution requires that only 'courts' can exercise judicial power of the Commonwealth. A body may be characterised as a 'court' for one purpose, but not for another. The meaning of the word 'court' in a statute depends upon the terms of the particular Act, and the statutory context in which that word appears. However, within the Constitution, the meaning of that word is less malleable than elsewhere." [Emphasis added by SSA][34]
20 In my opinion, the passages which SSA emphasises in the passage from the judgment of Weinberg JA in Sudi encapsulate, concisely, the position which SSA and the Irelands rely upon in these proceedings. On this basis, I turn now to consider the provisions of the CAA in light of the statutory context of that Act and its derivation from and substantial adoption of the provisions of the United Nations Commission on International Trade Law ("UNCITRAL") Model Law ("the Model Law") for the purposes of domestic commercial arbitration.[35]
Application of the Commercial Arbitration Act
21 The international origin of most of the provisions of the CAA, as derived from the Model Law, is the subject of specific provision in s 2A of the CAA. The import of these provisions is to seek uniformity of interpretation of the provisions of the CAA consistently with the provisions of the Model Law (as also given effect under the provisions of the International Arbitration Act 1974 (Cth) ("the IAA")). These provisions also effectively treat as legislative extrinsic materials, for the purpose of interpreting the CAA, the documents relating to the Model Law; being documents of UNCITRAL and also of its working groups for the preparation of the Model Law. The provisions of s 2A(4) are, in my view, indicative of the legislature treating the UNCITRAL material as, in effect, additional material for the purposes of s 35 of the Interpretation of Legislation Act 1984 (Vic). Having regard to the significance of these provisions in this context, it is convenient to set them out in full.
"2A. International origin and general principles (cf Model Law Art 2A)
(1) Subject to section 1AC, in the interpretation of this Act, regard is to be had to the need to promote so far as practicable uniformity between the application of this Act to domestic commercial arbitrations and the application of the provisions of the Model Law (as given effect by the International Arbitration Act 1974 of the Commonwealth) to international commercial arbitrations and the observance of good faith.
(2) [omitted]
(3) Without limiting subsection (1), in interpreting this Act, reference may be made to the documents relating to the Model Law of-
(a) the United Nations Commission on International Trade Law; and
(b) its working groups for the preparation of the Model Law.
(4) Subsection (3) does not affect the application of section 35 of the Interpretation of Legislation Act 1984 for the purposes of interpreting this Act.
Note
This section differs from the Model Law. Art 2A(1) has been changed as a consequence of the application of the Act to domestic (instead of international) commercial arbitrations. Art 2A(2) is omitted because it is covered by the provision referred to in section 1AC(4). Subsections (3) and (4) reflect section 17 of the International Commercial Arbitration Act 1974 of the Commonwealth."
Similar provisions are contained in s 17 of the IAA. In TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the Federal Court of Australia,[36] French CJ and Gageler J said:
"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 recognised as binding'."[37]
There was no suggestion that this approach is not generally applicable to both the provisions of the IAA and also the provisions of the CAA. Indeed, there would be no reason to suppose otherwise in view of the provisions of these Acts, to which reference has been made.
22 The other element of s 2A of the CAA is the clarification or saving provisions contained in s 2A(4) of the provisions of s 35 of the Interpretation of Legislation Act 1984 in light of the specific references to the UNCITRAL materials in s 2A(3). This provision and approach is also of significance in the present context; significance which is clear, in my view, when regard is had to the provisions of paragraph (a) of s 35 and also to the provisions of sub-paragraph (b)(i) of that section. These provisions are as follows:
"35. Principles of and aids to interpretation
In the interpretation of a provision of an Act or subordinate instrument -
(a) a construction that would promote the purpose or object underlying the Act or subordinate instrument (whether or not that purpose or object is expressly stated in the Act or subordinate instrument) shall be preferred to a construction that would not promote that purpose or object; and
(b) consideration may be given to any matter or document that is relevant including but not limited to-
(i) all indications provided by the Act or subordinate instrument as printed by authority, including punctuation;
..."
23 In terms of the legislative purpose underlying the CAA, Parliament has assisted with the provision of an express statement in s 1AC of the CAA:
"1AC. Paramount object of Act
(1) The paramount object of this Act is to facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense.
(2) This Act aims to achieve its paramount object by-
(a) enabling parties to agree about how their commercial disputes are to be resolved (subject to subsection (3) and such safeguards as are necessary in the public interest); and
(b) providing arbitration procedures that enable commercial disputes to be resolved in a cost effective manner, informally and quickly.
(3) This Act must be interpreted, and the functions of an arbitral tribunal must be exercised, so that (as far as practicable) the paramount object of this Act is achieved.
(4) Subsection (3) does not affect the application of section 35 of the Interpretation of Legislation Act 1984 for the purposes of interpreting this Act."
24 Reference has already been made to the statutory exhortation to purposive interpretation of legislation as set out in s 35(a) of the Interpretation of Legislation Act 1984. SSA also makes reference to a recent statement by the High Court of Australia in relation to the proper approach to statutory interpretation in Australian Education Union v Department of Education and Children's Services[38] where French CJ, Hayne, Kiefel and Bell JJ said:[39]
"[26] The disposition of this appeal turns upon the correct construction of s 9(4). The process of construction begins with a consideration of the ordinary and grammatical meaning of the words of the provision having regard to their context and legislative purpose. ...
[27] There are textual and purposive indicators to be considered in determining the preferred construction. Also applicable is s 22(1) of the Acts Interpretation Act 1915 (SA) which relevantly provides:
where a provision of an Act is reasonably open to more than one construction, a construction that would promote the purpose or object of the Act (whether or not that purpose or object is expressly stated in the Act) must be preferred to a construction that would not promote that purpose or object.
[28] The reasoning in the IRC was informed by the view that it was desirable that the Minister have flexibility in the appointment of teachers and that Pt III of the Act might be 'unnecessarily prescriptive' in its application to the ad hoc appointments of relief teachers in diverse circumstances. This approach, with respect, emphasised a judicially constructed policy at the expense of the requisite consideration of the statutory text and its relatively clear purpose. In construing a statute it is not for a court to construct its own idea of a desirable policy, impute it to the legislature, and then characterise it as a statutory purpose. The statutory purpose in this case was to be derived from a consideration of the scheme of the Act as a whole, the respective functions of Pts II and III of the Act, and the regulatory requirements of Pt IV of the Act."
25 In relation to the purpose of the CAA, SSA submits that:[40]
"44. In interpreting the words used in the CAA, it is important to recognise that the language of the Act is taken from an international agreement which was not specifically prepared for the particular courts, tribunals and other quasi-judicial bodies of Victoria. Instead, the Model Law implemented by the CAA was intended to be uniform, generic legislation capable of ready implementation in any particular jurisdiction in many different countries.
26 Further, SSA makes reference in its submissions to UNCITRAL material sought to be called in aid of its position:[42]
"49. The UNCITRAL Report of the Secretary General in relation to the Model Law[43] sets out a commentary regarding the Model Law. In relation to the definition of 'court' in the Model Law, it notes that:
[the definition of 'court'] simply refers to, without interfering with, the national judicial system... Taking into account the varied nomenclature, the term 'court' is not restricted to those organs actually called 'court' in a given country but would include any other 'competent authority' (such is the expression used in the 1958 New York Convention). The reference to the judicial system of 'a country' (instead of 'a State') has been used for the sole purpose of avoiding the misconception, possible in a federal of states, that merely 'states courts' are covered but not 'federal courts'.
27 I do not take it to be controversial and, indeed, it is entirely consistent with the legislative and other material to which reference has been made, that the purpose of the CAA is to facilitate commercial arbitration efficiently and without unnecessary delay and expense by adopting a well accepted international regime, in the form of the Model Law, which emphasises and enhances court assistance rather than court intervention. In terms of court intervention by way of merits appeals, the CAA, unlike the IAA, provides for appeals against awards, in s 34A. This does not mean, however, that the provisions of the CAA are to be interpreted without regard to the language of that legislation or without regard to the place of this legislation in the Victorian statute book as a whole.
28 Additionally, the international materials to which reference may be made under the provisions of s 2A of the CAA must be treated carefully, both having regard to their clear origins and purposes and also having regard to the accepted approach of the Australian courts to extrinsic materials. These materials are to aid interpretation, rather than to provide material which is, in effect, to be read with the relevant statute as though the extrinsic materials were also legislative documents. In my opinion, SSA in its submissions with respect to the UNCITRAL Report,[44] containing a commentary in relation to the Model Law, seeks to treat that commentary with reference to the word "court" as more than mere commentary by way of extrinsic material. Additionally, SSA, in my view, fails to take account of the fact that this Report is a commentary on the terms of the Model Law itself, not upon the provisions of the CAA, which are a separate legislative enactment; though by reference to and in substantially the same terms as the Model Law. These matters are demonstrated by reference to the provisions of the Model Law which, like the provisions of the CAA, demonstrate careful attention to definition provisions and the drafting of the substantive provisions. In Article 2 of the Model Law (Definitions and rules of interpretation), a definition of "court" is included in the following terms:
"For the purposes of this [Model] Law:
...
(c) 'court' means a body or organ of the judicial system of a State;
..."
Having defined "court" in this way, the Model Law uses the word "court", uncapitalised, throughout its text. In view of the fact that the Model Law is intended to be used by many countries (i.e. "States") throughout the world, both civil law and common law and with a variety of judicial systems, it is entirely unsurprising that such a general definition of "court" would be included in the Model Law.[45] The commentary contained in the UNCITRAL Report to which SSA refers demonstrates this position having regard to the reference to the intended inclusion within the definition of any other "competent authority" such as that expression is used in the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("the New York Convention").[46] The non-specific nature of the reference to "court" in the Model Law is, by reference to the provisions of the New York Convention, illustrated by paragraph 1(e) of Article V of that Convention, which is cast in the following terms:
"1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that ...
...
(e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made."
29 In my view, it is clear on this basis that the provisions of the Model Law and the commentary contained in the UNCITRAL Report are directed to embracing the diversities in the judicial systems of the various nation States applying the Model Law provisions, rather than in any way seeking to dictate which entity or entities are or are not to be treated as a "court" for the purposes of the Model Law provisions as they operate in, or in parts of, a nation State. In other words, it is the provisions of the CAA which govern and determine this position within the part of the nation State of Australia with which we are concerned; namely, Victoria. On this basis, I turn now to consider the provisions of the CAA.
30 As indicated previously, it is, in my view, clear from the provisions of the CAA that considerable care has been given by the Parliament to the definition provisions contained in s 2 of that Act and the drafting of the substantive provisions of the Act. This is demonstrated by careful consideration of the relationship between the definition of "the Court" in s 2(1) of the CAA, the provisions of s 6 and those of s 8. Additionally, having regard to the specific reference to the Supreme Court, the County Court and the Magistrates' Court in s 6 of the CAA, the obvious point should be made, namely that had Parliament intended to refer to VCAT in any of these provisions, particularly s 8, it was open for it to have done so. That the legislative mind was directed to considering the "body or organ of the judicial system"[47] is clear from the references to particular courts by name and from the various functions enumerated in s 6 of the CAA, by reference to corresponding provisions in the Model Law.
31 The functions referred to in s 6 of the CAA significantly mirror corresponding provisions of the Model Law, as follows:
Appointment of arbitrators failing agreement between the parties.
Appointment of arbitrators where appointment procedure agreed upon by the parties fail.
Challenge under any procedure agreed on by the parties et cetera are not successful.
Decision on arbitral tribunal ruling as a preliminary question.
Refusal or failure to attend before arbitral tribunal or to produce document.
Court may prohibit disclosure of confidential information in certain circumstances.
Court may allow disclosure of confidential information in certain circumstances.
Determination of preliminary point of law by the Court.
Application for setting aside as exclusive recourse against arbitral award.
In relation to these provisions of the CAA, it is relevant in the present context to note that each of these provisions when referring to the various functions refers to the "Court". The use of the capitalised reference to "court" is both consistent with the definition of this word in s 2(1) of the CAA and also the provisions of s 6(1) of that Act, which provides that the functions referred to in these sections are to be performed by the Supreme Court. This is a further indication, in my view, of the care and attention that has been given to the drafting of the definitions and substantive provisions of the CAA. This position is further reinforced by the provisions of s 6(2) of the CAA (which is linked to the operation of s 6(1) of the CAA by the closing words of those provisions) which enable parties to provide in their arbitration agreement or in a further written agreement that the County Court or the Magistrates' Court is to have jurisdiction under the CAA. If there is party agreement, the functions ascribed in s 6(1) to be performed, expressly, by the Supreme Court are to be performed by whichever of these other courts the arbitration agreement or other written agreement between the parties stipulates. There is no reference to VCAT in these provisions and, given the express reference to the various courts by name, it is clearly not open to parties to agree that the functions provided for in s 6 of the CAA could be performed by VCAT.
32 Additionally, the provisions of s 41 of the CAA appear to reinforce or, at least, confirm this position. Again, these provisions are drafted to accommodate their application to each of the three Courts named in s 6(2), in the event of party agreement under those provisions. Section 41 is in the following terms:
(1) Rules of court may be made for carrying the purposes of this Act into effect and, in particular, for or with respect to the following -
(a) applications to a court under this Act and the costs of such applications;
(b) the payment or bringing of money into and out of a court in satisfaction of claims to which arbitration agreements apply and the investment of that money;
(c) the examination of witnesses before a court or before any other person and the issue of commissions or requests for the examination of witnesses outside Victoria, for the purposes of an arbitration;
(d) offers of compromise in relation to claims to which arbitration agreements apply;
(e) any other matter or thing for or with respect to which rules are by this Act authorised or required to be made by a court.
(2) Subsection (1) does not limit the rule-making powers conferred on a court by any other Act.
There is no equivalent to this section in the Model Law."
33 In light of the above it is clear, in my view, that Parliament, in considering which "body or organ of the judicial system" of Victoria was to perform the functions referred to in s 6(1) (which, as I have indicated, significantly derive from the Model Law provisions), thought it appropriate to vest those functions, expressly, in the Supreme Court; subject to the possibility that the parties to an arbitration agreement may choose to have those functions performed by the County Court or the Magistrates' Court. In other words, in terms of the definition of "court" in Article 2(c) of the Model Law and by reference to the commentary in the UNCITRAL Report to which reference has been made, Parliament specified in the CAA that the "body or organ" was primarily the Supreme Court; with the possibility of the County Court or the Magistrates' Court, by agreement. In my opinion, in the face of these clear provisions of the CAA, neither the Model Law provisions nor the extrinsic materials to which reference has been made provide any basis for departing from this position.
34 The question which then arises is whether the provisions of s 8(1) of the CAA detract from or otherwise affect this position as a result of the reference in that section to the word "court", uncapitalised. Again, though for reasons which follow, it would not fit into the legislative scheme of the CAA if the word "court" were capitalised. Moreover, it was open to Parliament to refer to VCAT in the s 8 provisions had it intended VCAT to have a role. The same is true of the provisions of s 9 (arbitration agreement and interim measures by court), though these provisions are not relevant, directly at least, to the present application. Perhaps more significantly, the reference to "court", uncapitalised, in s 8 is, in my view, entirely consistent with the structure of the CAA. In terms of courts, s 8, which is directed to protecting arbitral proceedings, would not achieve this objective were it to be limited in application to one or more of the Supreme Court, the County Court or the Magistrates' Court. Clearly, its provisions are directed to courts generally and, had the word "court" been capitalised, then its operation would have been limited to the Supreme Court as a result of the definition contained in s 2(1). Additionally, there was no need for the provisions of s 8 to be specific with reference to the County Court or the Magistrates' Court, as it is not a situation where functions need to be separated between courts, as is the position with the matters dealt with in s 6 of the CAA. In other words, I am of the view that the provisions of s 8 do not indicate any lapse into generality on the part of the legislature with respect to the meaning of the word "court", but, rather, careful attention to language which, in the context of the provisions of the CAA to which reference has been made, simply indicates that its provisions apply to all courts in the sense of including the three courts to which reference has been made, specifically, in s 6. In my view, the same applies with respect to the provisions of s 9, provisions which are also intended to refer to all of the previously named courts.
35 Moreover, in my view, there is no absurdity which follows from application of the provisions of s 8 of the CAA, construed on this basis. In terms of absurdity or consequences said to be at odds with the purpose of the CAA, SSA submits:[48]
"51. The effect of excluding VCAT from the compulsory operation of section 8(1) of the CAA is significant. A party to an arbitration agreement who commences proceedings in breach of the agreement in the Supreme Court, County Court or Magistrates' Court will be the subject of a compulsory stay under s 8(1) of the CAA. However, if the party commenced proceedings in VCAT, the proceeding would not be stayed under section 8.
36 In my opinion, these submissions, apart from involving departure from the language of the CAA, do not produce a situation which might be regarded as untenable or absurd and contrary to the intention of Parliament.
37 First, they overlook the nature and functions of VCAT, matters which were considered by the Court of Appeal in Director of Housing v Sudi,[49] other aspects of which have already been considered.
38 In relation to VCAT, Warren CJ said:[50]
"VCAT is intended to be a forum for speedy and inexpensive resolution of specific kinds of disputes in respect of which the legislature saw fit to confer jurisdiction."
And as Weinberg JA commented, VCAT "... deals with the overwhelming majority of legal proceedings in this State ...".[51]
39 Additionally, various observations have been made in relation to the purposes of VCAT, some of which are summarised by Pizer:[52]
40 Having regard to the nature and purpose of VCAT, it does not follow, in my view, that the absurdity or inconvenience pointed to in SSA's submissions follows if VCAT is not to be regarded as a "court" for the purposes of s 8(1) of the CAA. It is quite consistent with the provisions of the CAA, in my view, that Parliament intended the possibility of VCAT's broad jurisdiction being exercised untrammelled by any mandatory provisions in favour of arbitration such as those contained in s 8(1) of the CAA. The fact that proceedings within a similar ambit of jurisdiction, if commenced in the Supreme Court, the County Court or the Magistrates' Court, would, if there were a relevant arbitration agreement, be constrained by the operation of the provisions of s 8(1) does not, in my view, indicate anything more than a distinction between the nature and purpose of VCAT as distinct from that of these courts where it might be said that procedures are not similarly "speedy and inexpensive". Additionally, it does not necessarily follow that, in circumstances where a dispute commenced in VCAT is within the scope of an arbitration agreement between the parties, VCAT may not make an order under s 77 of the VCAT Act referring the dispute to the arbitral tribunal as a more appropriate forum. It is true that Parliament has excluded a variety of disputes which were formerly the subject of commercial arbitration from that process in favour of exclusive jurisdiction in VCAT, particularly under the RLA and the Domestic Building Contracts Act 1995 (Vic). Nevertheless, it does not follow from these particular exclusions that there is any absurdity or inconvenience in leaving open the option to parties to commence proceedings in VCAT in the face of an arbitration agreement to take advantage of VCAT as a speedy and inexpensive forum. This still leaves open the possibility of the party not sharing this view seeking an order from VCAT in favour of arbitration under s 77 of the VCAT Act.
41 For these reasons, I find that VCAT is not a "court" for the purposes of s 8(1) of the CAA. Consequently, VCAT was not bound to refer the dispute between the Irelands and SSA to arbitration, pursuant to s 8 of the CAA.
42 In the course of the hearing of this matter, some attention was given to the provisions of a Franchise Agreement between the Irelands and SSA dated 28 October 2003 ("the Franchise Agreement"), which contains an arbitration agreement.
43 The arbitration agreement is contained in clause 10 of the Franchise Agreement, which contains a suite of what are commonly referred to as cascading dispute resolution provisions. The relevant parts of clause 10 are as follows:
"10. DISPUTE RESOLUTION. The parties want to settle all issues quickly, amicably, and in the most cost effective fashion. To accomplish these goals, the parties agree to the following provisions that will apply to resolve any dispute or claim arising out of or relating to this Agreement, or any other Franchise Agreement the parties have with each other (a 'Dispute'):
...
c. The parties will arbitrate the Dispute if the mediation clause in Subparagraph 10.a. is not enforceable, or the parties do not settle the Dispute under the informal discussion and mediation procedures above, or the Dispute is one which this Agreement provides will be submitted directly to arbitration, except as provided in this Agreement. The arbitration will be held in accordance with the United Nations Commission on International Trade Regulations and Law (UNCITRAL) Arbitration Rules administered by an arbitration association, such as the American Arbitration Association or the Institute of Arbitrators or Mediators Australia, at a hearing to be held in Queensland. The arbitration will be conducted in English and decided by a single arbitrator unless the law of Australia requires three (3) arbitrators. Any court having jurisdiction may enter judgment on the arbitrator's award. Except as provided in this Agreement, a party must commence and pursue informal discussions, mediation, and arbitration to resolve Disputes before commencing legal action.
..."
44 The question of the validity of this clause 10.c. ("the arbitration agreement") was the subject of written and oral submissions in these proceedings. Though not directly relevant to the grounds set out in the proposed Notice of Appeal, it follows that if the arbitration agreement were ineffective for any reason, questions sought to be raised on appeal would be of academic interest only; if not a hypothetical question which the Court would not entertain. The validity of the arbitration agreement appears to have been assumed in the VCAT proceedings and although Senior Member Riegler found that the word "court" as used in the relevant provisions of the CAA did not include VCAT, the principal basis of maintaining the VCAT jurisdiction with respect to the matters raised before the Tribunal was as a result of the operation of the provisions of the RLA, which confer exclusive jurisdiction on VCAT in dealing with retail tenancy disputes. These aspects of the matter were also the subject of submissions in the present proceedings, so more is said on these issues in the reasons which follow.
45 Returning to the provision of the arbitration agreement, it is clear that its provisions contain a number of errors and raise some problems.
46 First, the reference to "United Nations Commission on International Trade Regulations and Law" is erroneous, as the abbreviation "UNCITRAL" in the parenthesis which follows clearly indicates. The parties to the present proceedings did not suggest that this reference should be read as anything other than the United Nations Commission on International Trade Law. I accept that the reference to this organisation in long form is clearly an error and should be read as indicated.
47 The second problem that arises is that the arbitration agreement provides for administration of the arbitration by an "arbitration association" which is not specified. The agreement does continue to provide, in effect, for examples of a relevant "arbitration association": "such as the American Arbitration Association or the Institute of Arbitrators or [sic] Mediators Australia". I note that the latter organisation is correctly named as the Institute of Arbitrators and Mediators Australia. Another error in drafting, though not of any consequence. More importantly, these provisions of the arbitration agreement do not provide any clear machinery for selecting the administering "arbitration association" apart from, obviously, by agreement. SSA submits that meaning can be given to the provisions with respect to an "arbitration association" by reading the provisions as entitling the party triggering an arbitration to select the "arbitration association", regardless of any preference which the other party to the dispute the subject of arbitration may have. Moreover, it is not clear whether the selection or nomination by the party triggering the arbitration is to be confined to the associations referred to in the arbitration agreement; namely the American Arbitration Association or the Institute of Arbitrators and Mediators Australia, or whether the party entitled to select the arbitration association could select any other similar arbitration association. In support of this submission, SSA relied upon a variety of authorities on the construction of contracts, contractual uncertainty and the construction of arbitration agreements more specifically. In particular, reference was made to the following authorities in support of the proposition that courts should strive to give effect to arbitration agreements:[53]
"27. No special words are necessary to create an arbitration agreement. All that must be clear is that arbitration is the contemplated form of dispute resolution: Briscoe & Co Ltd v Victorian Railways Commissioner [1907] VicLawRp 92; [1907] VLR 523; Jones, Commercial Arbitration in Australia (Thomson Reuters, 2011) at 57.
'At the present date, in cases where the parties have agreed on an arbitration or valuation clause, in wide enough terms, the Courts accord full weight to their manifest intention to create continuing legal relations. Arguments invoking alleged uncertainty, or alleged inadequacy in the machinery available to the Court for making contractual rights effective, exert minimal attraction.'
'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.'
'Regard should be had in construing clause 45 to the clear tenor of approach internationally in construing arbitration clauses in international agreements. The authorities (to which I will refer shortly) are clear that a liberal approach should be taken. That is not to say that all clauses are the same or that the language used is not determinative. The court should, however, construe the contract giving meaning to the words chosen by the parties and giving liberal width and flexibility to elastic and general words of the contractual submission to arbitration.'
48 In my view, these authorities support the proposition that common law courts do, as SSA submits, strive to uphold the validity of arbitration agreements. I do not take there to be any controversy between the parties in relation to the general principles to be applied in this respect.
49 A further issue which arose in the course of the proceedings was whether arbitrations conducted under the UNCITRAL Arbitration Rules are open to administration by an arbitration institution; an arbitration association. Both the UNCITRAL Arbitration Rules of 1976 and the UNCITRAL Arbitration Rules of 2010 are a set of rules which lend themselves to both ad hoc, unadministered arbitration, and administered arbitration, in whole or in part. The SSA submissions are helpful in this respect in referring to a number of provisions in model arbitration clauses, guides and the like with respect to the UNCITRAL Arbitration Rules and their administration:[54]
"33. Although arbitration rules are sometimes thought of as designated for either administered or ad hoc arbitrations, arbitration may be conducted under the UNCITRAL Arbitration Rules yet still be administered by an arbitration body. Thus, IAMA recognises that the UNCITRAL Arbitration Rules
'are widely used in ad hoc as well as administered arbitrations.'[55]
'Any dispute or difference whatsoever arising out of or in connection with this contract shall be and is hereby submitted to arbitration in accordance with, and subject to, the UNCITRAL Arbitration Rules. The appointing and administering body shall be The Institute of Arbitrators & Mediators Australia (IAMA). There shall be one arbitrator, the language of the arbitration shall be English, the place of the arbitration shall be (nominate the Australia city in which you wish the arbitration to occur).[56]
'The ICDR can administer cases under its own International Dispute Resolution Procedures, various AAA Rules and the UNCITRAL Arbitration Rules.'
'Any dispute, controversy, or claim arising out of or relating to this contract, or the breach, termination, or invalidity thereof, shall be settled by arbitration under the UNCITRAL Arbitration Rules in effect on the date of this contract. The appointing authority shall be the International Centre for Dispute Resolution. The case shall be administered by the International Centre for Dispute Resolution under its Procedures for Cases under the UNCITRAL Arbitration Rules.'
'The UNCITRAL Arbitration Rules have been used in the following different ways by arbitral institutions and other interested bodies, including chambers of commerce and trade associations:
(a) They have served as a model for institutions drafting their own arbitration rules. The degree to which the UNCITRAL Arbitration Rules have been used as a drafting model ranges from inspiration to full adoption of the Rules;
(b) Institutions have offered to administer disputes under the UNCITRAL Arbitration Rules or to render administrative services in ad hoc arbitrations under the Rules;
(c) An institution (or a person) may be requested to act as appointing authority, as provided for under the UNCITRAL Arbitration Rules.'
'to assist throughout the process with matters such as payments, notice, mailings, and arranging for hearing facilities.'"
Again, I do not take it to be a matter of controversy between the parties that if the arbitration agreement does validly provide for arbitration under the UNCITRAL Arbitration Rules, then the arbitration could be conducted either as an ad hoc arbitration or as an administered arbitration, depending upon the operation of the provisions of the arbitration agreement, properly construed. An issue, however, which is highlighted in the SSA submissions set out above, is that there is a distinction to be drawn between the role of an arbitral institution administering an arbitration under the UNCITRAL Rules and the role or function of an appointing authority, the body charged with appointing the arbitrator or arbitrators which constitute the arbitral tribunal, in the absence of agreement between the parties in this respect. This is a further problem which is addressed more specifically in the paragraphs which follow.
50 In relation to the proper construction of the administration provisions of the arbitration agreement, I accept the submissions of SSA, in light of the authorities on the approach the courts should adopt with respect to arbitration agreements, that these provisions can only be given some operation by construing them on the basis that they do provide the party triggering an arbitration under the arbitration agreement with the right to nominate an arbitration association to administer the arbitration. It would seem to follow on the same basis that if the triggering party failed to nominate an administering arbitration association within a reasonable time of triggering the arbitration, then the other party or parties to the arbitration agreement would have the right to select an administering arbitration association. The exercise of this right by the other parties would, naturally, require notice to the triggering party of their intention to do so and to provide a reasonable further period of time for the triggering party to act.[59] If neither the triggering party nor any of the other parties did select an arbitration association, then the arbitration agreement could operate, nevertheless, to produce an ad hoc arbitration under the UNCITRAL Arbitration Rules. It is not necessary for present purposes to express a view as to whether the arbitration association nominated would be confined to the named associations or whether they are simply an indication of the type of arbitration association which could be appointed. I do note, however, that the express provisions of the arbitration agreement do contemplate the possible appointment of an arbitration association to administer the arbitration which is not based in Victoria or Australia, namely the American Arbitration Association.
51 The third problem, and probably the most serious, is the omission of any machinery in the arbitration agreement for the appointment of the member or members of the arbitral tribunal. There is a clear distinction between an arbitral institution or association which administers an arbitration and an arbitral institution or association, or a person, designated as an appointing authority for the purpose of appointing the arbitral tribunal. This distinction is noted in the UNCITRAL recommendation extracted in the SSA Submissions which are set out above.[60] The arbitration agreement does not provide for an appointing authority or any other machinery for the appointment of an arbitrator or arbitrators. In many instances this deficiency will be resolved by specifying that the arbitration is to be conducted according to the rules of a specified arbitral institution or association - where its rules specify that the institution or association is itself the appointing authority. That is, however, not the position under the terms of the arbitration agreement. Consequently, the parties are left to rely upon the operation of the UNCITRAL Rules to achieve appointment of the arbitral tribunal.
authorities are, for present purposes, relevantly similar.[61] Under these Rules, where there is no agreement between the parties as to the appointment of the arbitral tribunal, and in the absence of agreement as to an appointing authority, either party may request the Secretary-General of the Permanent Court of Arbitration at The Hague to designate an appointing authority.[62] Regardless of whether the 2010 Rules or the 1976 Rules apply, delays are involved. A 30 day period is required to elapse during which the parties have not reached agreement on the choice of a sole arbitrator under the 1976 Rules (Article 6(2)) and with respect to the absence of agreement as to the choice of an appointing authority under the 2010 Rules (Article 6) before a request is made by a party to the Secretary-General of the Permanent Court of Arbitration at The Hague to designate an appointing authority. Once the requisite time periods have elapsed to allow a request to be made to the Permanent Court of Arbitration, the request may be made, together with payment of a fee which is currently set at €750.[63] The appointing authority designated by the Permanent Court of Arbitration must agree to accept the appointment. If the appointing authority refuses to accept the appointment, then a further request may need to be made to the Permanent Court of Arbitration to designate another appointing authority, and so the process commences once again. Designation of an appointing authority is, of course, only one step in the process of appointing the arbitral tribunal. Once the designated appointing authority has agreed to act, it must then appoint the arbitral tribunal and the person or persons appointed in that capacity must then agree to act. If the person or persons do not agree to act, or if the appointment is challenged for some reason, then the whole process must begin again. It is fair to say, in my view, that the whole process is quite elaborate and requires a degree of understanding of arbitration processes. The process and issues arising with respect to the provisions of both the 1976 Rules and the 2010 Rules are examined in some detail in A Guide to the UNCITRAL Arbitration Rules.[64]
53 Most people, even judges, travelling internationally would have noticed the Subway take-away food stores in many places throughout the world. The extent of the Subway operations internationally is illustrated in the SSA submissions, which make reference to a decision of the United States District Court for the Southern District of New York in Farrell v Subway International, BV.[65] The case also indicates that the arbitration agreement which is contained in the Franchise Agreement relevant to these proceedings is something of a "standard form" clause which appears to have been used, at least, in the United States, the Republic of Ireland and also in Australia. That being so, one might wonder why at least some of the problems with its drafting which have been identified have not been remedied.
54 In any event, Farrell operated three Subway franchises in Dublin. The Franchise Agreement which was applicable contained an arbitration agreement in relevantly identical terms to that contained in paragraph 10.c. of the Franchise Agreement, the arbitration agreement, relevant to this proceeding. Subway International BV commenced an arbitration to be administered by the American Dispute Resolution Centre in the City of New York. Proceedings were brought by Farrell to stay the arbitration on two bases. The first was that the arbitration agreement did not allow one party to choose the American Dispute Resolution Centre as the appointing authority, unilaterally. The second was that the arbitral forum selection clause in the Franchise Agreement which designated New York as the site for arbitration was grossly unreasonable, bearing in mind that Farrell was an Irish citizen and operating Subway franchises in Dublin. The Memorandum Opinion and Order in the New York proceedings was delivered by Judge John F. Keenan, a United States District Judge. Judge Keenan upheld the first basis of complaint, but rejected the second on the basis that Farrell had agreed to arbitration in the United States and could not now argue that it was disadvantaged because the restaurant franchise was located in Dublin.[66] Judge Keenan, in upholding the first basis of complaint, held that the arbitration clause was valid and enforceable. In view of the relevance of his Honour's reasoning in relation to the first ground with respect to the enforceability of the arbitration agreement and the process for the appointment of arbitrators under the UNCITRAL Rules, it is helpful to set out the Court's reasoning in this respect in full:[67]
"C. Subway's Unilateral Selection of ADRC Violates the Agreement
As an initial matter, the parties disagree as to whether a dispute over selecting the arbitrator is a subject for the Court or for the arbitrator to decide. Petitioner asks the Court to stay arbitration because Subway's selection of ADRC as the appointing authority was contrary to the Agreement. Subway asserts that whether the ADRC was properly designated is a matter for the arbitrator to decide.
'When parties have agreed to arbitrate, but disagree as to the operation or implementation of that agreement, under the Federal Arbitration Act it is properly a matter for the Court.' Stop & Shop Supermarket Co, LLC v United Food & Commercial Workers' Union Local 342, AFL-CIO, CLC, No 06 Civ 3201, 2006 WL 1148728, at *2 (SDNY May 1, 2006), aff'd, 246 F. App'x 7 (2d Cir. 2007). A dispute over a party's choice of arbitrator is properly submitted to the Court. It would be counterintuitive to allow the arbitrator in question to determine the propriety of his selection. See id. ('Here, a method of the arbitration (the selection of appropriate arbitrators) is called into question and the Court undertakes its duty under s 5 to correct the failure of a party to avail itself of the proper method. It would be contrary to s 5 to submit to the arbitrator in question the appropriateness of his selection.'); cf. Avis Rent a Car Sys, Inc v Garage Emp Union, Local 272[1986] USCA2 439; , 791 F.2d 22, 25 (2d Cir. 1986) (court has the power to invalidate an arbitration award 'if the arbitrator is not chosen in accordance with the method agreed to by the parties'); Serv Emp Int'l Union, Local 32BJ v Coby Grand Concourse, LLC, No 04 Civ 9580, 2006 WL 692000, at *5 (SDNY Mar 16, 2006) ('Since the unilaterally selected arbitrator in this case was chosen in complete contravention of the arbitration provision of the CBA, the arbitrator's award was without effect, and is therefore vacated.').
As to ADRC, Petitioner submits that Subway failed to follow the procedures set out in the Agreement for selecting the arbitrator. The Court agrees. The arbitration provision of the Agreement is ambiguous. Paragraph 10(c) provides in part:
The parties will arbitrate any Dispute the parties do not settle under the discussion procedures above, and any Dispute which this Agreement provides will be submitted directly to arbitration, except as provided in this Agreement. The arbitration will be held in accordance with the United Nations Commission on International Trade Regulations and Law (UNCITRAL) Arbitration Rules administered by an arbitration agency, such as the International Centre for Dispute Resolution, an affiliate of the American Arbitration Association.
(Semel Aff. Ex. B Franchise Agreement 10(c).) The Agreement does not specify an arbitrator but provides for a method of selection and suggests one possible choice. Under the FAA, '[i]f in the agreement provision be made for a method of naming or appointing an arbitrator ... such method shall be followed; but if no method be provided therein, or if a method be provided and any party thereto shall fail to avail himself of such method ... then upon the application of either party to the controversy the court shall designate and appoint an arbitrator.' 9 USC s 5. Thus, federal law directs that the Court enforce the selection of the arbitrator in accordance with the terms of the Agreement, and here, the Agreement states that UNCITRAL Rules govern.
Article 6 of the UNCITRAL Arbitration Rules covers 'Appointment of Arbitrators'.[68] Under Article 6, the parties must agree on the arbitrator and/or the appointing authority. If the parties cannot agree, then either party may request the Secretary-General of the Permanent Court of Arbitration at The Hague to select an appointing authority. (Semel Aff. Ex. C, UNCITRAL Rules at 271.) The parties do not dispute UNCITRAL's application. Instead, Respondent asserts that Section 10(c) allows for the unilateral selection of any 'agency "such as" the ICDR, capable of and willing to use the UNCITRAL rules.' (Mem. of Law in Opp'n to Petition to Stay Arbitration at 13.)
Respondent's reading of the arbitration provision has no limitation - any arbitration agency may be appointed unilaterally. Respondent ignores the beginning clause of the sentence that states that '[t]he arbitration will be held in accordance with the United Nations Commission on International Trade Regulations and Law (UNCITRAL) Arbitration Rules.' These rules include a process for the selection of arbitrators. Nothing in the Agreement suggests that all aspects of the arbitration except for the selection of the appointing authority or arbitrator would be governed by the UNCITRAL Arbitration Rules. Petitioner did not agree to the selection of ADRC; under UNCITRAL Rules, the parties could either agree on an alternate arbitration agency or apply to The Hague for assistance. Because ADRC was not selected in accordance with the Agreement the arbitration is stayed, pursuant to the FAA and the Convention, so that the parties may pursue arbitration before a properly selected arbitrator.[69]
55 With respect, I note that Judge Keenan's reasoning generally reflects my own opinion as to the enforceability of the similarly worded arbitration agreement in the Franchise Agreement relevant to these proceedings and also the procedural requirements for the appointment of the arbitral tribunal which would, absent agreement, require recourse to the Permanent Court of Arbitration. I do, again with respect, differ in relation to the construction of the arbitration agreement with respect to the appointment of an administering body, for the reasons I have already indicated. As Judge Keenan notes in the concluding part of his Honour's reasons on the issue of the selection of ADRC, any difficulties with respect to the appointment of the arbitral tribunal or the administering body could be resolved by agreement between the parties, but that is not a matter which is to be assumed for the purpose of construing arbitration agreements or the procedural consequences of the terms of arbitration agreements.
56 Remembering that the VCAT proceedings and the substance of the present proceedings concern a Subway franchise business operating from a shop in a shopping centre food court located in Doncaster and a kiosk located in the same shopping centre, the Irelands submitted that the arbitration agreement is void as being in breach of the Trade Practices (Industry Codes - Franchising) Regulations 1998 unless the provisions of the RLA, conferring exclusive jurisdiction in favour of VCAT, operate. Further, it is submitted that the arbitration agreement is also void as it is unconscionable under s 51AC of the Trade Practices Act 1974, particularly under the provisions of s 51AC(3), which provide as follows:
"51AC Unconscionable conduct in business transactions
...
(3) Without in any way limiting the matters to which the Court may have regard for the purpose of determining whether a corporation or a person (the supplier) has contravened subsection (1) or (2) in connection with the supply or possible supply of goods or services to a person or a corporation (the business consumer), the Court may have regard to:
(a) the relative strengths of the bargaining positions of the supplier and the business consumer; and
(b) whether, as a result of conduct engaged in by the supplier, the business consumer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and
...
(g) the requirements of any applicable industry code; and
..."
These provisions are now reflected in Schedule 2, s 22 of the Competition and Consumer Act 2010.
57 It is also submitted that the effect of the provisions of clause 10.(g) of the Franchise Agreement breached the Franchising Code insofar as it reserves to SSA the right to terminate the Franchise Agreement without notice or informal discussion, mediation or arbitration; particularly, it is said, as the consequences of termination for the Irelands, as franchisees, might be expected to be extremely severe in terms of loss of future profits and the capital value of the business. It is also submitted that other aspects of the Franchise Agreement are unconscionable as they are unfair and in conflict with the Franchising Code and also s 68B of the Trade Practices Act. It is not necessary, however, to form any view on these matters for the purpose of the present proceedings. This is because, first, they are not matters which go to the grounds of the proposed appeal, directly or indirectly and, secondly, even if it might be argued that the validity of the Franchise Agreement itself is relevant with respect to the validity of the arbitration agreement, the answer must be, in my view, that the latter provisions would be expected to survive the failure of the Franchise Agreement on the basis of the doctrine of separability of arbitration clauses and their consequent survival, regardless of the fate of the agreement in which they might be contained.[70]
58 In terms of the arbitration agreement itself, the point was made that its provisions, in addition to those already considered, also impose unnecessary expense on the Irelands by requiring an arbitration hearing in Queensland. Whilst accepting that this appears somewhat onerous and unnecessary having regard to the subject matter of the dispute, noting however, SSA's submissions that the Irelands' claim is substantial and a journey to Queensland is not onerous in that context, I do not regard this as a sufficient basis to make a finding that the arbitration agreement is void on any of the bases submitted by the Irelands. There was also discussion of a number of United States court decisions in relation to unconscionability with respect to arbitration agreements, with particular reference to Farrell v Subway International BV,[71] Nino v The Jewellery Exchange Inc[72] and Gandee v LDL Freedom Enterprises.[73] It is true, however, that the arbitral environment in the United States is somewhat different from that in Australia, if only because of the complexities of a much larger federation and different State laws affecting arbitration. I take it that the Irelands, in effect, accept this position as their further submissions with respect to the unconscionability of the arbitration agreement are directed principally to Australian case law and legislation rather than the United States. [74] Consequently, for the reasons set out in the SSA submissions, I accept that the United States law is not helpful with respect to unconscionability or related arguments in the present proceedings.[75] Moreover, for the preceding reasons it is not necessary to pursue further the contention by the Irelands that the arbitration agreement is unconscionable and otherwise void or unenforceable under Australia law.
59 SSA submitted that it should not now be open to the Irelands to complain about the operation and ramifications of the arbitration agreement which they chose to enter into. In the context of this proposed appeal two points should be made. First, whether or not the Irelands entered into the arbitration agreement with their eyes open does not go to the proper interpretation of s 8(1) of the CAA; again, for reasons already indicated, this is primarily a matter of statutory interpretation. Secondly, insofar as Parliament might be thought to have good reason to seek to preserve access to the "speedy and expensive"[76] dispute resolution procedures of VCAT the present circumstances are illustrative of a situation where parties, the Irelands as retail food outlet operators in a Melbourne suburb, find themselves having to resolve this dispute in a quite different environment. As discussed, they find themselves in an environment which raises complexities and potential delays and expense in dealing with what is, essentially, an international arbitral regime and, possibly, having to deal with both the Permanent Court of Arbitration in The Hague and also the American Arbitration Association; which on SSA's construction of the arbitration agreement it could choose to nominate under its provisions. On the material before me I would have to infer that it is more probable than not that such an excursion for the purpose of resolving, what is essentially a shop dispute, was never dreamed of by the Irelands.
60 There is, however, an aspect in relation to the proper construction and operation of the arbitration agreement which is, in my view, directly relevant to this proceeding and the proposed appeal. It is not an issue which is relevant in the sense of being decisive with respect to the proper construction of the provisions of the CAA and the question whether the word "court" in s 8(1) of that Act encompasses VCAT. It is, rather, a matter which might be thought to go to the wisdom of Parliament in not legislating to treat VCAT as a "court" for the purposes of s 8(1) of the CAA. However it might be sought to rationalise the utility of subjecting parties, such as the Irelands, to the complexities of the UNCITRAL Arbitration Rules, a request to the Secretary-General of the Permanent Court of Arbitration in The Hague and a journey to Queensland, a two hour flight, for an arbitration hearing, it is difficult to see how this regime could compare at all favourably with the speedy and inexpensive resolution of disputes by VCAT.[77] The inelegancies and problems with the terms of the arbitration agreement exacerbate, rather than ameliorate this position. A good deal of attention has been given by the Commonwealth Government to franchising arrangements, and in very recent times.[78] For these reasons, I think it may be helpful to forward a copy of these reasons and any other material requested with respect to these proceedings to the Australian Competition and Consumer Commission, the Australian Small Business Commissioner and the Victorian Small Business Commissioner; and will do so accordingly.
61 A significant part of the VCAT proceedings, as indicated in the VCAT Reasons, were directed to issues with respect to the characterisation of occupancy provided for under a document entitled Licence # 26063 dated 3 November 2003 between the Irelands and the second respondent in the VCAT proceedings, SR. Whether or not Senior Member Riegler was correct in characterising the so-called licence as a sub-lease, rather than a licence (in spite of its terms to that effect) is not a matter raised in the grounds of the proposed notice of appeal. Accordingly, issues with respect to the application of the provisions of the RLA to the terms of that occupancy agreement, as a sub-lease, do not arise, save to the extent that issues were canvassed in these proceedings as to the effect of the provisions of the RLA on the enforceability, or perhaps arbitrability, of disputes contemplated by the arbitration agreement.
62 As appears from the VCAT Reasons, SSA argued in the VCAT proceedings that the provisions of the CAA, being a later act, would by implication repeal inconsistent provisions of the RLA. That submission was not accepted for the following reasons:[79]
"50. Mr Moore, however, submitted that there would be no inconsistency because the Commercial Arbitration Act 2011, being a later Act of Parliament, would by implication repeal the consistent provisions of the RLA. I do not accept that submission. In Goodwin v Phillips,[80] Barton J adopted the following statement from Hardcastle on Statutory Law:
The court must be satisfied that the two enactments are so inconsistent or repugnant that they cannot stand together, before they can from the language of the later imply the repeal of an express prior enactment, i.e., the repeal must, if not express flow from the necessary implication.
Further, in Saraswati v R,[81] Gaudron J stated the following;
It is a basic rule of construction that, in the absence of express words, an earlier statutory provision is not repealed, altered or derogated from by a later provision unless an intention to that effect is necessarily to be implied. There must be very strong grounds to support the implication, for there is a general presumption that the legislature intended that both provisions should operate and that, to the extent that they would otherwise overlap, one should be read as subject to the other.[82]"
63 If this issue were raised in the grounds of appeal in the proposed notice or was intrinsically connected with those grounds, I would have rejected any suggestion that Senior Member Riegler was in error in rejecting the SSA submission in this respect. This issue did not, however, arise in the present proceedings, either directly or intrinsically in connection with the grounds of appeal in the proposed notice for the reasons set out in the SSA submissions:[83]
(1) A provision of a retail premises lease or of an agreement (whether or not the agreement is between parties to a retail premises lease) is void to the extent that it is contrary to or inconsistent with anything in this Act (including anything that the lease is taken to include or provide because of a provision of this Act).
(2) A provision of a retail premises lease or of an agreement (whether or not the agreement is between parties to a retail premises lease) is void to the extent that it purports-
(a) to exclude the application of a provision of this Act; or
(b) to limit the right of a party to the lease to seek resolution of a retail tenancy dispute under Part 10 or otherwise to limit the application of that Part.
(3) A provision contained in any other agreement or arrangement (whether or not between parties to a retail premises lease) is void if that provision would be void under this Act if it were contained in a retail premises lease.
(emphasis added)
In my view, these submissions correctly state the position, which is that the effect of s 94 of the RLA is to render a dispute to which s 94 of RLA applies, a matter which may not be the subject of arbitration in Victoria. It is not necessary to explore the basis of the ineffectiveness of an arbitration agreement at odds with s 94 further for present purposes.
64 The Irelands did, however, raise further issues in relation to the operation of s 94(3) of the RLA in relation to the provisions of the Franchise Agreement.
65 The Franchise Agreement is made between SSA and the Irelands, whereas the sub-lease as found by Senior Member Riegler is made between SR and the Irelands. Whether or not SR should be treated as merely the agent of SSA so that the provisions of both the occupation agreement as a sub-lease and the Franchise Agreement are treated as, in substance, agreements between the same parties is a matter in controversy between the parties. In my view, it is not necessary to resolve that issue in these proceedings, particularly as s 94(3) of the RLA specifically contemplates that any relevant "other agreement" or "arrangement" might be between parties other than the parties to the relevant retail premises lease.
66 In relation to the contents of the Franchise Agreement, the submissions of the Irelands were, in substance, that the occupation agreement, construed as a sub-lease, and the Franchise Agreement were documents which were intrinsically connected in their provisions to the extent that they were not documents which, if each were standing alone, would give effect to the commercial relationship contemplated by SSA, SR and the Irelands. In this respect, reference was made to a number of provisions of the Franchise Agreement to seek to illustrate this point. They include the following provisions of the Franchise Agreement, namely:
• Clause 5.a(1) - provisions which require the sub-lease to be signed within two years of the Franchise Agreement being signed;
• Clause 5.a(3) - provisions with respect to the location of the restaurant and approval by SSA with provision for leasing by SSA or "an affiliate" it designates;
• Clause 8.a. - provision for termination of the franchise agreement if the franchisee no longer holds a licence to carry on the franchise business;
• Clause 9 - transfer or assignment of the restaurant.
67 I accept the submissions by the Irelands that the provisions of the Franchise Agreement to which reference was made do appear to be intrinsically connected with the provisions of the occupation agreement, construed as a sub-lease. However, I am of the view that SSA is correct in submitting that s 94(3) does not operate, in effect, to treat the related "other agreement" or "arrangement" as incorporated by reference into the retail premises lease, thereby rendering all of the provisions, both of the lease and the "other agreement" or "arrangement", subject to the operation of the RLA.[84] This does not mean that a specific provision or provisions of an "other agreement" or "arrangement" which would, if contained in a retail premises lease, be rendered void is or are not rendered void under the provisions of s 94(3) of the RLA but, in my opinion, the operation of these provisions is no broader than that. Consequently, the Irelands would need to identify a specific provision or specific provisions of the Franchise Agreement which are said to be rendered void under particular provisions of the RLA. This, they did not do, apart from referring to a variety of provisions in support of the submission that the Franchise Agreement provisions were to be, in effect, "consolidated" with the provisions of the occupation agreement and treated as one for the purposes of the RLA. Consequently, I express no view on the possible effect, or the possibility of effect, of the RLA provisions, with respect to the provisions of the Franchise Agreement. In this context, it probably should be observed that the mere fact that an arbitration agreement, if included in a retail premises lease, would be rendered void by the provisions of the RLA does not mean that this would be the fate of the arbitration agreement as contained in the Franchise Agreement; as there is no suggestion that it would not otherwise have work to do with respect to the provisions of that Agreement, rather than with respect to the occupancy agreement, as a sub-lease.
68 For the preceding reasons, leave to appeal from the Orders is granted, but the appeal is dismissed.
69 The parties are to bring in orders to give effect to these reasons. I otherwise reserve the question of costs and will hear submissions in relation to this issue.
[1] Draft Notice of Appeal annexed to the Affidavit of Michelle Shannon Power (13 November 2012) in support of Application for Leave to Appeal (Tab 10) ("the draft Notice of Appeal").
[2] Commissioner of State Revenue v Frost [2011] VSC 232 at [5] (Pagone J), referring to Secretary to the Department of Premier and Cabinet v Hulls [1991] 3 VR 331 at 335-6 (Phillips JA); Myers v Medical Practitioners Board (Vic) [2007] VSCA 163 at [28] (Warren CJ).
[3] Boucher v Dandenong Ranges Steiner School Inc [2005] VSC 400 at [15] (Osborn J), referring to Spurling v Development Underwriting (Vic) Pty Ltd [1973] VicRp 1; [1973] VR 1 and Whitehorse City Council v Golden Ridge Investments Pty Ltd [2005] VSCA 198.
[4] [2011] VSC 232 at [3].
[5] Commissioner of State Revenue v STIC Australia Pty Ltd [2010] VSC 608 at [10] (Davies J).
[6] Secretary to the Department of Premier and Cabinet v Hulls [1991] 3 VR 331; Al-Hakim v Monash University (Unreported, Victorian Supreme Court of Appeal, 28 March 2003); Myers v Medical Practitioners Board (Vic) [2007] VSCA 163.
[7] See Morris v R [1987] HCA 50; (1987) 163 CLR 454 at 475 (Dawson J).
[8] Osland v Secretary to the Department of Justice [2010] HCA 24; (2010) 241 CLR 320 at [21] (French CJ, Gummow and Bell JJ).
[9] Morris v R [1987] HCA 50; (1987) 163 CLR 454 at 475 (Dawson J); Secretary to the Department of Premier and Cabinet v Hulls (1991) 3 VR 331 at 335 (Phillips JA).
[10] Secretary to the Department of Premier and Cabinet v Hulls [1991] 3 VR 331 at 335-6 (Phillips JA); Commissioner of State Revenue v Challenger Property Nominees Pty Ltd [2006] VSC 203 at [20] and [65] (Hollingworth J).
[11] VCAT Reasons, paragraphs 45 and 46.
[12] Ireland v Subway Systems Australia Pty Ltd (Retail Tenancies) [2012] VCAT 1061 at [45] and [46].
[13] Applicant's Submissions (15 February 2013), paragraphs 34 and 35.
[14] Applicant's Submissions (15 February 2013), paragraphs 37 and 38.
[18] (1986) 6 NSWLR 497 (CA) 497 at 516; and see Applicant's Submissions (15 February 2013), paragraph 39.
[19] Australian Postal Commission v Dao (No 2) (1986) 6 NSWLR 497 at 516 (McHugh JA).
[21] [2002] FCA 497 at [21].
[22] [2002] FCA 497 at [22] and [23].
[23] Brian Rochford Ltd (administrator appointed) v Textile Clothing and Footwear Union of New South Wales (1998) 47 NSWLR 47.
[24] Helm v Hansley Holdings Pty Ltd (In liq) [1999] WASCA 71.
[27] [2011] VSCA 266 at [29] (Warren CJ) and see [182] (Weinberg JA).
[33] Director of Housing v Sudi [2011] VSCA 266 at [192].
[34] See Applicant's Submissions in Reply (15 April 2013), paragraph 24.
[35] The expression "Model Law" is defined in s 2(1) of the CAA as follows:
Model Law means the UNCITRAL Model Law on International Commercial Arbitration (as adopted by the United Nations Commission on International Trade Law on 21 June 1985, and as amended by the United Nations Commission on International Trade Law on 7 July 2006);
The expression "domestic commercial arbitration" is defined by reference to s 1 of the CAA (see s 2(1) of the CAA).
[37] [2013] HCA 5 at [20].
[39] [2012] HCA 3; (2012) 285 ALR 27 at 34-35, [26]- [28].
[40] Applicant's Submissions (15 February 2013), paragraphs 44 and 45.
[41] As adopted by the United Nations Commission on International Trade Law on 21 June 1985 with amendments as adopted by that Commission in 2006. See Commercial Arbitration Bill 2011, explanatory memorandum, page 1.
[42] Applicant's Submissions (15 February 2013), paragraphs 49 and 50.
[43] UNCITRAL, Analytical commentary on draft text of a model law on international commercial arbitration, A/CN.9/264 (25 March 1985).
[45] For the status of the Model Law (in its original form and as revised in 20006), see http://www.uncitral.org/uncitral/en/uncitral\_texts/arbitration/1985Model\_arbitration\_status.html
[46] Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted in 1958 by the United Nations Conference on International Commercial Arbitration at its twenty-fourth meeting, a copy of the English text of which is set out in Schedule 1 to the International Arbitration Act 1974 (Cth).
[48] Applicant's Submissions (15 February 2013), paragraphs 51 to 55.
[50] [2011] VSCA 266 at [19]; and similarly at [34].
[51] [2011] VSCA 266 at [150].
[52] Jason Pizer, Pizer's Annotated VCAT Act (4th ed, JNL Nominees Pty Ltd, 2012) at 49, [VCAT.1.20]; and the Chief Justice's statement bears repeating, as did her Honour in Sudi.
[53] Supplementary Submissions on Validity of Arbitration Clause (30 August 2013), paragraphs 27 to 32.
[54] Supplementary Submissions on Validity of Arbitration Clause (30 August 2013), paragraphs 33 to 38.
[55] http:/www.iama.org.au/resources/uncitral-arbitration (accessed 27 August 2013).
[57] http://www.adr.org/aaa/ShowPDF?doc=ADRSTG_002559 (accessed 29 August 2013).
[59] See, generally, Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623.
[61] These provisions of the UNCITRAL Arbitration Rules are set out in Croft, Kee and Waincymer, A Guide to the UNCITRAL Arbitration Rules (Cambridge University Press, 2013) as follows (at 82-84):
1. Unless the parties have already agreed on the choice of an appointing authority, a party may at any time propose the name or names of one or more institutions or persons, including the Secretary-General of the Permanent Court of Arbitration at The Hague (hereinafter called the 'PCA'), one of whom would serve as appointing authority.
2. If all parties have not agreed on the choice of an appointing authority within 30 days after a proposal made in accordance with paragraph 1 has been received by all other parties, any party may request the Secretary-General of the PCA to designate the appointing authority.
3. Where these Rules provide for a period of time within which a party must refer a matter to an appointing authority and no appointing authority has been agreed on or designated, the period is suspended from the date on which a party initiates the procedure for agreeing on or designating an appointing authority until the date of such agreement or designation.
4. Except as referred to in article 41, paragraph (4), if the appointing authority refuses to act, or if it fails to appoint an arbitrator within 30 days after it receives a party's request to do so, fails to act within any other period provided by these Rules, or fails to decide on a challenge to an arbitrator within a reasonable time after receiving a party's request to do so, any party may request the Secretary-General of the PCA to designate a substitute appointing authority.
5. In exercising their functions under these Rules, the appointing authority and the Secretary-General of the PCA may require from any party and the arbitrators the information they deem necessary and they shall give the parties and, where appropriate, the arbitrators, an opportunity to present their views in any manner they consider appropriate. All such communications to and from the appointing authority and the Secretary-General of the PCA shall also be provided by the sender to all other parties.
6. When the appointing authority is requested to appoint an arbitrator pursuant to articles 8, 9, 10 or 14, the party making the request shall send to the appointing authority copies of the notice of arbitration and, if it exists, any response to the notice of arbitration.
7. The appointing authority shall have regard to such considerations as are likely to secure the appointment of an independent and impartial arbitrator and shall take into account the advisability of appointing an arbitrator of a nationality other than the nationalities of the parties.
This is a new article. There is no 1976 Rules direct equivalent, although some aspects were already found in other articles.
If within thirty days after receipt by a party of a proposal made in accordance with paragraph 1 the parties have not reached agreement on the choice of a sole arbitrator, the sole arbitrator shall be appointed by the appointing authority agreed upon by the parties. If no appointing authority has been agreed upon by the parties, or if the appointing authority agreed upon refuses to act or fails to appoint the arbitrator within sixty days of the receipt of a party's request therefor, either party may request the Secretary-General of the Permanent Court of Arbitration at The Hague to designate an appointing authority.
If within thirty days after the receipt of a party's notification of the appointment of an arbitrator the other party has not notified the first party of the arbitrator he has appointed:
(a) The first party may request the appointing authority previously designated by the parties to appoint the second arbitrator; or
(b) If no such authority has been previously designated by the parties, or if the appointing authority previously designated refuses to act or fails to appoint the arbitrator within thirty days after receipt of a party's request therefor, the first party may request the Secretary-General of the Permanent Court of Arbitration at The Hague to designate the appointing authority. The first party may then request the appointing authority so designated to appoint the second arbitrator. In either case, the appointing authority may exercise its discretion in appointing the arbitrator.
[62] See UNCITRAL Arbitration Rules, Article 6(2); and see Croft, Kee and Waincymer, A Guide to the UNCITRAL Arbitration Rules (Cambridge University Press, 2013) at 82-95.
[64] Croft, Kee and Waincymer, A Guide to the UNCITRAL Arbitration Rules (Cambridge University Press, 2013) at 82-95.
[65] (No 11 Civ 08 (JFK), 2011 WL 1085017 (SDNY Mar 23, 2011)).
[66] Farrell v Subway International, BV at pp 15 and 16.
[67] Farrell v Subway International, BV at pp 8-12.
1. If a sole arbitrator is to be appointed, either party may propose to the other:
(a) The names of one or more persons, one of whom would serve as the sole arbitrator; and
(b) If no appointing authority has been agreed upon by the parties, [either party may propose to the other] the name or names of one or more institutions or persons, one of whom would serve as appointing authority.
2. If within thirty days after receipt by a party of a proposal made in accordance with paragraph 1 the parties have not reached agreement on the choice of a sole arbitrator, the sole arbitrator shall be appointed by the appointing authority agreed upon by the parties. If no appointing authority has been agreed upon by the parties, or if the appointing authority agreed upon refused to act or fails to appoint the arbitrator within sixty days of the receipt of a party's request therefor, either party may request the Secretary-General of the Permanent Court of Arbitration at The Hague to designate an appointing authority.
[69] Because arbitration is stayed based upon the improper designation of ADRC as the arbitration agency, the Court need not reach Petitioner's claims concerning the Demand issued by ADRC.
[70] See D. Jones, Commercial Arbitration in Australia (2nd ed, LawBook Co, 2013) at 76-79, [4.260] and [4.270].
[71] (No 11 Civ 08 (JFK), 2011 WL 1085017 (SDNY Mar 23, 2011)).
[72] 609 F.3d 191 (3d Cir. 2010).
[74] Further Supplementary Submissions - Validity of Arbitration Clause US Cases (4 October 2013), paragraphs 1 to 9, (though I note that leave was only granted to the parties to make further submissions with respect to the position in the US: see Transcript, pp 113 and 114).
[75] The position is helpfully summarised in the SSA Supplementary Submissions (27 September 2013), as follows:
"United States Law on arbitration is complex and should not be considered in this application
2. In response to 'widespread judicial hostility to arbitration agreements,' the United States Congress passed the Federal Arbitration Act (FAA) in 1925 (see AT&T Mobility, LLC v. Concepcion, 131 S. Ct. 1740, 1745 (2011) (Concepcion), being a United States Supreme Court decision describing the FAA's enactment). The FAA states, in pertinent part, that arbitration agreements 'shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract' (9 U.S.C. s 2). The United States Supreme Court has made clear that the FAA reflects both 'a liberal federal policy favoring arbitration' and the recognition that 'arbitration is a matter of contract.' - see Concepcion at 1745. This creates a rather unique situation: under the FAA, state law (which varies by state throughout the 50 states) can be applied to show that an arbitration agreement is unenforceable, but if that particular state law is hostile to arbitration in some way, either directly or in how it is applied, the FAA preempts (i.e. overrules) it - see Concepcion at 1746-48; see also DAI v. Casarotto, [1996] USSC 43; 517 U.S. 681, 687 (1996). Considering the obvious complexities of this framework, an Australian court should avoid looking to the arbitration decisions of a particular American state because those decisions may not reflect how other courts in the United States would address the issue, let alone how an Australian court would handle a similar unconscionability argument under Australian law.
This position is reaffirmed in the SSA Submissions in Reply - US Cases (14 October 2013) and the further point that the arbitration clause in SSA's American equivalent franchise agreement has, in a number of identified US cases, been found not to be unconscionable (see paragraph 6 of those Submissions). For the reasons indicated it is not, however, necessary to pursue this point.
[78] See, for example, Review of the Franchising Code of Conduct Report (2013) by Mr Alan Wein and the Government's Response and the Consultation Paper (http://www.innovation.gov.au/SmallBusiness/CodesofConduct/Pages/29130Review_of_the_Franchising_Code_of_Conduct.aspx).
[79] VCAT Reasons at [50] and [51].
[80] [1908] HCA 55; (1908) 7 CLR 1 at 10.
[83] Applicant's Submissions (15 February 2013), paragraphs 29 to 32.
[84] And see Tucci v Victorian Civil and Administrative Tribunal [2010] VSC 425; also Ireland's Further Supplementary Submissions - Validity of Arbitration Clause US Cases (4 October 2013), paragraphs 10-12.
Subway Systems Australia
Ireland [2013] VSC 550
(1986) 6 NSWLR 497
(1982) 149 CLR 571
(2013) 295 ALR 596
(2006) 157 FCR 45
(1987) 163 CLR 454
(2010) 241 CLR 320
(1991) 3 VR 331
(1998) 47 NSWLR 47
(2008) 169 FCR 85
(2012) 285 ALR 27
(1989) 166 CLR 623
(1908) 7 CLR 1
(1991) 100 ALR 193