Historically, Australia has grappled with some inconsistency in its authorities as to whether or not claims under mandatory Australian consumer and competition law are arbitrable. Recent decisions, including in Casaceli v Natuzzi SpA (Casaceli), and Amcor Packaging (Aust) Pty Ltd v Baulderstone Pty Ltd (Amcor) seem to have resoundingly resolved that question in favour of arbitrability. Further, the cases of Casaceli and Amcor provide examples of the Court adopting a practical, pro-arbitration approach to claims by parties seeking to avoid arbitration under the guise of mandatory law.
The Australian Consumer Law
The Australian Consumer Law (ACL) is a single, national, mandatory law for fair trading and consumer protection in Australia and is part of a broader legislative suite which regulates anti-competitive conduct and other trade practices. The ACL extends to conduct and places outside Australia. The two provisions of the ACL which are frequently relied upon in commercial litigation are that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive, or engage in conduct that is unconscionable. In certain circumstances, directors of corporate entities in breach of the ACL can be liable for knowing involvement in the contravention.
Arbitrability of the ACL
Historically, there has been some uncertainty as to whether claims brought under a public policy statute such as the ACL should be referred to arbitration when they involve matters of public interest. Since the 1990s, the New South Wales Court of Appeal has accepted that claims brought under the ACL (then the Trade Practices Act 1974 (Cth)) are arbitrable. However, in Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 5), the Full Court of the Federal Court of Australia, narrowly interpreted the scope of an arbitration agreement and found that claims under the TPA were not arbitrable. Some years later, in Comandate Marine Corp v Pan Australia Shipping Pty Ltd the Full Federal Court of Australia broadly interpreted the scope of an arbitration agreement, finding it encompassed statutory claims including the TPA and referring the dispute to arbitration accordingly.
Casaceli and Amcor, both recent Federal Court decisions, follow in the vein of the Comandate decision in finding that claims under the ACL are capable of resolution by arbitration. Casaceli concerned the termination of a distribution agreement by an Italian company of its Australian distributor, with the agreement to be governed by Italian substantive law. The distributor claimed, amongst other things, misleading or deceptive conduct and unconscionable conduct against Natuzzi and its directors. Natuzzi applied for a stay of the proceedings in favour of arbitration. The Court critically examined the claims made by the distributor parties, rejecting the attempts to "surround their claims with an aura of important public policy issues" in what was otherwise a claim for damages in a commercial dispute between companies. The Court opined in relation to claims under the ACL, "it is well settled that such claims are capable of settlement by arbitration".
The case of Amcor concerned a failed building construction contract. Amcor sought relief for (amongst other things) misleading and deceptive conduct against Baulderstone, and for knowing involvement in the contravention against its executives. The arbitration clause required that "a dispute arising out of or in connection with this Agreement" be referred to arbitration. The Court adopted the reasoning in Comandate, holding the court should construe an arbitration clause liberally a rebuttable presumption that the parties did not intend to have disputes from their transaction heard in two places. Amcor's ACL claim fell within that wide scope, and a stay of Amcor's claim in favour of arbitration was granted.
Ancillary claims under the ACL
In both Casaceli and Amcor, the party invoking the ACL also made claims against non-parties to the contract, either as independent wrongdoers or for knowing involvement in the alleged misleading or deceptive conduct. In Casaceli, the distributor argued the directors of Natuzzi were necessary and proper parties to any proceeding. In a very practical response, the Court exercised its discretion to stay the proceedings against the directors, pending the resolution of what it considered to be the "principal" arbitral proceeding between the counterparties, so as to avoid separate but overlapping arbitral and curial proceedings. The same approach was taken in Amcor, where Justice Marshall commended it as practical and appropriate, and stayed the claims for knowing involvement against the directors.
Casaceli and Amcor each demonstrate a more nuanced and practical approach to the treatment of mandatory law in arbitral proceedings. It is most welcome in so far as it gives effect to the bargain reasonably struck by parties to commercial arbitration agreements.
Jacob Chylinski, Jo Delaney, and Mia Livingstone also contributed to this article.