The High Court has unanimously upheld the constitutional validity of legislation conferring jurisdiction on the Federal Court to enforce international arbitration awards in Australia.*  The tragedy is that the challenge was brought at all.

TCL, the plaintiff, sought to argue, having already agreed to resolve its dispute by arbitration and being in receipt of an unfavourable award, that the Federal Court could not properly be vested with jurisdiction to enforce the award.  TCL submitted that this jurisdiction was incompatible with Chapter III of the Commonwealth Constitution. 

Such an argument is contrary to the very foundation of international arbitration, being the consensual agreement of the parties to resolve their dispute by arbitration.  Further, the Model Law in respect of which jurisdiction is conferred on the Federal Court reflects the globally accepted standard for enforcement of arbitral awards.  Had TCL succeeded, Australia would have been alone among its peers in having no effective means of enforcing international awards.

Pleasingly, representatives for the Commonwealth, Queensland, South Australia, Victoria, NSW and WA intervened in support of the constitutional validity of the legislation.

The High Court unanimously rejected TCL’s argument.  The High Court held that the legislation did not undermine the institutional integrity of the Federal Court nor confer judicial power on the arbitral tribunal. 

Commentators Australia-wide have welcomed the decision, which accords with Australia’s political commitment to promote international arbitration.  It is regrettable that the High Court and the defendants were put to the burden and cost of this matter – which is so obvious in its outcome – at all.

*TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the Federal Court of Australia [2013] HCA 5