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Cite as: September 2014 88 (09) LIJ, p.60

Commercial Arbitration Act 2011 (Vic): Does s8 of the Act extend to proceedings before VCAT?

Subway Systems v Ireland [2014] VSCA 142 (unreported, 1 July 2014, No S APCI 2013 0197, Maxwell P, Beach JA and Kyrou AJA).

Disputes arose under a franchise agreement. The respondents brought proceedings in the Victorian Civil and Administrative Tribunal (VCAT). The applicant contended that by reason of s8 of the Commercial Arbitration Act 2011 (Vic) (the Act), VCAT could not hear the proceeding and it ought to be referred to arbitration in accordance with the Act. Section 8 provides that, where a relevant request is made, a court before which an action is brought in a matter which is the subject of an arbitration agreement must refer the parties to arbitration. The franchise agreement contained an arbitration provision, but was VCAT a court for the purpose of s8? There is no definition of “court” in the Act.

Maxwell P approached the matter by reference to the Model Law on International Arbitration (the Model Law) developed by the United Nations Commission on International Trade Law (UNCITRAL). The Act adopts the Model Law; that is, Victoria has adopted the Model Law as part of its domestic law. The Act does not adopt the definition of “court” in Article 29(c) of the Model Law, namely, “a body or organ of the judicial system of a State”. His Honour emphasised at [26] the need to ensure uniformity of interpretation across jurisdictions concerning a treaty, or law implementing a treaty, affecting international commerce. Special rules of interpretation are attracted. His Honour referred to a number of cases then said at [39]-[41]:

“It follows, in my view, that in interpreting s8 of the Victorian Act, very great weight must be given to the intention of the drafters of art 8 of the Model Law and to the importance of uniformity of interpretation. We should avoid an interpretation of the section which would limit its intended scope by reason only of some peculiarity about the way in which the adjudicative structures of this jurisdiction have been established.

“The intention of the drafters of art 8 is, of necessity, to be determined having regard to the definition of ‘court’ in art 2(c). As noted earlier, ‘court’ is there defined to mean ‘a body or organ of the judicial system of a State’. It seems clear that this definition was intended to be sufficiently general to be capable of application to the ‘judicial system’ of each contracting State, whatever the constituent elements of that system might be.

“Whether a particular decision-making tribunal is part of the ‘judicial system’ of a particular State was thus intended to be determined as a question of substance, not of form. As noted earlier, the 1985 UNCITRAL Commentary emphasised that the term ‘court’ was not restricted to those organs actually called ‘court’. What is determinative, therefore, is the character of the functions which the tribunal performs. Is it a ‘competent authority’, in the sense of having a recognised adjudicative jurisdiction?” (endnote omitted).

VCAT has such an adjudicative function. Accordingly, VCAT should be regarded as a court for the purposes of s8.

Beach JA focused on the fact that the Victorian Parliament had not adopted the definition of “court” in the Model Rules and the arguments of both parties as to the significance (or lack of significance) of this. He concluded at [89]-[90]:

“All of that said, one might debate at length the consequences of the failure by the Victorian Parliament to define the word ‘court’ in s2(1) of the Act in the same terms as that word is defined in art 2 of the Model Law. Further, one might debate at length the failure to make reference to this omission in the note following s2(1), having regard to the terms of the note at the commencement of the Act. However, as has been said before, it is the nature of contestable statutory provisions that persuasive arguments can commonly be mounted in support of alternative interpretations.

“When one examines the provisions of the Act, the Model Law and the extrinsic materials to which I have referred, and when one takes into account the purposes of the Act as specified in s1AA and the paramount object of the Act as specified in s1AC, one is driven towards a conclusion that the underlying purpose of the Act was not merely to express a preference for low cost speedy arbitrations over longer more expensive court trials – but rather, and partly in the interests of uniformity, to express a preference for holding parties to their bargains that in terms involve preferring arbitration of whatever kind has been agreed between the parties over State sponsored dispute resolution (no matter how cost efficient or time effective the relevant State body or arm might prove to be)” (endnote omitted).

Kyrou AJA dissented. His Honour emphasised that the question of whether VCAT was a “court” for the purposes of s8 was to be answered by the ordinary rules of interpretation as expanded by the Act (at [94]). He examined a number of cases as to what constitutes a court and the Act itself and concluded at [115]:

“Having regard to the language of s8 of the Act, the context in which the word ‘court’ appears in the Act, the key purpose and paramount object of the Act, the wording of the Model Law and the extrinsic materials relating to the Model Law, VCAT is not a court for the purposes of the Act”.

Leave to appeal was granted, the leave application was treated as the hearing of the appeal, and the appeal was allowed.


PROFESSOR GREG REINHARDT is executive director of the Australasian Institute of Judicial Administration and a member of the Faculty of Law at Monash University, ph 9600 1311, email Gregory.Reinhardt@monash.edu. The numbers in square brackets in the text refer to the paragraph numbers in the judgment. The full version of this judgment can be found at www.austlii.edu.au.

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