In December 2014, the Australian Sports Anti-Doping Authority (ASADA), with the support of the Australian Football League (AFL), sought orders from the Supreme Court of Victoria under the Commercial Arbitration Act 2011 (Vic) (Act). These orders were for subpoenas to be issued requiring certain evidence (witnesses and documents) to be given at the AFL Anti-Doping Tribunal (Tribunal) hearing of ASADA's prosecution of several players at the Essendon Football Club on allegations of doping through the use of the banned peptide Thymosin Beta-4.

The Tribunal hearing was conducted pursuant to the AFL Anti-Doping Code and the AFL Player Rules and a threshold question arose as to whether the Tribunal hearing was properly characterised in law as an "arbitration" in the first place to which the Act could apply.

The Act applies to "domestic commercial arbitrations" arising under "arbitration agreements". In holding that the Tribunal hearing could not properly be characterised as an arbitration, the Court discussed the essential characteristics of arbitrations in its decision in Chief Executive Officer of the Australian Sports Anti-Doping Authority and the Australian Football League v 34 Players and One Support Person [2014] VSC 635.

Implications

This high profile decision confirms the care which should be taken when drafting dispute resolution clauses. Today, the general practice is to include alternative dispute resolution provisions in most commercial contracts, from leases and licences to design and construct contracts.

If it is the intention of the parties that an alternative dispute resolution process in their contract should be arbitration, then the drafter must ensure that all ten arbitration criteria identified by the Court in this decision, as set out below, are provided for in the contract. The most convenient and usual way to achieve this is to expressly refer disputes to arbitration and provide a mechanism for the appointment of the arbitrator. Somewhat tellingly, there was no reference to "arbitration" or an "arbitrator" anywhere in the AFL Anti-Doping Code or the AFL Player Rules.

Conversely, if the parties intend that arbitration is not to be a form of dispute resolution under their contract, then the drafter should not include all ten criteria identified below in the dispute resolution clauses and should especially be mindful of excluding the fundamental features of an arbitration as discussed below. If such is the intention, it is common practice that the contract should expressly state that the decision-maker who is to resolve any dispute arising under the contract does not act as an arbitrator and acts as an expert or in some other specified role or is to merely express an opinion.

Arbitration principles

The Court followed recent English authority on the nature of an arbitration and held that in order for a dispute resolution process (which is provided for in an agreement and which involves the referral of disputes arising under that agreement to a third party decision-maker) to be properly characterised as an arbitration, that process must satisfy the following ten criteria which are essential attributes of an arbitration:

  1. The decision of the decision-maker resolving the dispute must be final and binding on the parties to the agreement.
  2. The decision of the decision-maker must also be recognised and directly enforceable under the relevant arbitration legislation by the courts of the relevant jurisdiction.

In relation to criteria 1 and 2, this means that the agreement must not provide, either expressly or impliedly, that the decision is to be enforceable in contract law by an entity other than a court under the contractual framework of the agreement between the parties. Further, the agreement should not itself provide contractual avenues of appeal against the decision.

Decisions may be final and binding on many bases without necessarily being arbitral awards or decisions. In order for a decision to be an arbitral award, it must be:

  1. final and binding on the parties in the sense of having a preclusive effect which, similar to the effect of a judicial decision, triggers the application of the principles of res judicata and estoppel; and
  2. enforceable by the courts as an arbitral award under the relevant arbitration legislation.​
  3. The dispute resolution process must involve persons whose substantive rights are to be determined by the decision-maker.
  4. The jurisdiction of the decision-maker to carry on the process and decide the substantive rights of the parties must derive either:
    1. from the consent of the parties; or
    2. from an order of a court or from a statute, the terms of which make it clear that the process is to be an arbitration.
  5. The decision-maker must be chosen either:
    1. by the parties; or
    2. by a method to which the parties have consented (which may include appointment by a third party or an arbitral institution selected by the parties).  
  6. The dispute on which the decision-maker is to make a decision must already have arisen at the time when the decision-maker is appointed. This means that the decision-maker must not be called upon by the parties simply to determine a particular issue under the agreement which the parties have agreed will be determined by a third party, such as in a valuation.
  7. The decision-maker must be obliged to apply the rules of natural justice in resolving the dispute. Such an obligation means that the decision-maker must owe an equal duty of fairness to all parties and must determine the rights of the parties in an impartial manner.
  8. The decision-maker must not be allowed to receive unilateral communications from a party and the decision-maker must disclose all communications with one party to the other party. This is to ensure that the arbitration is conducted fairly without a reasonable apprehension of bias. The ability of the decision-maker to communicate with one party without the other party being present and being given an opportunity to respond is unacceptable in arbitration proceedings.
  9. There must be a procedure which gives each party a proper opportunity of presenting its case to the decision-maker if it chooses to do so. The procedure by which the parties are to present their cases must be typical of arbitration rules or procedures.
  10. Though arbitral procedures regarding evidence are generally flexible, nevertheless there must be proper and proportionate procedures for the provision and receipt of evidence by the decision-maker so that each party is entitled to:
  11. give evidence if it chooses to do so;
  12. see and hear the evidence advanced by its opponent; and
  13. test by cross-examination or by other appropriate means, and to answer, its opponent's case.

Though all of the above criteria are necessary in order for there to be an arbitration, not all of these criteria are unique to arbitration and some may be found in other forms of dispute resolution as well.

However, the fundamental features which ultimately and uniquely characterise an arbitration in the spectrum of alternative dispute resolution processes are as follows:

  1. an arbitration is an inquiry which is in the nature of a judicial inquiry (see in particular criteria 9 and 10 above); and
  2. an arbitral award has a preclusive effect so that the same issues in dispute cannot be re-ventilated once the arbitral process is completed (see in particular criteria 1 and 2 above).

It is not necessary for the words "arbitration" or "arbitrator" to be expressly used in dispute resolution clauses in order for an arbitration to arise. The description which the parties give to a particular form of dispute resolution is not determinative of its proper characterisation at law.

Therefore, a dispute resolution process which the parties name as an arbitration but which has some but not all of the ten criteria above, and which in particular does not have the fundamental features of arbitration, may bear a very close resemblance to an arbitration but will not be an arbitration in law. Instead, it may be more accurate to characterise such a process as one before a domestic contractual tribunal rather than before an arbitral body.

Alternatively, a dispute resolution process which is not named as an arbitration (or which is even given some other name) but which has all the hallmarks of an arbitration may nevertheless be held to be an arbitration.

Outcome

In applying the above principles to the Tribunal hearing, the Court held that the ASADA proceedings against the Essendon players before the Tribunal could not be properly characterised as an arbitration.

The Tribunal was not an arbitral body but was more properly characterised as a domestic disciplinary tribunal because:

  1. it was established and operated under a contractual framework for an association to which its members were contractually bound; and
  2. the decisions of the Tribunal were only enforceable by the AFL in contract under that contractual framework and were not enforceable as arbitral awards by the Supreme Court of Victoria under the Act.

Accordingly, ASADA was not entitled to invoke the Act and the Court dismissed its application for the subpoenas to be issued.