Mandatory Law of the Forum
18 Next Epic submitted that Part IV and ACL s 21 were 'mandatory laws of the forum'. In simple terms a mandatory law of the forum is a law operating in the jurisdiction where the court is sitting which the parties are not at liberty by contract to displace. An example of such a law is s 11(2) of the Carriage of Goods by Sea Act 1991 (Cth), which negates the effect of either a choice of foreign law or a foreign exclusive jurisdiction clause in an agreement for the shipment of goods from within Australia to a place outside of it.
19 I accept that Part IV and ACL s 21 are mandatory laws in the sense that parties cannot contract out of their application. There is actually no decision which holds directly that parties may not by contract agree that they are not bound by the competition laws contained in Part IV, although there are statements that at the very least it is not possible to contract out of what is now the ACL: see Henjo Investments Pty Limited v Collins Marrickville Pty Limited (No 1) (1988) 39 FCR 546 at 561 per Lockhart J, Burchett J and Foster J agreeing at 568; IOOF Australia Trustees (NSW) Ltd v Tantipech [1998] FCA 924; 156 ALR 470 at 479 per Lee, Nicholson and Sundberg JJ; Burke v LFOT Pty Limited [2002] HCA 17; 209 CLR 282 ('Burke') at 336 [143] per Callinan J.
20 However this absence of authority is a result of the obviousness of the proposition. Part IV is designed to ensure the competitive nature of Australian markets. The means by which s 45, for example, achieves this end is to focus upon contracts, arrangements and understandings having certain effects or entered into with particular purposes. Part IV therefore takes as one of its points of departure the existence of contracts and then creates sanctions where those contracts impact on competition in certain deleterious ways. It would be a surprising outcome if in those very contracts the parties could agree amongst themselves that Part IV did not apply to their relationship. This is particularly so where the evident intent of Part IV is to foster competition for the common good. For example, s 2 of the CCA provides that the object of the Act is 'to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection'. The stipulations in Part IV are not erected for the interests of the entities engaged in competition, rather, they are imposed for the general well-being of the economy. In light of that public purpose, it is impossible to accept that parties are at liberty to contract out of Part IV: see Westfield Management Ltd v AMP Capital Property Nominees Ltd [2012] HCA 54; 247 CLR 129 at 143-144 [46] per French CJ, Crennan, Kiefel and Bell JJ. Similar reasoning leads to the same conclusion in relation to ACL s 21: see Burke at 336 [143]; Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd [2007] FCA 881 ('Clough') at [41] per Gilmour J; Home Ice Cream Pty Ltd v McNabb Technologies LLC (No 2) [2018] FCA 1093 ('Home Ice Cream') at [17] per Greenwood ACJ; see also Australian Competition and Consumer Commission v Valve Corporation [2016] FCA 196; 337 ALR 647 at [119] per Edelman J. There would be precious little purpose in requiring suppliers of goods and services to behave conscionably in their dealings with consumers if they could agree with the consumers in the same breath that s 21 did not apply.
21 Consequently, I accept that Part IV and ACL s 21 are mandatory laws in the sense that parties are not at liberty to agree that they do not apply. Apple did not attempt to argue that the operation of Part IV and ACL s 21 did not extend to cover the conduct at issue here, no doubt dissuaded by the extraterritorial application brought about by CCA s 5.
22 The question then arises as to how such a mandatory law interacts with:
(a) a choice of law clause; and
(b) a choice of forum clause.
23 Where a choice of law clause is not accompanied by a choice of forum clause (not this case), the analysis is straightforward. Because the parties are not at liberty to agree that a mandatory law (here a provision of Part IV or ACL s 21) does not apply to them, they are likewise unable to achieve that outcome by agreeing that their relationship will be governed by some foreign law which does not include the mandatory law. No doubt their agreement will be effective for some purposes but it cannot have the effect of displacing the mandatory law.
24 Where a choice of forum clause is involved, different concerns arise. The first concern is one on the part of the forum court that the foreign court selected may not apply the mandatory law when hearing the case. The second concern is that the foreign court may decline to hear the case altogether. Both concerns only come into view when an application is made to the forum court to stay the proceeding before it so as to give effect to the choice of foreign court.
25 The usual rule where a choice of forum clause is concerned is that the bargain of the parties is to be enforced and a stay granted unless strong reasons are shown that it should not be: Huddart Parker Ltd v Ship 'Mill Hill' (1950) 81 CLR 502 at 508-509 per Dixon J; The Eleftheria [1970] P 94 at 99 per Brandon J; Akai Pty Ltd v People's Insurance Co Ltd (1996) 188 CLR 418 ('Akai') at 427-429 per Dawson and McHugh JJ, at 445 per Toohey, Gaudron and Gummow JJ; Global Partners Fund Ltd v Babcock & Brown Ltd (in liq) [2010] NSWCA 196 ('Global Partners') at [88]-[89] per Spigelman CJ, Giles JA agreeing at [101], Tobias JA agreeing at [102]. Where mandatory laws are concerned the question then is whether the nominated mandatory law constitutes a strong reason.
26 In Akai the High Court was required to assess the nature of certain provisions of the Insurance Contracts Act 1984 (Cth). A majority of the High Court accepted that a choice of forum clause (coupled with a choice of law clause), if given effect, would defeat a mandatory law of the forum because it had not been shown that the foreign court would apply the mandatory law, being the relevant provisions of the Insurance Contracts Act, when hearing the breach of contract case. However, this is not an Akai case. Both parties accepted that the courts of the Northern District had jurisdiction to entertain a suit under Part IV and ACL s 21 and both assumed that if such a suit were brought, those courts would regard Part IV and ACL s 21 as the lex causae. This was not the case in Akai.
27 The contention in this case is instead of the second variety described above. The concern is not that the foreign court in otherwise hearing the case will not apply the mandatory law (as in Akai) but rather that it will decline to hear the case alleging contraventions of the mandatory law. I accept that if it were shown that a court in the Northern District would decline to hear Epic's case under Part IV and ACL s 21 then it would not be appropriate to stay the present proceeding: Commonwealth Bank of Australia v White [1999] VSC 262; 2 VR 681 at [88]-[91] per Byrne J; Reinsurance Australia Corporation Ltd v HIH Casualty and General Insurance Ltd (in liq) [2003] FCA 56; 254 ALR 29 ('Reinsurance Australia') at [293] per Jacobson J; Clough at [43]; Faxtech Pty Ltd v ITL Optronics Ltd [2011] FCA 1320 at [18]-[28] per Middleton J; Home Ice Cream at [19]. In a sense, this is obvious and I did not really apprehend that Apple disputed it.
28 The debate between the parties was instead about the factual question of whether a court in the Northern District would, whilst certainly having jurisdiction to hear such a suit brought by Epic, decline to hear it for, what I will loosely call for now, procedural reasons. The evidence about this was unclear in its implications. Both parties accepted that a court in the Northern District could decline in its discretion to hear such a case, the difference between them lay in whether it would do so.
29 The principal discretionary basis identified was the principle of forum non conveniens as applied in the Northern District, while considerations of international comity were also discussed. The evidence of Judge Matz showed that United States courts have declined to hear complex antitrust cases arising under foreign laws: In re Air Cargo Shipping Services Antitrust Litigation 2008 WL 5958061 (ED NY 2008) ('Air Cargo'); Tongfang Global Limited v Element Television Company LLC 2020 WL 4354173 (CD Cal 2020) ('Tongfang'). In the Air Cargo litigation the United States District Court for the Eastern District of New York declined to entertain a case brought under European Union competition law in relation to the imposition of fuel surcharges by airlines on air cargo, while Tongfang was a case involving Chinese competition law. The principles to be applied in such cases were laid out in some detail before me. However, the discretionary nature of those principles means they provide no clear guidance as to what the actual outcome would be if Apple were to assert that a court in the Northern District should decline to hear such a suit on forum non conveniens grounds. The best one can say is that such an application might succeed or it might not.
30 In fact, there may perhaps be an air of unreality about this inquiry. In this Court Apple is seeking to make Epic litigate in the courts of the Northern District. In part it relies on cl 14.10 but it also asks this Court to stay Epic's proceeding on forum non conveniens grounds. It may perhaps be doubted that Apple, having adopted such a posture in this Court, would have the chutzpah to submit to the court in the Northern District that, contrary to cl 14.10, Epic should now litigate any Part IV or ACL s 21 claim in Australia. Although this thought is attractive on the surface, I have concluded that I ought not to give it controlling weight since there remains the possibility, vestigial perhaps, that an overworked docket judge in the Northern District might decide to weigh into the forum non conveniens question at his or her own instigation.
31 Given that it is unclear whether a court in the Northern District would stay any proceeding before it under Part IV and ACL s 21 on forum non conveniens grounds, the question then arises as to which of the parties before the Court bore the onus of proving this matter. Did Apple have to prove that such a stay would not be ordered or did Epic have to prove that it would be?
32 The ordinary rule where a choice of forum clause is concerned is that Australian courts will hold the parties to their bargain and will enforce the choice made unless strong reasons are shown that this should not occur: Akai at 429, 445. Under that well-established principle, it is for the party seeking to resist the stay (on the basis that it should not be forced to comply with the choice of forum clause) to demonstrate the existence of a strong reason: The Eleftheria at 99; Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 at 230-231 per Brennan J, at 259 per Gaudron J; FAI General Insurance Co Ltd v Ocean Marine Mutual Protection and Indemnity Association (1997) 41 NSWLR 559 at 569 per Giles CJ Comm D; Incitec Ltd v Alkimos Shipping Corporation [2004] FCA 698; 138 FCR 496 ('Incitec') at [42]-[43] per Allsop J; see also Reinsurance Australia at [342]; Global Partners at [92].
33 The application of that principle would suggest that it is for Epic to show that if it commences a Part IV or ACL s 21 case in the Northern District that case will be stayed. Although Epic has succeeded in showing that there is some prospect that its case would be stayed, it has not proved that its case will be stayed: see Armacel Pty Limited v Smurfit Stone Container Corporation [2008] FCA 592; 248 ALR 573 at [98]-[118] per Jacobson J. Put another way, it has not proved on the balance of probabilities that such a case will be stayed but it has proved on the balance of probabilities that there is a non-trivial chance that this may occur.
34 In my opinion, if the only strong reason put forward by Epic was the mandatory nature of Part IV and ACL s 21 the correct result would be that its case in this Court should be stayed until any case relying on the same provisions in the Northern District is itself stayed on forum non conveniens or other discretionary grounds. This is not quite a permanent stay and, in terms of genus, is properly characterised as a temporary stay.
35 Epic submitted that the majority's reasoning in Akai required the conclusion that Apple bore the onus of demonstrating that any proceeding before a court in the Northern District would not be stayed. If that is correct, then Apple will have failed to discharge that burden because the evidence is not sufficient to draw that conclusion either.
36 The question of who bears the onus therefore dictates, in relation to the mandatory law aspect of the matter, whether there is no stay at all or whether there is a temporary stay of the kind referred to above.
37 Epic relies on the majority's reasoning in Akai to make good its submission that the onus lay with Apple and not with it. Akai was, as I have said above at [26], a case where the question was whether the Australian court was satisfied that the English court would apply the Insurance Contracts Act. A majority of the High Court found that the party seeking to enforce the choice of forum clause (the insurer) had failed to prove that the English court would do so in the proceeding which had been commenced before it. As a result, the stay was refused.
38 This reasoning is, with respect, at least frangible. Although all members of the High Court stated that where a choice of forum clause was concerned it was for the party seeking to resist the stay (there, the insured) to show strong reasons why it should not be enforced, the majority then proceeded on the basis that it was the party seeking the stay (the insurer) who had failed to show that the English court would apply the Insurance Contracts Act. I have found it impossible to reconcile these two statements which are chalk and cheese. If the onus is on the party opposing enforcement of the choice of forum clause to adduce a strong reason against enforcement, then the onus must be on that party to establish the existence of any juridical disadvantage it will face in the forum selected by the clause.
39 Even if the majority should be taken to have intended to overturn the orthodox position without discussion, despite having affirmed the orthodox position on the very same page, the resulting reasoning makes even less sense. If the insurer had failed to prove the content of the English conflict of laws rules this would not automatically lead to the result at which the majority arrived. There is often an absence of evidence about foreign law in litigation. It is beyond argument where such lacunae appear in the evidence that a court is to apply the default rule that the foreign law is to be presumed to be the same as Australian law: Neilson v Overseas Projects Corporation of Victoria Ltd [2005] HCA 54; 223 CLR 331 ('Neilson') at 372 [125] per Gummow and Hayne JJ, at 411 [249] per Callinan J; at 420 [275] per Heydon J but cf at 343 [16] per Gleeson CJ, at 348-349 [36] per McHugh J, at 396 [203] per Kirby J. Indeed, the majority in Akai at 444 itself recognised the existence of the principle and noted that it required them to presume the English court would apply Australian choice of law rules. In the absence of evidence as to the content of English law relating to insurance contracts, the application of that principle should have led the majority to assume that the English law was relevantly the same as that in Australia. Why it did not do so is unclear. These criticisms have been made elsewhere by Professor Davies in terms which are compelling: Davies M, 'A Curate's Egg: Good in Parts - Akai Pty Ltd v People's Insurance Co Ltd' (1997) 25 ABLR 215 at 220; see also Garnett R, 'Jurisdiction Clauses since Akai' (2013) 87 ALJ 134 at 144.
40 If this case were on all fours with Akai I would be bound to apply it and conclude that it was Apple which had failed to discharge its onus. However, this case is not an Akai case. In this case the question is not whether the courts of the Northern District will apply Part IV and ACL s 21. It is whether they will decline to hear the case brought under those provisions on discretionary grounds. As I have indicated already, this does not necessarily entail the same binary consequence that answering the question in Akai had. In my opinion, Akai is distinguishable.
41 Consequently, in a conventional way, it is Epic which bears the onus. For the reasons I have given, if this were the only matter put forward by Epic as a strong reason for not enforcing cl 14.10 I would conclude that a stay should be granted but that it should revocable if the court in the Northern District declined to exercise its jurisdiction on forum non conveniens grounds.
42 For completeness, there was another ground on which a court of the Northern District might stay any proceeding commenced before it by Epic under Part IV and ACL s 21. This related only to the United States District Court for the Northern District. One of the bases on which it might exercise jurisdiction was as pendent or supplemental jurisdiction by reason of the suit already before that court between Epic and Apple under the Sherman Act. Pendent jurisdiction can be declined on discretionary grounds. However, it is not clear to me that all the courts of the Northern District would be exercising that jurisdiction. For example, I am reasonably clear that no state court would be exercising that jurisdiction when hearing a Part IV or ACL s 21 claim brought by Epic. In relation to the United States District Court itself it is not entirely clear to me that it would have pendent jurisdiction in a proceeding separate from the suit between Epic and Apple that is already pending in it. In Australia pendent jurisdiction can sustain separate proceedings in the one court (Re Wakim; Ex parte McNally [1999] HCA 27; 198 CLR 511 at 584 [136] per Gummow and Hayne JJ, Gleeson CJ agreeing at 540 [3], Gaudron J agreeing at 546 [26]) but I do not know what the position is in the United States federal courts. However, it does not matter and there is, therefore, no reason to apply the default rule in Neilson. Even assuming that the United States District Court for the Northern District had pendent jurisdiction, that court would also appear to have diversity jurisdiction which cannot be declined on discretionary grounds (except of course under forum non conveniens principles). It is difficult to think therefore that any discretionary matter is in play beyond issues of forum non conveniens (and to the extent that it is a distinct issue, considerations of international comity). Were I wrong in that, however, I have no greater clarity as to how the pendent jurisdiction discretion would be exercised than I do in the case of the forum non conveniens issue. The same result would flow.