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 are commercial and corporation lists operating in certain state Supreme Courts for case management purposes, there are no specialist courts for adjudicating financial services disputes. However, the Australian Financial Complaints Authority (AFCA) is the one-stop shop external dispute resolution body for financial disputes. 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, the Central Practice Note deals with the management of cases in the Commercial and Corporations National Practice Area in the Federal Court. 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. There are similar practice and guidance notes that apply to commercial and corporations matters in the state jurisdictions.Arbitration
May parties agree to submit financial services disputes to arbitration?
Arbitration in Australia is voluntary, and it is possible for financial services institutions to agree to arbitration provisions – a more common practice with institutional clients. However, the Australian Securities and Investments Commission does not use arbitration as a dispute resolution method with financial services providers.
Australia is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (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. 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, AFCA membership 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, because 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, work is underway between the federal and state governments to implement the recommendation of the 2018 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry to introduce a uniform national scheme.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 those 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).
Unilateral jurisdiction clauses nominating a foreign jurisdiction will not prevail over statutory protective provisions of a valid law of the Commonwealth of Australia.