Procedure

Specialist courts

Do you have a specialist court or other arrangements for the hearing of financial services disputes in your jurisdiction? Are there specialist judges for financial cases?

While there is a commercial list in the Federal Court and certain state Supreme Courts for case management purposes, there are no specialist courts for adjudicating financial services disputes. However, AFCA is the new one-stop shop external dispute resolution body for financial disputes (see question 27). AFCA hears both financial and superannuation complaints (previously heard by separate third-party external dispute resolution bodies).

Procedural rules

Do any specific procedural rules apply to financial services litigation?

There are no specific procedural rules applying to financial services litigation. By way of guidance, there is a Central Practice Note dealing with the management of cases in the Commercial and Corporations National Practice Area. This covers commercial and corporation disputes within federal jurisdiction, of which banking, finance and insurance are sub-areas as well as economic regulation, competition and access.

Arbitration

May parties agree to submit financial services disputes to arbitration?

Arbitration in Australia is voluntary and it is possible for financial service institutions to agree to arbitration provisions; a more common practice with institutional clients. However, ASIC does not use arbitration as a dispute resolution method with financial service providers.

Australia is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also known as the New York Convention). As such, Australian courts will give effect to private agreements to arbitrate and recognise and enforce arbitration awards made in other contracting jurisdictions.

Out of court settlements

Must parties initially seek to settle out of court or refer financial services disputes for alternative dispute resolution?

There are legislative requirements for financial services providers to seek to resolve their disputes out of court, if possible (see question 15). However, generally, they are not required to refer matters to alternative dispute resolution before commencing proceedings.

While customers are not required to first raise their dispute with AFCA, membership of AFCA is either required by law or is a licence condition of financial institutions that provide financial products and services. Accordingly, in practice, this is often the first step to a dispute, becuase customers can pursue a court outcome if unsatisfied with AFCA’s recommendations. AFCA is also free to consumers and small businesses because it is funded by contributions from subscribed financial institutions.

Pre-action considerations

Are there any pre-action considerations specific to financial services litigation that the parties should take into account in your jurisdiction?

In Australia, there are no specific pre-action formalities generally applicable to financial services litigation. Some states have such formalities as a matter of course in litigation generally.

Various state jurisdictions and courts have particular pre-action requirements before commencing proceedings, including, by way of example, an obligation to take genuine steps to seek to resolve the matter and subsequently filing a ‘genuine steps statement’.

There are, however, some requirements regarding agricultural customers as a result of farm-debt mediation regulations. This requires a mediation to be held in certain circumstances before the bank can take enforcement action. While this is only applicable in some jurisdictions, a recommendation of the Royal Commission was the implementation of a uniform national scheme, which will likely be carried out.

Unilateral jurisdiction clauses

Does your jurisdiction recognise unilateral jurisdiction clauses?

Unilateral jurisdiction clauses, also known as ‘asymmetric’ or ‘one-sided’ jurisdiction clauses, limit one party to suing the other in a court of a particular country while the other party is free to sue the former party in a jurisdiction of its choice. Accordingly, this favours one party. While there is little judicial consideration of such clauses, it is likely that these would be enforceable under Australian law, although this is not the case in certain overseas jurisdictions (such as where the term is regarded as unfair or unconscionable).