Australia

Australia has a system of tribunals, state courts and federal courts. At the federal level, the Federal Court of Australia, the Family Court of Australia and the Federal Circuit Court sit in all capital cities in Australia, and the original jurisdiction of those courts is conferred by over 150 statutes of the Australian Parliament.

At the state and territory level, there are a hierarchy of courts ranging from local/magistrates/county courts for small claims to district courts and supreme courts for higher value claims. Some state supreme courts have specialised Commercial Lists, Technology and Construction Lists, and Arbitration Lists where judges with expertise in specific business disputes preside.

Federal and state supreme courts offer intermediate courts of appeal, but the ultimate court of appeal in Australia is the High Court of Australia, which also presides over cases concerning Australia’s Constitution. State and federal courts across Australia have strong reputations in the business community because of their high-quality judges with strong commercial acumen and experience in resolving disputes efficiently, transparently, and in accordance with the rule of law.

Proceedings in Australia’s Federal Court are regulated by the Federal Court of Australia Act 1976 (Cth), the Federal Court Rules 2011 (Cth), and practice notes issued by the Federal Court. At state and territory levels, court procedures are governed by legislation, civil procedure rules and practice notes. While efforts have been made to put in place uniform civil procedure rules, rules of evidence, and legal profession uniform laws across Australian states and territories, care should be taken to understand the specific nuances of each court system at territory, state and federal levels.

A common theme across Australian federal and state courts is the broad powers judges have to case manage individual cases. Specifically, active case management techniques, particularly in specialist commercial lists of Australian courts, are applied by judges and registrars to ensure compliance with the overriding/overarching purpose of the Australian court systems, which is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. The practice and procedure in Australian courts is implemented with the object of resolving issues between the parties in a way that the cost to parties is proportionate to the importance and complexity of the subject-matter in dispute.

Australia is an adverse-costs jurisdiction, meaning a prevailing party can recover from an unsuccessful party its reasonable legal fees, and in some circumstances, all of its legal fees in the event that costs are awarded on an indemnity basis. To minimise cost risk, parties need to ensure that efforts have been made to resolve a dispute prior to initiating any proceedings. Equally, before issuing proceedings, legal practitioners need to be confident that there are reasonable grounds for believing that any claim or defence has reasonable prospects of success on the basis of provable facts and a reasonably arguable view of the law.

In addition to those threshold issues, parties should give careful attention to:

• whether any arbitration clause might govern the dispute;
• what court they plan to file in;
• what relief a party intends to seek;
• whether any insurers or litigation funders might be involved in the dispute (and how that might impact attempts to settle or resolve the dispute);
• the location of parties and third parties in any proceedings for the purposes of jurisdiction, service, discovery, lay evidence, expert evidence, testimony, and enforcement;
• the likelihood of a proportionate liability defence being made;
• the likelihood of a security for costs application;
• whether preliminary discovery is required before commencing proceedings;
• whether any kind of injunctions, interim preservation, freezing and search orders are required; and
• whether any judgment needs to be enforced in any jurisdictions outside of Australia.

Arbitration is often considered as a confidential alternative to litigation, where the parties have greater control over the process, rules and timing of their dispute.

In both federal and state courts, parties are encouraged, and expected, to engage in efforts to resolve their business disputes using alternative dispute resolution methods. It is common, particularly in commercial contexts, for parties to include ADR provisions in their contracts. Often, parties will include tiered-dispute resolution provisions that refer to one or more of: good faith conferral; mediation; expert determination; adjudication; and arbitration. Australian courts customarily expect parties to engage in these processes in good faith as a meaningful and alternative way of resolving disputes without the extra time, expense, and resources that are often involved in litigating through to the completion of a trial.

Mediation is a popular contractual mechanism used in Australia as a way of attempting to resolve a dispute when it first arises. It is an expectation that prior to commencing proceedings the parties meet and attempt to resolve any issues between them. The same expectation applies before the matter proceeds to trial before a federal or state court.

Commercial arbitration is a well-recognised and common alternative to litigation. Ad hoc arbitration is common for domestic disputes, with institutional arbitration rules often adopted in larger domestic and international arbitration proceedings. In addition to the virtues of providing well-understood procedural frameworks and confidentiality than ad hoc arbitration, institutional arbitration can also provide time efficiencies as well as benefits when it comes to enforcement of an award, especially if the award might need to be enforced in jurisdictions outside of Australia. Australian courts are familiar with the leading international institutional arbitration rules, and the Australian Centre for International Commercial Arbitration (ACICA) is the leading Australia-based arbitration institution for domestic and international arbitrations.

While federal and state courts in Australia report that they seek to have proceedings reach trial within 12–18 months from commencement, that timeframe can extend beyond 24 months, particularly in complex high-value commercial litigation. To ensure that parties commit to a schedule that is as efficient as possible given the specific circumstances of each case, federal and state courts will set tight deadlines and seek an initial case management hearing soon after the commencement of proceedings. Once a date has been set for trial, that date will not be moved without compelling reasons. Australian courts, particularly commercial lists in state Supreme Courts, have strong reputations for active case management to progress cases through to trial.

Australian courts have a range of powers and discretion to make orders for the disclosure of information by parties and third parties, including:

• preliminary discovery and inspection;
• discovery from prospective defendant to decide whether to commence proceedings;
• providing particulars;
• in pleadings;
• third-party discovery;
• discovery or disclosure between parties;
• search orders; and
• interrogatories. 

The threshold that is applied is whether the document is relevant to a fact in issue. Relevance is assessed by whether a document contains material that could rationally affect an assessment of the probability of the existence of a fact that is material to an issue in dispute, regardless of whether the document or matter would be admissible in evidence. This standard is narrower than prior rules where a document was discoverable if it tended to advance a party’s case or would lead to a train of inquiry that might have that effect. Parties are required to disclose both helpful and unhelpful documents and lawyers have important professional obligations in that regard.

Discovery typically occurs after the close of formal pleadings, once the issues in the case have been defined and before the parties serve evidence in written form. However, it is worth noting that in the Supreme Court of New South Wales, Equity Division — a leading court used for resolution of commercial disputes — the court will not make an order for disclosure of documents until after the parties have served their evidence (unless there are exceptional circumstances necessitating disclosure and it is necessary for the resolution of the real issues in dispute).

Confidential communications for the dominant purpose of legal advice or for use in existing or anticipated legal proceedings are protected from disclosure by legal professional privilege. However, care must be taken when assessing whether communications can be withheld from required production based on privilege protections, particularly because the applicable law is not uniform across all states and territories. In commercial cases, care also needs to be taken as to how confidential documents and communications will be treated during proceedings. Particular care should also be taken when retaining expert witnesses because requirements concerning disclosure of communications with experts and draft reports are also not uniform across all states and territories.

Yes, witnesses can be required to attend trial and face cross-examination, and this is normal practice. Generally, witness evidence is provided in the form of an affidavit. And then in trials before Australian federal and state courts, lay and expert witnesses are required to attend trial for direct examination and cross-examination. In some circumstances witnesses can be cross-examined in interlocutory hearings, although they are generally conducted on the basis of affidavit evidence only.

It is worth noting that forms of pre-trial witness testimony, like the type of deposition testimony that is common in the United States, are not frequently used in Australia outside the context of liquidator examinations. However, there are processes available for parties involved in litigation in the United States to seek production of documents and deposition testimony from witnesses located in Australia for the purpose of using that evidence in proceedings in the United States.

Australian federal and state courts have very broad discretion to make costs orders at any stage of the proceedings or after the conclusion of the proceedings (see Questions 2, 3 and 6, above).

The norm is for costs to follow the event, which is distinct from jurisdictions like the United States where parties typically bear their own costs. Costs are usually awarded on the “ordinary” basis, which means that the prevailing party will receive its reasonable costs back. As a rule of thumb, reasonable costs tend to be around 65–75% of a party’s actual costs. However, courts have discretion to award costs on an indemnity basis where there is a special entitlement or unreasonable conduct, including misconduct in connection with the conduct of the proceedings. A party in whose favour an order for costs is made may proceed to an assessment of costs or the court can make a gross sum costs order before costs are referred for assessment.

Because costs orders can be made against parties, third parties, and legal practitioners, care must be taken when assessing what claims or applications are pursued in any proceedings. Refusal by a party to accept an offer of compromise on a specific claim or interlocutory application can have real cost consequences, particularly when it comes to a court assessing if costs can be recovered on an indemnity basis.

Courts can make urgent injunctions, interim preservation orders, freezing orders (also called Mareva orders or asset preservation orders), and search orders (also called Anton Pillar orders). Where such orders are made ex parte, the applicant is required to disclose to the court all material matters, including those that may be adverse to the application.

Courts may make a freezing order to prevent the frustration of the court’s process by seeking to meet a danger that a judgment or prospective judgment of the court will be wholly or partly unsatisfied unless the assets of a particular party are frozen. A freezing order may restrain the dispossession or diminution of any assets located in or outside of Australia. Courts may also issue search orders or other orders requiring a respondent to permit persons to enter premises for the purpose of securing or preserving evidence.

It is important to note that any applications made prior to proceedings being instituted are subject to a court requirement of providing an undertaking to pay the usual filing fee and, if the interim relief is granted, the plaintiff also needs to provide an undertaking as to damages. An undertaking as to damages is an undertaking to the court that a party will pay court ordered compensation to any person adversely affected by the operation of the interlocutory order or undertaking if it is subsequently held to be unmerited.

Federal and state courts in Australia encourage and support the use of commercial arbitration for both domestic and international disputes. Australian courts promote arbitration as an efficient, impartial and enforceable method to resolve commercial disputes and ensure awards provide certainty and finality.

For international arbitration, this express commitment is enshrined in the International Arbitration Act 1974 (Cth) (IAA), which designates the Model Law as the exclusive, mandatory procedural law for all international arbitrations seated in Australia. The IAA provides guidance and limits to the exercise of judicial power in relation to arbitration in Australia and sets out specific circumstances when courts may act.

For domestic arbitration, at the state level, Commercial Arbitration Acts were agreed upon as a way of creating a uniform domestic arbitration law throughout Australia. All Australian states and territories have adopted and enacted versions of the Model Law creating a uniform framework for domestic arbitration in Australia.

Arbitrators in Australian seated arbitrations, both international and domestic, have power to grant interim measures and Australian courts have power to order provisional measures in aid of arbitration.

These powers include:

• making preliminary orders prior to an interim measure application being heard/determined;
• orders to maintain or restore the status quo pending the determination of a dispute;
• orders preventing or refraining action that is likely to cause current or imminent harm or prejudice the arbitral process;
• orders to preserve assets out of which a subsequent award may be satisfied; and
• orders to preserve evidence that is relevant or material to the resolution of the dispute.

The power of tribunals to grant interim measures are enshrined in the IAA, the Model Law and the Commercial Arbitration Acts. Such powers are also reflected in ACICA’s institutional rules, both ACICA’s Arbitration Rules (2021) and ACICA’s Expedited Arbitration Rules.

There are very limited grounds to appeal an arbitration award arising from an arbitration seated in Australia to an Australian court.

For international arbitrations, if Australia is the seat of arbitration then awards on jurisdiction can be reviewed de novo by Australian courts. Outside of appeals going to the jurisdiction of the tribunal, there is no basis to appeal an award arising from an international arbitration seated in Australia. For domestic arbitrations, the Commercial Arbitration Acts allow appeals from arbitration awards on a question of law arising out of the award, but such appeals are only permitted where parties agree to appeal rights in advance and leave to appeal has been granted by the court. There are tight deadlines for filing these types of appeals.

Outside such limited appeal rights, Australian courts have the power to set aside an award arising from an arbitration seated in Australia, but this does not operate as an appeal or review of the merits. Awards may only be set aside on the limited grounds in Article 34 of the Model Law:

• incapacity;
• invalid agreement;
• failure to provide proper notice of appointment or proceedings;
• inability to present case;
• award deals with a dispute outside scope of agreement;
• procedure not in accordance with agreement;
• dispute not capable of settlement by arbitration; or
• award conflicts with public policy.

Foreign judgments are primarily recognised and enforced in Australian courts through the operation of the Foreign Judgments Act 1991 (Cth) and the Foreign Judgments Regulations 1992 (Cth) or alternatively pursuant to common law principles as an action in debt. Where substantial reciprocity is established, judgment creditors can register foreign judgments, which give them the same force and effect as if they were made by an Australian court. For foreign judgments not made in a court listed in the Foreign Judgments Regulations, including the United States, China, Russia and India, parties rely on common law principles for recognition and enforcement of any foreign judgments.

The IAA gives effect to Australia’s obligations under the Model Law, the Convention on Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention) and the Convention of Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). Article 35 of the Model Law governs recognition and enforcement of awards and Article 36 sets out the specific grounds for refusing recognition and enforcement of awards.

Where a party seeks to enforce a judgment or award against a foreign state or state-owned enterprise in Australia, attention should be directed to the Foreign States Immunities Act 1985 (Cth) as the interpretation of that statute has been subject to recent litigation in Australia.

A judgment that orders the payment of a specific, or readily calculable, sum of money is generally enforceable.

For judgments from countries listed in the Foreign Judgments Regulations, money judgments are enforceable through registration. Under Australian common law, any final and conclusive money judgment can be enforced in Australia, even if the country of origin is not listed in the Foreign Judgments Regulations. In some circumstances, Australian courts may provide equitable assistance for non-money judgments.

By contrast, the following judgments are typically excluded from enforcement in courts in Australia:

• non-money judgments (including judgments requiring a person to perform or refrain from a specific act);
• judgments for foreign taxes, fines or penalties;
• fraudulent or unjust judgments (where judgment is contrary to Australian public policy or if the foreign court failed to act according to natural justice); and
• unregistered judgments.

Under the Foreign Judgment Act, a judgment creditor must apply within six years after the date of the foreign judgment to register a foreign judgment. Although there is a national framework for judgments to be registered and enforced in Australia, it should be noted that the formal requirements and procedures differ between federal, state and territory legislation. The application to a court can be made ex parte without giving any notice to the judgment debtor. After the court registers the foreign judgment, the judgment creditor must serve a notice of registration on the judgment debtor and inform them of their right to apply to set aside the registration. After the deadline passes for setting aside the registration, the judgment creditor can enforce the foreign judgment in the same way as an Australian judgment.

Australian courts prescribe rules relating to initiating applications for the recognition of a foreign judgment under common law, and the common features are initiating an application by originating motion and accompanying the motion with a supporting affidavit exhibiting an authenticated copy of the judgment as well as an English translation if the judgment is not in English.

The recognition and enforcement of awards in Australia are governed by section 8 of the IAA and Article 35 of the Model Law. A foreign award is binding by virtue of the IAA for all purposes on the parties to the award and may be enforced in Australian federal, state, or territory courts as if it were a judgment or order of that court. In proceedings where a party seeks to enforce a foreign award in Australia, that party must provide a duly authenticated original award or duly certified copy and an original arbitration agreement under which the award was made or a duly certified copy.

There are a number of procedures available in Australian federal, state and territory courts for the enforcement of judgments, including:

• instalment orders;
• writs/warrants of execution against property;
• garnishee orders (attachment of debts);
• charging and stop orders; and
• use of receivers.

The procedure for enforcement will be set out in the rules for each specific court.

In addition to processes in Australian courts which permit the use of a sheriff to assist in the execution of a judgment against an individual or company, there are enforcement procedures based on court orders requiring third parties with control over a judgment debtors’ property to transfer the property to the judgment creditor, or otherwise deal with it in a way that protects the judgment creditors’ rights.

Failure to pay a judgment debt may also be a basis for proceedings in bankruptcy against an individual or proceeding for winding-up against a corporation. Insolvency proceedings are often used as a last resort by judgment creditors when other enforcement efforts have not succeeded.

A judgment creditor can obtain interim relief while registration and enforcement procedures take place, including seeking an injunction to restrain any potential disposal of assets or freezing orders. Furthermore, where payment of a judgment debt is made by instalment order, a judgment creditor may apply to the court for the variation or rescission of an instalment order based on any change in the financial circumstances of the judgment debtor.

There are also powers that can be used to conduct examinations of a judgment debtor to gather information about a judgment debtor’s financial position. Examinations often assist a judgment creditor is assessing the most efficient and effective option for enforcement of any judgment. An examination notice can require a judgment debtor to answer material questions in relation to their financial position in order to satisfy the judgment and ordinarily requires the production of documents by the examinee.

Proceeding on the assumptions outlined in the Model Answer, would a court in this jurisdiction recognise and enforce the arbitral award under the New York Convention?

In particular:

• Does the award fall within the scope of Article V(1) of the Convention, or would any of the grounds in Article V(1) justify refusal on the assumed facts?
• Is the subject matter of the dispute capable of settlement by arbitration under domestic law for the purposes of Article V(2)(a)?
• Would recognition or enforcement of the award be contrary to public policy within the meaning of Article V(2)(b)?

Response

There is a risk that such an award would not be recognised by the Australian courts, but instead seen as the arbitral version of “judgment laundering” observed by the English Court of Appeal in Strategic Technologies Pte Ltd v. Procurement Bureau of the Republic of China Ministry of National Defence [2020] EWCA Civ 1604. In that case, the English court refused to register in England a judgment from one Commonwealth court (the Cayman Islands) that was itself based on a judgment from another court (Singapore). Whilst the Cayman Islands judgment was within the literal definition of the term “judgment” for the purposes of the United Kingdom’s Administration of Justice Act 1920, in substance the judgment was one of the Singapore courts, whose judgments do not have reciprocity with England, such that registration would undermine that essential feature of the regime.

Whilst Strategic Technologies has not to date been considered by Australian courts, similar considerations may be taken into account by an Australian court in considering recognition of the example award. Section 7(2)(b) of Australia’s Foreign Judgments Act 1991 (Cth), provides that an Australian court may set aside registration of a judgment if satisfied that “the matter in dispute in the proceedings in the original court had before the date of the judgment in the original court been the subject of a final and conclusive judgment by another court having jurisdiction in the matter”. Whilst the IAA does not contain a similar provision, section 8(7)(b) provides that an Australian court may refuse to enforce an award if to do so would be contrary to public policy.

An important issue here is likely to be whether there is, in substance, any genuine dispute over payment of the monetary sum itself, separate from the underlying merits of the original dispute. The requirement for security in the full amount of the judgment would appear to undermine such an argument. It is theoretically possible that the award addresses a purely payment dispute, and an award on that issue only may be capable of recognition. However, assuming there is no reciprocity between Australia and the jurisdiction in which the underlying judgment was made, an “intermediary” award that has the effect of simply “rubber stamping” the underlying judgment is likely to be at risk of refusal, for similar reasons as the intermediary judgment of the Cayman Islands judgment in Strategic Technologies, namely that to do so would undermine the policy and reciprocity of Australia’s Foreign Judgments Act 1991 (Cth).

Thank you to associates Liam Campbell and Joshua Kennedy for their assistance in preparing this chapter.