Whether the IA Act covers the field
61 I make no finding as to the jurisdiction of the State and Territory courts in relation to enforcement of non-foreign awards made under the Model Law. My finding of jurisdiction in the Federal Court is not dependent on whether or not the State and Territory courts have such jurisdiction. However, the submissions dealt at length with whether or not the IA Act covers the field and for the sake of completeness I record my views in that regard.
62 Castel contends that s 21 of the Act, introduced in the 2010 amendment, means that the Model Law covers the field. It provides:
If the Model Law applies to an arbitration, the law of a State or Territory relating to arbitration does not apply to that arbitration.
63 TCL argues that the Model Law does not cover the field. It relies on s 30 of the IA Act and the former s 21. Both provisions are in Part III and both were introduced in the 1989 amendment. The former s 21 stated:
If the parties to an arbitration agreement have (whether in the agreement or in any other document in writing) agreed that any dispute that has arisen or may arise between them is to be settled otherwise than in accordance with the Model Law, the Model Law does not apply in relation to the settlement of that dispute.
64 This section was on foot in December 2003 when the distribution agreement between Castel and TCL was entered into. It enabled the parties, if they so chose, to "opt out" of the operation of the Model Law by agreement and to use other rules to regulate any settlement or arbitration. They could have agreed to exclude the provisions of the Model Law, including those concerned with setting aside or enforcement of awards. However, it is common ground that the parties did not opt out of the Model Law, and that the Model Law applies to the arbitration.
65 TCL argues that there is no clear indication in the 2010 amendment or the extrinsic history that the current s 21 operates in relation to arbitration agreements entered prior to its enactment. It relies on the general presumption in Australian law against retrospectivity of legislation, subject to clear contrary intention. It cites in support the learned authors Nottage and Garnett, albeit noting the hesitation with which the authors offer their support for this view: L Nottage and R Garnett, International Arbitration in Australia, The Federation Press, Sydney 2010, pp 27 and 59-60. While it is unnecessary to me to reach a final view on this issue, I am not inclined to accept TCL's contentions for the reasons I now set out.
66 The common law presumption against retrospectivity was set out by Dixon CJ in Maxwell v Murphy (1957) 96 CLR 261 at 270:
Perhaps there could be no more practical summary of the principle…than the following, - "unless the language used plainly manifest in express terms or by clear implication a contrary intention - (a) A statute divesting vested rights is to be construed as prospective. (b) A statute, merely procedural, is to be construed as retrospective. (c) A statute which, while procedural in its character, affects vested rights adversely is to be construed as prospective.
67 The Model Law sets out rules for the commencement and conduct of international commercial arbitrations and provides limited supervisory, interim and enforcement functions for the courts. It does not set out the substantive law to be applied. The introduction of the current s 21 did not change the substantive law to be applied to the facts so as to determine the rights and liabilities of parties to a Model Law arbitration. By way of example, under the distribution agreement the substantive contract law of Victoria was chosen by the parties, and this substantive law applies whether the former or the current s 21 applies to the arbitration. Section 21 relates to the capacity to opt in or opt out of the Model Law and is best described as a procedural rather than substantive provision.
68 TCL observes that Article 28 of the Model Law contemplates party choice as to the substantive law that is to be applied to the particular facts of the dispute. It also notes that s 21 concerns the arbitral law - the law governing the conduct of the arbitral proceedings. TCL's observation of this dichotomy also points up the procedural nature of s 21.
69 Finally, it is difficult to see how any of TCL's vested rights could be adversely affected by the amendment to it in 2010. TCL does not contend that no Court has jurisdiction to enforce the non-foreign awards in this matter - only that the Federal Court does not. It contends that the Supreme Court of Victoria has jurisdiction.
70 In Minister for Home and Territories v Smith (1924) 35 CLR 120 at 128-129 a statutory amendment vesting jurisdiction in the High Court to enforce certain arbitral awards was held to be procedural in nature, and therefore retrospective in its operation. The amendment was held not to alter any rights, but merely to invest the High Court with original jurisdiction to compel their observance.
71 Dealing as it does with arbitral law, the current s 21 should be construed as procedural and therefore retrospective unless the Act indicates a contrary intention by express terms or by clear implication. I consider that the available indications point to a Parliamentary intention that the current s 21 be given immediate effect upon enactment.
72 TCL relies on s 30 of the IA Act in arguing that an intention that s 21 have a prospective operation is found in the Act. Section 30, enacted by the 1989 amendments, provides:
This Part does not apply in relation to an international commercial arbitration between parties to an arbitration agreement that was concluded before the commencement of this Part unless the parties have (whether in the agreement or in any other document in writing) otherwise agreed.
73 TCL submits that s 30 contemplates that the 2010 amendment to s 21 be treated as its "commencement" and therefore is expressly intended to operate prospectively. However, if TCL's argument is accepted, the effect of s 30 is that every time a section within Part III is amended, that amended section only applies to arbitration agreements entered after that date. The Part commenced in 1989 when the Model Law was introduced into Australian law. In my view the purpose of s 30 was to ensure that arbitration agreements that had been entered into before the Model Law commenced to operate were not caught by it. If Parliament had intended that the saving provision in Part III effectively restarted each time a section within the Part was amended, it would have said so expressly. It did not. I consider that the "commencement of this Part" referred to in s 30 is intended to mean the commencement of Part III as then enacted by the 1989 Act: see Trustees Executors and Agency Co Ltd v Gleeson (1959) 102 CLR 334.
74 Further, to read s 30 as requiring that each time a section within Part III is amended the amended section only applies to arbitration agreements entered into after that date, gives s 30 a far reaching and unexpressed effect. Sections within the Part were amended in the 2009 amendment and the 2010 amendment. In 2010, amendments were made to the Part either by introduction of new provisions or substitution of existing provisions. The amended provisions were ss 15(1), 16(2), 18, 18A, 18B 18C, 19, 21, 22, 23, 23A to 23K, 25(1), 26 to 28, 35(2) and (4). Parliament gave no indication that these amendments were only to operate on arbitration agreements entered after the date of amendment. Indeed, if TCL's reading of s 30 is correct, individual subsections such as 15(1) or 16(2) would commence in 2010 while other subsections of ss 15 and 16 would have commenced on other dates. Such a result would make it very difficult for people affected by the IA Act and Model Law to understand the applicability of its provisions. Parliament said nothing to indicate that it intended this strange result.
75 Both the explanatory memorandum and the Second Reading Speech for the 2010 amendment indicate that, in amending s 21, Parliament was responding to an immediate and significant difficulty which required prompt rectification, rather than be addressed progressively over ensuing years as arbitration agreements were entered into in the future.
76 The explanatory memorandum states:
Application of the Act and the Model Law
…
[Former] section 21 of the Act allows the parties to an arbitration agreement to resolve their dispute under an arbitral law other than the Model Law (as given the force of law by the Act)…This creates significant legal difficulties and confusion concerning the interaction of the different laws….
…
110. The operation of [former] section 21 causes considerable practical and interpretive problems. Firstly, section 21 allows the parties to 'opt out' of using the Model Law but not the Act...Secondly, it is not necessary for the parties to nominate an alternative law under which their dispute is to be resolved. Unless the parties nominate another law under which the arbitration is to occur, it is not clear what law would apply...Thirdly, even where a law is nominated, it will not always be clear that a court will have any power with respect to the arbitration…Finally, should the law of a foreign country be nominated and the arbitration is conducted in Australia it is doubtful that there would be any court which could exercise jurisdiction if required and the agreement may be unenforceable both in Australia and overseas.
…
112. While it is appropriate to give parties the flexibility to determine the procedures they want and the law that is applicable to the dispute, allowing parties to oust the arbitral law creates significant difficulties that cannot be easily remedied without complex litigation. Accordingly, this item repeals section 21. Consequently, while the parties will continue to have freedom to choose both the procedures and the applicable substantive law, they will not be free to oust the Model Law as the applicable arbitral law.
International Arbitration Amendment Bill 2009, Explanatory Memorandum, Outline and paras 110 and 112.
77 In his Second Reading Speech the Attorney-General described the former s 21 as "a provision which has long been a source of confusion and concern": International Arbitration Amendment Bill 2009, Second Reading Speech, Hon. Robert McClelland, Attorney-General, House of Representatives, 25 November 2009, p 12791.
78 TCL argues that it is the State and Territory Courts that have jurisdiction to enforce non-foreign awards. Firstly, it submits that State and Territory courts have inherent jurisdiction to perform this function although it did not develop its argument as to how it said this was so. Castel rejects this argument. I make no finding as to it as it is unnecessary that I do so.
79 Second, TCL argues that the Commercial Arbitration Act 1984 (Vic) and its successor the Commercial Arbitration Act 2011 (Vic), provide jurisdiction for the Supreme Court of Victoria to enforce non-foreign Model Law awards. It is correct that the application provisions of the 1984 Act prior to its replacement in 2011, did not expressly exclude application of the Act to non-foreign Model Law awards. TCL contends that the "competent court" in Art 35 contemplates State and Territory courts having the jurisdiction to enforce non-foreign awards.
80 However, whatever the Commercial Arbitration Act 1984 (Vic) previously provided, the Commercial Arbitration Act 2011 (Vic) enacted in November 2011 makes it clear that the Act does not apply to international commercial arbitrations under the Model Law. Section 1 of the 2011 Act provides that it is confined to "domestic commercial arbitration" which is defined as including only arbitrations where the parties have their place of business in Australia, and as not including "an arbitration to which the Model Law (as given effect to by the International Arbitration Act 1974 of the Commonwealth) applies." This means that TCL's submission that the Commercial Arbitration Act 2011 (Vic) applies to the enforcement of non-foreign Model Law awards cannot be sustained.
81 If TCL's submissions regarding Art 35 are accepted, the enactment of the Commercial Arbitration Act 2011 (Vic) means that neither the Federal Court nor the Victorian Courts have jurisdiction conferred by statute to enforce non-foreign Model Law awards. The same is true of any State or Territory legislation mirroring this Act, as can be expected with the uniform Commercial Arbitration Acts. It is unnecessary for me to reach a concluded view as to the jurisdiction of the State and Territory Courts to enforce non-foreign Model Law awards and I do not do so. However, I very much doubt that the Federal, State and Territory parliaments intend the result that no court is specified as "competent" to do so.