Arbitration Clauses in Australia – Not Quite What It Says on the Tin

The Australian federal court, in an exceptional case, emphasised its reach over arbitration tribunals in a recent judgment.

Qantas Airways, Australia’s largest airline, suspended all international passenger flights due to Covid-19. It announced that it would be standing down two-thirds of its workforce, including its aircraft engineers.

The engineers filed an application with the Fair Work Commission seeking that the Commission hear the dispute by way of arbitration, given that in the relevant enterprise agreement, a clause stated that any disputes were to be arbitrated in the Commission. Qantas claimed that, in the circumstances, the Commission had no jurisdiction to deal with the disputes and filed an application in the Federal Court of Australia seeking a constitutional writ to permanently restrain the Commission from hearing the dispute.

Katzmann J reasoned that dispute raised complex legal issues, which deserved the attention of a superior court. Additionally, there was the potential for delay if the dispute was heard in the Commission. The Court, however, could move quickly to determine the substantive issues. Thus, her Honour held that the interests of justice favoured the action being heard in the Federal Court.

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