The decision on Wednesday (13 March) confirmed the final and binding nature of arbitral awards, strengthening Australia’s international arbitration system, said Doug Jones (pictured), president of the Australian Centre for International Commercial Arbitration (ACICA).
“This decision is confirmation that the approach of the judicial system is supportive of international arbitration,” he told Lawyers Weekly.
The constitutional challenge arose out of a dispute regarding a distribution agreement between China-based TCL Air Conditioner and Australian company Castel Electronics. The dispute examined the way in which arbitral awards are recognised and enforced in Australia.
In separate proceedings instituted in the High Court, TCL sought to quash decisions of the Federal Court in relation to the awards. TCL argued that recognising arbitration decisions made in the absence of a judge (outlined in the UNCITRAL Model Law on International Commercial Arbitration governing the conduct of international commercial arbitrations in Australia) contravenes the constitution, which states that judicial power of the Commonwealth can only be exercised by the courts.
The High Court unanimously dismissed TCL’s appeal, drawing a distinction between the judicial power of the courts and the power of arbitration tribunals.
King & Wood Mallesons acted on behalf of ACICA, the Institute of Arbitrators and Mediators Australia and the Chartered Institute of Arbitrators, which intervened in the proceedings and prepared a joint submission to the High Court.
The intervention was financially supported by litigation funder IMF Australia.
IMF’s investment manager Susanna Khouri told Lawyers Weekly that the decision could invite significant international commercial arbitration claims and bi-lateral investment treaty claims to Australia, which she described as “fertile areas” for the litigation funder.
“This this is a significant victory,” she said, adding that the decision “preserves and shows the robustness of the international commercial arbitration framework in Australia.”