Applicants v Respondents

Applicants v Respondents - [2014] VSC 635 - VSC 2014 case summary — Zoe

[10]

1. Scope of application (cf Model Law Art 1)

(1) This Act applies to domestic commercial arbitrations.

Note

The International Arbitration Act 1974 of the Commonwealth covers international commercial arbitrations and the enforcement of foreign arbitral awards.

...

(3) An arbitration is domestic if -

(a) the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in Australia; and

(b) the parties have (whether in the arbitration agreement or in any other document in writing) agreed that any dispute that has arisen or may arise between them is to be settled by arbitration; and

(c) it is not an arbitration to which the Model Law (as given effect by the International Arbitration Act 1974 of the Commonwealth) applies.

(4) For the purposes of subsection (3) -

(a) if a party has more than one place of business, the place of business is that which has the closest relationship to the arbitration agreement; and

(b) if a party does not have a place of business, reference is to be made to the party's habitual residence.

(5) This Act does not affect any other Act by virtue of which certain disputes may not be submitted to arbitration or may be submitted to arbitration only according to provisions other than those of this Act.

(6) Subject to subsection (5), this Act applies to arbitrations provided for in any other Act as if -

(a) the other Act were an arbitration agreement; and

(b) the arbitration were pursuant to an arbitration agreement; and

(c) the parties to the dispute which, by virtue of the other Act, is referred to arbitration were the parties to the arbitration agreement -

except in so far as the other Act otherwise indicates or requires.

Model Law note

The term "commercial" should be given a wide interpretation so as to cover matters arising from all relationships of a commercial nature, whether contractual or not. Relationships of a commercial nature include, but are not limited to, the following transactions: any trade transaction for the supply or exchange of goods or services; distribution agreement; commercial representation or agency; factoring; leasing; construction of works; consulting; engineering; licensing; investment; financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business co-operation; carriage of goods or passengers by air, sea, rail or road.

Note

This section differs from the Model Law to the extent necessary to apply Art 1 as incorporated in this Act to domestic commercial arbitrations. Section 1AD contains provisions that also relate to the application of this Act.

[24]

Article 2 provides three 'definitions' - actually points of clarification rather than comprehensive explanations of meaning - and three rules of interpretation. These provisions apply, with certain exceptions that are indicated in two of them, throughout the Model Law. There are other definitions elsewhere in the Law, notably of the term 'arbitration agreement' in Article 7 and of the expression 'international' in Article 1. The present section provides the legislative history of the provisions that are included in Article 2 of the final text, as well as of several defining provisions that ultimately were not included in the Model Law. The most important of these unincluded provisions was a proposed definition of the term 'award'.

'Arbitration.' As noted, the definition of 'arbitration' is not a definition at all, but rather simply a clarification that the Model Law covers both ad hoc and institutional arbitration. The First and Second Drafts of the Law[11] contained a fuller version of this provision, based loosely on the scope-of-application article of the European Convention on International Commercial Arbitration (Geneva 1961).[12] That draft provision was also not a definition per se, but essentially a 'table of contents' that listed elements included in the term 'arbitration': arbitration agreements, the preparation and conduct of arbitration proceedings, and arbitral awards. The Working Group deleted the provision because it was regarded as superfluous and because it was feared that any elements left out of the list might be regarded as outside the scope of the Law.[13] As the Secretariat noted, the term 'arbitration' is widely used in national statutes and international conventions, but commonly is not defined.[14] In these circumstances, the Working Group and the Commission felt that it was safest not to attempt to provide a comprehensive definition of the term in the Model Law either.

Ultimately, all that was retained of the original proposals was the notation that the Model Law covered both ad hoc and institutional arbitrations. This was initially placed in the provision defining the arbitration agreement - Article 7(1) in the final text. The Commission moved the provision to its present place in Article 2, presumably because it logically related to the Law as a whole and not only to the arbitration agreement.[15]

Although the Working Group declined to include a fuller definition of the term 'arbitration', its deliberations provide some useful guidance on the intended scope of the term. The Working Group decided at the outset that the Model Law should have a wide scope of application, and that it should cover all forms of arbitration.[16] At the same time, the Working Group was agreed that certain nonjudicial mechanisms for third-party resolution of disputes, mechanisms that are sometimes labeled 'arbitration', should not be governed by the Model Law. In particular, it was felt that the Model Law was designed for consensual arbitration - i.e., arbitration based on the voluntary agreement of the parties - and that 'compulsory arbitration' - required by statute - should fall outside its scope.[17] In addition, the Working Group considered that the Model Law should not apply to various types of 'free arbitration' - such as the arbitrato irrituale in Italian law, the Dutch bindend advies, and the German Schiedsgutachten - which, according to the Secretariat, are procedures that often determine questions only of fact and not of law and commonly result in decisions that are binding only as contractual provisions and not as arbitral awards.[18]

The Working Group concluded, however, that such limitations need not be expressed in the Law, apparently in part because it was thought to be difficult to draw a clear and comprehensive distinction between various forms of 'free arbitrations' and arbitrations covered by the Law.[19] The Working Group noted, however, that States could incorporate such limitations where necessary when adopting the Model Law.[20] This point was not repeated in the Commission's deliberations or its Report, but it would seem that national legislatures could exclude any nonarbitral procedures that are provided for by their law and for which they considered the Model Law to be inappropriate.[21]

[32]

(ii) 'Commercial'. In the early stages of drafting the Model Law, the Working Group recognized the difficulties of defining the term 'commercial'.[32] Various suggestions were advanced, including use of the words 'trade', 'commerce', 'economic transaction', or 'business',[33] but no comprehensive definition of the term was found. As the Secretariat noted in its commentary on the Working Group's final draft, conventions on international commercial arbitration do not define the word.[34] The view appears to have been that the compound term 'commercial arbitration' is widely used and has acquired a sufficiently clear meaning.[35]

...

The footnote itself states that the term 'commercial' was to be given a wide interpretation, and this call is repeated throughout the legislative history.[36] In particular, the Commission and Working Group reports emphasize that the term is not to be construed in accordance with national law definitions of 'commercial' in certain civil law countries, some of which include only those relationships dealt with in the commercial code or only transactions between 'commercial persons' (i.e., merchants).[37] This concern arose out of experience with the provision in the New York Convention that allows States to restrict the Convention to awards arising out of 'legal relationships ... which are considered as commercial under the national law of the State' making the restriction.[38] The view was that this proviso had resulted in an excessively narrow interpretation.[39]

In both the Working Group and the Commission, attempts were made to make explicit in the Law this intent not to limit 'commercial' to transactions with merchants. Amendments to the footnote were offered that would have stipulated that the Law applied 'irrespective of whether the parties are "commercial persons" (merchants) under any given national law' or, in another version, 'regardless of the nature or character of the parties'.[40] Some delegations feared, however, that such a provision might be interpreted as touching upon the question of State or sovereign immunity.[41] It was widely agreed that the Law is not intended to confer immunity on States that have waived it under the applicable rules (such as by engaging in non-governmental activities or signing arbitration clauses), nor to lift that immunity where it has not been waived.[42] In the end, the Commission found that the footnote expressed sufficiently clearly that the 'commercial' nature of a relationship for purposes of the Model Law did not depend on the nature of the parties, and that view was further stipulated in the Report of the session.[43]

The list of examples of commercial relationships is, by its terms, not exhaustive; it is intended merely to illustrate that the term is to be interpreted broadly. The Secretariat noted, for example, several relationships that were not included in the list, but should be considered to be 'commercial' within the meaning of Article 1, including arrangements to supply electrical energy or to transport liquefied gas via pipeline, and 'non-transactions' such as claims for damages arising in a commercial context.[44] This is not to say that the term 'commercial' is boundless. The legislative history also provides examples of relationships that were not meant to be included in the term, in particular, labor and employment disputes and ordinary consumer claims.[45] In addition, Article 1(5) of the Law places an additional limitation on the scope of relationships that are subject to the Law: no matter may be submitted to arbitration under the Model Law if it is not arbitrable under municipal law or if it may be submitted to arbitration only under other provisions of law. See the discussion of Article 1(5), pages 38-39 infra.

[50]

In spite of these difficulties, it is possible to suggest a list, almost certainly incomplete, of those factors which are material to the question whether a particular process qualifies as an arbitration. This list may be divided into two parts. First, those qualities which are necessary, although not in themselves sufficient,[55] if the process is to be considered an arbitration. Second, certain other considerations which are relevant to the question, although not conclusive upon it.

(a) Attributes which must be present

(i) The agreement pursuant to which the process is, or is to be, carried on ("the procedural agreement") must contemplate that the tribunal which carries on the process will make a decision which is binding on the parties to the procedural agreement.

(ii) The procedural agreement must contemplate that the process will be carried on between those persons whose substantive rights are determined by the tribunal.

(iii) The jurisdiction of the tribunal to carry on the process and to decide the rights of the parties must derive either from the consent of the parties, or from an order of the court or from a statute the terms of which make it clear that the process is to be an arbitration.

(iv) The tribunal must be chosen, either by the parties, or by a method to which they have consented.

(v) The procedural agreement must contemplate that the tribunal will determine the rights of the parties in an impartial manner, with the tribunal owing an equal obligation of fairness towards both sides.

(vi) The agreement of the parties to refer their disputes to the decision of the tribunal must be intended to be enforceable in law.

(vii) The procedural agreement must contemplate a process whereby the tribunal will make a decision upon a dispute which is already formulated at the time when the tribunal is appointed.

(b) Other factors which are relevant[56]

(i) Whether the procedural agreement contemplates that the tribunal will receive evidence and contentions, or at least give the parties the opportunity to put them forward.

(ii) Whether the wording of the agreement is consistent or inconsistent with the view that the process was intended to be an arbitration.

(iii) Whether the identity of the chosen tribunal, or the method prescribed for choosing the tribunal, shows that the process was intended to be an arbitration.

(iv) Whether the procedural agreement requires the tribunal to decide the dispute according to law.

[70]

42. Disciplinary Tribunal

42.1 Establishment

(a) Appointment and Definitions

(i) The General Counsel may from time to time appoint persons to a disciplinary Tribunal to be known as the Disciplinary Tribunal.

(ii) In this Rule, 'Disciplinary Matter' means any matter with which the Disciplinary Tribunal is empowered to deal other than a Reportable Offence.

(b) Functions

The function of the Disciplinary Tribunal shall be to deal with Disciplinary Matters in accordance with the AFL Rules and Regulations.

(c) Members of Disciplinary Tribunal

The Disciplinary Tribunal shall consist of:

(i) a Chairman being a person who is a senior member of the legal profession ('Chairman');

(ii) a Deputy Chairmen being a person who is a senior member of the legal profession ('Deputy Chairman');

(iii) a panel of persons who in the opinion of the General Counsel have appropriate qualifications to act as panel members as required under these Rules ('Disciplinary Tribunal Panel Members').

(d) Qualifications

Save and except where the General Counsel otherwise determines, a person shall not be appointed to the Disciplinary Tribunal if that person:

(i) has been a member of a Board of Directors of a Club; or

(ii) has been a Coach or assistance or specialty Coach of a Club; or

(iii) has been a Player of a Club

in the twelve months preceding the appointment.

...

42.3 Procedure and Evidence

(a) Regulate own Procedure

Subject to the further matters set out in this Rule, the Disciplinary Tribunal may regulate any proceedings brought before it in such manner as the Chairman thinks fit.

(b) Conduct of Hearing

(i) General

Any hearing by the Disciplinary Tribunal shall be conducted with as little formality and technicality and with as much expedition as a proper consideration of the matters before it permits.

(ii) Chairman

The Chairman shall determine all questions of law, evidence or procedure and give such directions in such manner as the Chairman thinks fit. Without limitation, the Chairman may give directions as to the length, form and nature of submissions, the reception of evidence, amendment of a report, adjournment of hearings and all other matters of procedure including those referred to in Rule 42.3(g). The Chairman may give directions to any person appearing before the Disciplinary Tribunal and to the Disciplinary Tribunal Panel Members prior to or during any deliberation on any question of fact.

(iii) Disciplinary Tribunal Panel Members

Whenever the Disciplinary Tribunal is to deal with a Disciplinary Matter, the Disciplinary Tribunal Panel Members shall decide questions of fact and law.

(c) Rules of Evidence

The Disciplinary Tribunal is not bound by the rules of evidence or by practices and procedures applicable to Courts of record, but may inform itself as to any matters in any such manner as it thinks fit.

...

(f) Matters Referred Under AFL Anti-Doping Code

Where a matter is referred to the Disciplinary Tribunal for an alleged contravention of the AFL Anti-Doping Code or the AFL Illicit Drugs Policy, this Rule shall be read in conjunction with the provisions of the AFL Anti-Doping Code or the AFL Illicit Drugs Policy as the case may be, provided that to the extent of any inconsistency, the provisions and guidelines contained in the AFL Anti-Doping Code or the AFL Illicit Drugs Policy shall respectively prevail.

...

42.4 Obligations of Disciplinary Tribunal

(a) Natural Justice and Other Obligations

The Disciplinary Tribunal shall:

(i) provide any person whose interest will be directly and adversely affected by its decision, a reasonable opportunity to be heard;

(ii) hear and determine the matter before it in an unbiased manner; and

(iii) make a decision that a reasonable Disciplinary Tribunal could honestly arrive at.

[126]

52 I accept the proposition that at AFL level the sport is fully professional and that there are other intensely commercial aspects involved in the playing and promotion of the sport. Indeed, one could not but be impressed by the contents of the AFL Annual Report 2013 to which ASADA made detailed references in the course of submissions.[129] Clearly, the AFL is a very significant major commercial enterprise. Nevertheless, I am of the view that the type of disputes to which the present proceedings relate are primarily conduct and disciplinary proceedings with respect to players and are, consequently, not commercial in the relevant sense. Were this not the case, it would be like saying that any dispute involving any party which is a corporation, association or individual which carries on business which would, on any view, be regarded as commercial once involved as a party to an arbitration or other non-arbitral proceeding would thereby render that proceeding or dispute something of a "commercial" nature.[130] In my view, this is not supported by the other authorities to which reference has already been made in these reasons,[131] where courts have found that labour and employment disputes and ordinary consumer claims are not "commercial" for the purposes of the Model Law. Closer to home, as noted previously, I am also conscious of the statement by Marks J in Nobes v Australian Cricket Board[132] that professional sportspersons enjoy an analogous right to those of employees and other professionals. In this respect, ASADA made reference to a number of cases which it submitted detracted from this characterisation emphasising, it is said, the commercial nature now ascribed to sporting activity. The proposition, theme or thread which ASADA sought to draw from and emphasise on the basis of the cases relied upon is that football leagues and clubs are engaged in activities of a commercial nature, and to such an extent - again seeking to emphasise the "commercial" point - that they are "trading corporations" within the meaning of pl 51(xx) of the Commonwealth Constitution. In this respect, references to cases included the following passages in the judgment of Barwick J in R v Judges of the Federal Court of Australia; Ex parte The Western Australian Football League (Incorporated):[133]

[127]

Of course, football of any code may be a sport, as distinct from a trade, when played solely for its own sake as a pastime upon an amateur footing. But what the Club and the League conduct is far removed from any such concept of sport. The players are professionals employed for wages in the playing of the code.

...

In my opinion, the presentation of a football match as a commercial venture for profit to the promoting body is an activity of trade. I agree with Lord Russell in thinking that the presentation of a play by a theatrical promoter for reward by admission fees is a matter of trade: see Brimelow v Casson (35). I can see little difference between the presentation of a theatrical spectacle and the presentation for reward of the spectacle of a football match played by professionals as a major source of their income and of the income of the promoter.

Here, however, the commercial activity of the Club is not limited to the promotion of football matches. A diverse range of advertising rights, television rights and sundry other rights are sold in connexion with the presentation of the matches. The detail of these activities may be read in the reasons for judgment of other Justices. Further, large sums are at times demanded by the Club for the release of players by clearance to play with other clubs: in general, no part of these moneys is paid to the player concerned.

These activities, essentially commercial in nature, emphasize the trading quality of the manner in which the Club and the League promote Australian Rules Football. No doubt young players in junior leagues are encouraged by things done and moneys expended by the Club but one may be permitted to suspect that the motivation for the assistance of junior clubs is the prospect of a supply of players of quality to form the teams of the future from which the Club will reap financial benefits, and in any case, if purely philanthropic, these activities are of a minor character in relation to the activities of the Club as a whole. None of these activities are forbidden by the rules of the Club or of the State League. Indeed, the purpose of the associations, and thus of their corporation, is to do the very things which the Club and the State League are engaged in doing. In my opinion, the Club and the League are each trading corporations within the meaning of s 51(xx.) of the Constitution.

[160]

Subject to the Court's power to set a subpoena aside in certain circumstances, any party is typically entitled upon their request to have a subpoena issued.[154] The Court should not be overly prescriptive in setting out criteria for the grant of a subpoena, and it will usually be sufficient that the evidence sought will be of some apparent potential relevance.[155]
The power to issue a subpoena in the context of an arbitration is granted to the Court by s 27A of the Act. The above principles remain applicable.[156]
In regards to the two witnesses, the Canning Affidavit sets out the relevance of calling Mr Charter[157] and Mr Alavi[158] as witnesses before the Tribunal. Both are alleged to have been involved in dealing with the substance at the centre of possible Anti-Doping Rule Violations. The Canning Affidavit establishes that Mr Charter and Mr Alavi are both material witnesses.
It is clear that the attendance of both Mr Charter and Mr Alavi at the Tribunal hearing is not assured.[159] Mr Charter himself has made comments to the media that he does not intend to cooperate with the Tribunal or attend the hearing.[160]
In regards to the corporate entities, from which subpoenas are sought to compel the production of documents, the Canning Affidavit sets out the relevant background at paragraphs [35] to [37]. The Support Person (a party to the proceeding) was a director of the four entities at the relevant time being considered by the Tribunal. In regards to the Support Person's possible Anti-Doping Rule Violation, the CEO contends that the companies hold documents relevant to the proceeding in the Tribunal. Disclosure notices have been served on the directors of the company.[161] No documents have been provided thus far.
Paragraph 2 sufficiently narrows the class of documents sought by the CEO in its terms to that compliance with the subpoenas would not create an unreasonable burden.[162] The Court should take note that the companies are associated with a party to the proceeding (the Support Person) and therefore are not strangers to the arbitration.[163]
Based on the evidence in the Canning Affidavit, and the submissions set out above, it is appropriate that the Court issue:

[177]

69 ASADA also made further submissions in relation to whether the ASADA Act is to be regarded as "any other act" for the purposes of sub-s 1(6) of the Victorian domestic arbitration legislation, the Act.[171] In my view, were it necessary to decide this question - having decided that the ASADA Act is not "any other act" for the purposes of the domestic arbitration legislation, the Act - the contentions of ASADA in this respect are correct for the reasons advanced and on the basis of the material upon which they rely; save with respect to the further question.[172] The further question addressed in those submissions is whether a statutory arbitration under s 1(6) of the Act must be a "commercial" arbitration. In my opinion, the additional requirement that the arbitration must be "commercial" does apply with respect to the operation of the provisions of sub-s 1(6) of the Act. This is because those provisions use the word "arbitration", though in the plural, which is, as indicated previously, a defined term in sub-s 2(1) of the Act by reference to the further definition in that sub-section of "domestic commercial arbitration", which has the effect of applying the provisions of s 1 of the Act for the purposes of this definition. In my opinion, reading these provisions together, it is clear that if the arbitration "provided for in any other Act" is not also a "commercial" arbitration, then the provisions of sub-s 1(6) do not have the effect of applying to a "statutory arbitration" of this kind, no matter what its character.[173] Consequently, for the preceding reasons, even if ASADA were correct in seeking to invoke the application of the Act with respect to the NAD scheme under sub-s 1(6), the Act would, nevertheless, not apply, as the character of the NAD scheme does not change the nature of the proceedings before the Tribunal which, as I have found for the preceding reasons, are not "commercial" in nature, even if they were to be characterised as arbitration proceedings. Consequently, neither the Act, nor particularly s 27A of the Act, would be available to the applicants.

[232]

Nonetheless, the Model Law's list of examples of commercial relations is non-exclusive ("include, but are not limited to"), making it difficult to draw conclusions from the exclusion of particular types of transaction from the Law's footnote [See UNCITRAL Model Law, Art. 1(1) n.2. See Report of the Secretary-General on the Analytical Commentary on Draft Text of A Model Law on International Commercial Arbitration, U.N. Doc. A/CN.9/264, Art. 1, 18 et seq. (1985).]. It is also noteworthy, however, that the Model Law's footnote extends expressly to "carriage of ... passengers" and "consulting", which very arguably include at least certain consumer or employment relations - raising the question why other types of consumer and employment relations are any less "commercial" or more appropriately excluded entirely from the Model Law's coverage [Alternative approaches, discussed below, are to apply more specifically-tailored rules of validity or nonarbitrability to particular types of transactions or claims. See UNCITRAL Model Law, Art. 1(5); ss6.03[C][1]-[2].]. The better view, therefore, is that the Model Law includes within its coverage both consumer and employment matters, subject to any specific nonarbitrability rules adopted in particular states pursuant to Article 1(5) of the Law [See UNCITRAL Model Law, art. 1(5); s6.03[C][1].]. There are contrary decisions in Model Law jurisdictions, but they are difficult to reconcile with the text of Article 1(5)'s footnote and the objectives of the Model Law [See, e.g., Ross v Christian & Timbers, Inc, (2002) 18 C.P.C.5th 348 (Ontario Super. Ct.) (employer/employee relationship, as opposed to independent contractor relationship, was non-commercial); Borowski v Heinrich Fiedler Perforiertechnik GmbH, (1994) 158 A.R. 213 (Alberta Q.B.) (same). See also Patel v Kanbay Int'l Inc, [2008] ONCA 867 (Ontario Ct. App.) (claim for wrongful dismissal and tort of negligent misrepresentation was held not to satisfy "commercial" requirement).].

At a glance

Court

Decision date

Before

Source

Judgment (357 paragraphs)

Parties

Legislation Cited (22)

Cases Cited (12)