Jones v Treasury Wine Estates Limited [2016] FCAFC 59: Possible Implications on International Arbitration Practice

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In Jones v Treasury Wine Estates Limited [2016] FCAFC 59, the Federal Court of Australia granted an anti-suit injunction preventing parties engaged in a class action suit before it from taking oral depositions from US-based employees under US Court procedures, namely, 28 USC § 1782 of the US Code on Assistance to foreign and international tribunals and to litigants before such tribunals. Mark Clarkson, IAA Lead Editor for Australia highlights possible implications of this decision in relation to international arbitration proceedings. 

Treasury Wine Estates (TWE) is the respondent to a class action commenced in the Federal Court of Australia. ‘The proceeding, which commenced in July 2014, involves allegations of misleading or deceptive conduct as well as contraventions of the continuous disclosure provisions of the Corporations Act 2001 (Cth)’. [1] ‘The conduct in question, broadly, is TWE’s alleged failure to disclose to the market that inventory levels of wine held by its US distributors were materially excessive and which in turn affected TWE’s profitability’.[2]

While directly involving class action litigation, the decision potentially has  implications on international arbitration practice. The Full Federal Court exercising original jurisdiction,[3] granted injunctive relief to prevent the plaintiffs using 28 USC § 1782 of the US Code Assistance to foreign and international tribunals and to litigants before such tribunals. This provides a specific right for a person to apply to a US District Court to obtain orders in respect of gathering information from persons within the jurisdiction of the Court to which application is made that may assist in overseas proceedings.[4] Those ‘overseas proceedings’ would include international arbitration proceedings.

The jurisdiction to grant the injunctive relief came from ‘the inherent power of the Court to protect its own processes once set in motion’.[5] While not citing the case, the concepts applied by the Full Court appear to emulate the inherent powers that Lord Diplock used to restrain ‘a collateral attack made upon a final decision … made by another court’ in Hunter v Chief Constable of the West Midlands.[6] This is not a new concept. Nor is the declaration by the Full Federal Court that ‘the overarching purpose of the civil practice and procedure regime is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible’ (emphasis added).[7] It is enshrined in s. 37M(1), of the Federal Court of Australia Act 1976 (Cth) (the Act). The Full Court also noted that: ‘Section 37N(1) requires that parties to a civil proceeding before this Court must conduct such a proceeding in a way that is consistent with that overarching purpose’[8] (emphasis added).

What is new, is the concept that the objectives of the Act, extended by s. 37M(2) to the ‘efficient and timely disposal of cases’ before the court, ‘suggests that satellite ancillary proceedings may not be conducive to such an objective except in a rare case’ (emphasis added).  The Full Court also found that the overarching purpose: ‘At the very least … suggests parties co-operating with the Court, particularly in the invocation of discovery or like processes’ (emphasis added).[9]

The co-operation the Full Court found is suggested ‘in the invocation of discovery or like processes’ may not simply mean that the court requires parties to use its processes, rather than those of some foreign place; but that parties to an action cannot circumnavigate around the restrictions that the Federal Court now imposes upon these processes, by using the more readily accessible and differing processes of a foreign court or tribunal, including an international arbitration tribunal.

The Full Court noted that: ‘Litigation, particularly in superior courts, in Australia has undergone a dramatic transformation in recent years’, and that: ‘Judicial case management is at the heart of this sea-change’[10] The Full Court also noted that: ‘Discovery [both documentary and oral] is no longer a matter of course or of right’,[11] ‘subpoenas cannot be issued without the leave of the Court’[12] and ‘a party must not apply for an order for discovery unless it will facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible’.[13]

The procedures in the Federal Court must be contrasted with the ‘full rounds of submissions, production, witness statements, multi-day hearings, post hearing briefs, and follow-up rounds’ relating to international arbitration of which Risse (2013) spoke.[14]

The Full Court noted that: ‘interrogatories are conceptually different from oral discovery of the kind permitted under US procedures. Oral discovery of the kind permitted in the US has been foreign to the procedures which have applied in civil litigation in Australia …’.[15]  The Full Court took the view that: ‘the [US] applications were patently made in order to obtain the benefit of processes not usually available in this Court.[16] The Full Court also noted that the plaintiffs had not made or foreshadowed making an application to the Federal Court of Australia for leave to administer interrogatories in the proceedings.[17]

The combination of the powers suggested and the apparent lack of co-operation by the Plaintiffs on the question of domestic interlocutory processes operated together to found the decision by Full Federal Court to issue an injunction restraining the Plaintiffs from taking any further steps in relation to the US proceedings.[18]

The decision of the Full Federal Court raises some potential implications on international arbitration practice:-

  • Would the Federal Court of Australia exercise its supervisory power over an international arbitration tribunal to find that the ‘parties to an arbitration proceeding’ must conduct the arbitration proceeding in a way that is consistent with the ‘overarching purpose’ to ‘facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible’ and restrain the ‘full rounds of submissions, production, witness statements, multi-day hearings, post hearing briefs, and follow-up rounds’?
  • Further, would the Federal Court exercising its supervisory jurisdiction restrain an international arbitration tribunal that allowed parties to use (or did not prevent them from using) ‘satellite ancillary proceedings’ to the arbitration, such as 28 USC § 1782 of the US Code Assistance to foreign and international tribunals and to litigants before such tribunals?
  • Last, would the Federal Court regard international arbitration proceedings in themselves, as ‘satellite ancillary proceedings’ to litigation in the court?

This article may be cited as follows: Mark Clarkson, “Jones v Treasury Wine Estates Limited [2016] FCAFC 59: Possible implications on international arbitration practice “International Arbitration Asia (25 June 2016) <www.internationlarbitrationasia.com/Jones-v-Treasury-Wine-Estates-Limited >.

[1] Jones v Treasury Wine Estates Limited [2016] FCAFC 59, [6].

[2] Ibid [7].

[3] Ibid [4].

[4] Ibid [8].

[5] Ibid [21].

[6] [1982] AC 529, 536, 541.

[7] Jones v Treasury Wine Estates Limited [2016] FCAFC 59, [23]

[8] Ibid.

[9] Ibid.

[10] Ibid.

[11] Ibid [24].

[12] Ibid.

[13] Ibid [25].

[14] Dr Joerg Risse, above N 20, 454.

[15] Jones v Treasury Wine Estates Limited [2016] FCAFC 59, [27].

[16] Ibid [44].

[17] Ibid [18].

[18] Ibid, Orders 1 – 5.

 

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