AUSTRALIAN NATIONAL UNIVERSITY
Symposium to honour Professor Leslie Zines: Key Issues in Australian Federal Constitutional Law
Constitutional Framework for the Establishment of an Australian International Commercial Tribunal
James Allsop
Background
In the last few years, a number of international commercial courts have been established around the world. There has been discussion in Australia as to the wisdom (or not) and means of establishing such a court in this country. 
This paper is not directed to entering the debate as to whether it would be in Australia’s national interest to create a commercial court of a national character designed to cater to the needs and requirements of international commercial parties. The view is open that, without any intended reflection on the skill and expertise of State and Territory Supreme Courts, such a step would be both wise and useful so that Australia can fully participate in, and contribute towards, the growth and development of an international commercial justice system. The advantages for Australia and Australians may be not only the development and enhancement of what might be described as the legal service sector, but also the contribution of Australia’s skilled and respected judiciary, legal profession, and legal system to developing and enhancing the rule of law in international commerce. Others may see no real advantage. One view recently expressed saw existing courts in Australia as “courts which…offer quick and clear justice delivered by conscientious and clever judges with a feel for the workings of commerce” and considered that “well-advised, sophisticated commercial parties know where they are.” 
There was deliberateness in the choice of the word “Tribunal” in the title to this paper. It was chosen to permit a discussion of the forum to be created from the perspective of both judicial power (if a court were to be created) and private authority or power (if an arbitral institution were to be created). Whatever might be the preferred policy response, if any, of Parliaments, some historical context is helpful, both to understanding why the subject is worthy of discussion, and to appreciating some of the Constitutional foundations of legislation, if such be thought to be appropriate by way of policy. 
The second half of the twentieth century and the first decades of this century have seen the vast increase and expansion of global trade and the rise of new economic development and wealth around the world, not least in our region. International commercial arbitration, in institutions and by ad hoc references, has grown enormously. It is no exaggeration to say that the arbitral dispute resolution ‘system’ is the foundation of what can be described as an international commercial justice system. Its widespread efficacy is founded on one of the most successful and important conventions of all time, the New York Convention of 1958. That convention, which has been adopted by over 150 countries, provides for the streamlined recognition and enforcement of international commercial arbitration awards. The UNCITRAL Model Law likewise provides for recognition and enforcement of arbitral awards, as well as containing the template for an effective and harmonised law of arbitration procedure. 
Notwithstanding the widespread growth of international commercial arbitration, there has been some growing dissatisfaction with, or reservation about, some aspects of international commercial arbitration. Some of this dissatisfaction relates to costs, some to lack of transparency and process. At the same time, there has been some stirring of existing commercial courts to improve their procedures and their perception, as well as the growth of bespoke international commercial courts to cater for the international commercial community. 
At least part of the motivation for the steps taken by individual jurisdictions in the creation of these bespoke courts is to position themselves better to reap the rewards involved in the business of dispute resolution. That, however, is too narrow a focus. The participation of Australians and Australian institutions in the building and maintenance of an international system of resolution of disputes by accepted rules of commercial law is a public policy objective to be recognised as distinct from, but related to, any economic advantage for Australians and Australia. 
Different models 
Given that the discussion concerns the (Australian) Constitutional framework for a tribunal of some kind in which to resolve international commercial disputes, the distinction between judicial power and non-judicial private arbitral authority or power comes immediately to mind. 
Underlying the notion of a court is its fundamental character as an institution of government, of the state, exercising power, upon application, to resolve disputes and determine rights independently of the consent of those before it. The court is an institution of government in or through which governmental power, of a particular kind, is exercised. Arbitral power is private; it is the submission of a dispute to a third party to resolve, with an express or implied agreement to abide by and perform the award. The existence and scope of the authority to make the arbitral award rests in the arbitration agreement, in contract. That the source of the authority to arbitrate is private contract does not mean, however, that an institution cannot be set up by Parliament to foster, facilitate and support private arbitration; nor does it say anything as to who can be an arbitrator, and, more specifically, whether someone who holds office as a judge can (otherwise than as a judge) act as an arbitrator. 
Thus, the models for consideration are a court and an arbitral and alternative dispute resolution (ADR) institution.  
I do not propose to deal with the detail or minutiae of such institutions, except insofar as the positing of attributes might be necessary to consider in relation to underlying constitutional considerations. 
A court
The character of a court as an institution of government means that, for Australia, the court may be a State court, a Territory court, or a federal court. The features of such a court will depend upon the operation of legislation authorised by respective Constitutional authority.
One aspect of such a court is that it would be designed for the voluntary submission of matters by international parties, should there be no existing basis for jurisdiction whether by presence of the defendant or ex-juris service. Submission, whether by prior contract or otherwise, is a foundation of jurisdiction.
One particular advantage of the use of the jurisdiction of a court, as opposed to an arbitral institution, is the capacity of the court to join third parties to a proceeding within jurisdiction by service outside the jurisdiction. The consolidation of arbitral proceedings and bringing of relevant parties into arbitrations to resolve all aspects of a commercial controversy has always been a problem. 
One feature of some international courts that is said to give them attractiveness is the ability to populate the court with ad hoc appointments of distinguished former judges of significant commercial reputation from a variety of jurisdictions, sitting both at first instance and on appeal. This feature is not a hallmark of an international commercial court, but, if present, it would add flexibility and immediate international reputation to a new institution. This, of course, throws up the question of part-time or ad hoc judges in the Australian Constitutional framework. 
An arbitral and ADR institution 
Arbitration is often undertaken under the auspices of formal institutions. Such is not essential. Many arbitration agreements provide for ad hoc resolution by a named (or to be mutually agreed) arbitrator or arbitrators or by an arbitrator or arbitrators appointed by an independent third party or institution.
There already exist private arbitral institutions in Australia. Most particularly, the Australian Centre for International Commercial Arbitration (ACICA) exists with a mandate for the promotion of international commercial arbitration in Australia. Given the existence of these private arbitral institutions, one would need to consider the utility of the creation of a Commonwealth, State or Territory arbitral and ADR institution. That consideration would not only be helpful for an assessment of the legitimacy and utility of the policy, but would also be relevant to attendant Constitutional considerations. 
An arbitral and ADR institution created under legislation may provide supporting features for the conduct of the arbitration: a set of rules under which the arbitration is to be conducted; infrastructure to support the undertaking of the reference, such as physical infrastructure; support and assistance for the arbitrator chosen; and available and appropriate arbitrators from whom parties may choose the person or persons to whom their dispute is to be submitted. By its rules, features and requirements, the institution may engender a standard of skill and excellence in those it makes available to act in the function of the private exercise of authority.
The rules of the institution may also be important in affecting the content of the contractual submission to arbitrate. The rules of an institution contribute to the content of the relevant procedure to be followed, and thus may affect the power of the arbitrator to conduct the reference in the most efficient way. 
If an arbitral institution were also to provide other ADR services, such as conciliation and mediation, its infrastructure (physical and human) could be developed accordingly. 
Modern dispute resolution is complex and varied. The frequency of extremely large cases is growing, often with the feature of multi-party complexity that modern transnational commercial activity engenders. This increases the need for subtle, but intense, mechanisms and skills to reduce disputes to their essentials, to the “real issues”, in order that the large costs in sophisticated litigation are minimised. 
Case management has emerged over the last 40 years as a means of reducing the complexity and cost of litigation. For its success it requires an approach to litigation that has a degree of co-operation and that focuses on problem-solving. These can be described as issues of litigation or dispute resolution “culture”. The appropriate culture is best able to be encouraged in an institutional environment. Australian courts have led the world in this respect. Such a culture would be an expected feature of the arbitral and ADR institution.
An institutional framework which enabled all features of such a culture of litigation problem-solving to flourish might combine or co-ordinate the operation of an international commercial court with a separate, but associated, arbitration and ADR institution, such that together they were able to provide human and physical infrastructure to the international commercial community to permit the deployment of judges, registrars, mediators, conciliators and arbitrators.  I will, however, restrict the following discussion to a court and an arbitral and ADR institution, separately. 
These models and an outline of some Constitutional considerations
A State court 
A State Parliament could create an international commercial court, whether as part of its Supreme Court or separate from it. The foundation for such a court would be the peace, order and good government of the State, under provisions of respective State constitutions.
A number of Constitutional questions would attend such a step. First, if the court were to be separate from the Supreme Court, it would still be subject to supervision by the Supreme Court, irrespective of any privative clause that may be enacted: Kirk.
Secondly, subject to the maintenance of institutional integrity, the judges of the court could be ad hoc international and domestic appointments. This would provide the feature that other international commercial courts have – a suite of international judicial talent, whether sitting or retired.
Thirdly, subject to the doctrine of incompatibility (dealt with separately later), sitting federal judges could receive commissions as ad hoc judges. 
Fourthly, there would be no inhibition on the institution making appropriate arrangements for the use of Federal or State or Territory court premises and facilities around Australia, nor on the court’s head of jurisdiction making arrangements with other heads of jurisdiction and relevant authorities for the presentation of the State court as one which makes available the skill and expertise of an integrated national judiciary. Such might be the price of Commonwealth permission to call the Court an Australian court. 
A Territory court
The terms of s 22(1) of the Australian Capital Territory (Self-Government) Act 1988 (Cth), that the Assembly has power to make laws for the peace, order and good government of the Territory, are indistinguishable from relevant provisions of State constitutions. The question arises whether the Territory Legislative Assembly has the same broad authority to create an international commercial court as part of the ACT Supreme Court or separate from it. The ACT Supreme Court undoubtedly has jurisdiction to hear cases unconnected with the Territory if the parties wish to submit to the Court’s authority.   Section 48A of the Self-Government Act invests the ACT Supreme Court with all original and appellate jurisdiction necessary for the administration of justice in the Territory. So, the validity of legislative action which provides for the Supreme Court to hear these kinds of cases submitted to the Court should not be in doubt. That would not necessarily authorise legislation, whether by the Assembly, or the Parliament under s 122, setting up a separate court. To the extent that the purpose of setting up such a court by the Assembly was to give expression to a national interest, that may still be consistent with the peace, order and good government of the Territory. It may, however, make more difficult the characterisation of a law of the Parliament under s 122 as one for the government of the Territory, as opposed to fostering Australia’s involvement in international dispute resolution.
Subject to the maintenance of institutional integrity, the judges of the court could be ad hoc international and domestic appointments. The requirement for the maintenance of institutional integrity comes from the capacity (now recognised – see below) to invest Territory courts with federal jurisdiction. 
Again, subject to the doctrine of incompatibility, sitting federal judges could receive commissions as ad hoc or part-time judges on such a court.  
A federal Ch III court 
More contentious perhaps is whether the Commonwealth Parliament can create a new federal court or use the Federal Court of Australia as an international commercial court. The discussion below seeks to explore the possibilities of such a course by reference to conferral of jurisdiction upon the Federal Court of Australia in matters under s 76(ii) that call in aid one or more of ss 51(i), (xx), (xxix) and s 122 of the Constitution. As will emerge, the power to make laws for the peace, order, and good government of the Commonwealth with respect to external affairs, s 51(xxix), offers a more straightforward foundation.  
The Federal Court could not exercise judicial power by ad hoc or part-time appointments. On the other hand, a Commonwealth arbitral and ADR institution, as discussed below, could, through the mechanism of the deployment of private power, make available international and domestic judges (subject to the operation of the doctrine of incompatibility) to sit as arbitrators. 
A State or Territory arbitral and ADR institution 
A State or Territory Parliament could create an international arbitral and ADR centre. The Constitutional authority or foundation for such an institution would be the peace, order and good government of the State or Territory.
There would appear to be few Constitutional questions attending such an institution. The authority it would exercise would be private and arbitral, or non-compulsory conciliation and mediation. Its arbitrators could include State judges, and subject to the incompatibility doctrine, federal judges, otherwise than in that capacity. 
A Commonwealth arbitral and ADR institution
The Constitutional foundation for the creation of a governmentally structured arbitral institution would be, at least, the corporations power, the interstate and overseas trade and commerce power, and the external affairs power. 
Commonwealth legislation may be seen as important in the creation of a strong, well-resourced institutional framework that has the administrative and logistical support of existing (but separate) courts. The availability of sitting judges and approved arbitrators, mediators and conciliators, operating under rules which embody the best case management and problem-solving approaches, and of court facilities around the country would build upon and be a significant development of existing arbitral centres, focused, as some are, on State or city rivalries. It would be necessary, however, to be careful that the governmentally originated and sponsored creation of the institution did not affect the nature of the power that was exercised by arbitrators and that such remained private power.  
The Commonwealth model and further discussion of some of the Constitutional issues involved
Available propositions
Based on the discussion below, the following propositions are open:
1.	The Commonwealth Parliament could create an international commercial court as part of the Federal Court of Australia:
(a)	by legislation supported by s 122 conferring the jurisdiction of a Territory Supreme Court on the Federal Court, assuming that all matter jurisdiction (including general law) of such a Supreme Court, including jurisdiction by submission of foreign parties, involves matters arising under laws made by Parliament for the purposes of s 76(ii); or
(b)	by the existing operation of cross-vesting legislation supported by s 122 on the authority of Crosby v Kelly in respect of matter jurisdiction by submission; or
(c)	by legislation using s 51(xxix) supported by ss 51 (i) and (xx) under which jurisdiction is conferred on the Federal Court in matters arising under a law made by Parliament which provides for the rights and duties of foreign parties, and Australian and foreign parties, to be determined by the law they choose or the law which would otherwise apply to their controversy, by the mechanism of double function, on the authority of Ruhani, Ex parte Barrett, and Hooper v Hooper. This is not the creation of a court or judicial power by constitutional provisions outside Ch III in the nature of, or akin to, United States legislative courts but is to employ the double function of a law which simultaneously creates the right and the remedy, both under a law of the Parliament.
2.	The Commonwealth Parliament by use of ss 51(i), (xx) and (xxix) could create an international arbitral and ADR institution. 

Given that the first two of these possibilities (1(a) and (b)) rest on the Territories power, a simpler and therefore preferable model, if the Federal Court of Australia is to be the vehicle for an Australian international commercial court, is the third basis (1(c) above). I will however later say something of the Territories power and its complexities. 
Introductory comments
The adaption of a federal system in a flexible way to the perceived exigencies, necessities or opportunities of life has its difficulties. As Dixon CJ, McTiernan, Fullagar and Kitto JJ said in Boilermakers, “a federal constitution must be rigid”. The strictness of the conception of the independence of the judicial branch of government derives from the fact that the responsibility for decisions as to the limits of respective, and potentially competing, parliamentary and executive power is placed in the hands of the federal judicature. As the majority in Boilermakers said: 
While the constitutional sphere of the judicature of the States must be secured from encroachment, it cannot be left to the judicial power of the States to determine either the ambit of federal power or the extent of the residuary power of the States. The powers of the federal judicature must therefore be at once paramount and limited. The organs to which federal judicial power may be entrusted must be defined, the manner in which they may be constituted must be prescribed and the content of their jurisdiction ascertained. 
This strictness, as expressed in Boilermakers as protective of the political bargain of Federation, should also be understood as fundamentally protective of society and the rule of law. It has led to three fundamental propositions as to the nature and conduct of the judicial power of the Commonwealth. First, essential to the valid conferral of judicial power and jurisdiction under Ch III is that the conferral be in respect of a matter, that is, a justiciable controversy between parties. It is insufficient that there be judicial power alone. So, the conferral of an advisory jurisdiction (albeit an expression of judicial power) is invalid. 
Secondly, Ch III of the Constitution does not permit the exercise of the judicial power of the Commonwealth by a body that is not a court, nor does it permit a court established under Ch III to exercise non-judicial power that is not ancillary or incidental to the exercise of judicial power.
Thirdly, the Constitution does not permit the conferral of State jurisdiction upon courts established under Ch III.
All three decisions (In re Judiciary Act, Boilermakers and Wakim) were majority decisions of the High Court, though the advice of the Privy Council in Attorney-General v The Queen (that is, Boilermakers) was unanimous. Nevertheless, it is both a prudent and safe assumption to view these cases and propositions as foundational and bedrock features of the Australian Constitutional landscape. 
The last of these three cases (Wakim) has had a profound effect on the structure of the Australian judicial system. It put an end to the possibility of a substantially unified Australian judiciary with each superior court having the same jurisdiction as any other (with some limited special federal matter exceptions). Most relevantly to this discussion, it put an end to the Federal Court of Australia being conferred with the complete jurisdiction of State Supreme Courts all around the country and, by that mechanism of State jurisdiction, making it a court capable of acting as an international commercial court. It is worthwhile recalling the terms of each of the State Cross-vesting Acts. Each Act not only provided for the transfer (cross-vesting) of proceedings from one Court to another, but more fundamentally, each conferred the jurisdiction of the respective State Supreme Court on every other State Supreme Court and the Federal Court (and the Family Court). For instance, s 4(1) of the New South Wales Cross-vesting Act was (in its original form) in the following terms:
The Federal Court has and may exercise original and appellate jurisdiction with respect to State matters.
A “State matter” was defined as, relevantly, a matter: 
…in which the Supreme Court has jurisdiction otherwise than by reason of a law of the Commonwealth or of another State…
After Wakim, the jurisdiction of courts created under Ch III (of which the Federal Court was one) was bounded by the terms of ss 75 and 76 of the Constitution, subject to the possible operation of s 122. That jurisdiction included, of course, s 76(ii):
…[a matter] arising under any laws made by the Parliament…
It is helpful to begin with Wakim. Whilst Mr George Wakim has carved his name into Australian legal history by his case brought against the trustee in bankruptcy of one of his debtors and against the solicitors and counsel who acted for the trustee, his was only one of three matters before the High Court. Another of the three cases was Spinks v Prentice. In that case, a company incorporated in the Australian Capital Territory had been wound up by order of the Federal Court, which had also ordered parties to produce documents. Mr Spinks challenged the validity of these orders. Section 51(1) of the Corporations Act 1989 (Cth) purported to confer on the Federal Court jurisdiction:
…with respect to civil matters arising under the Corporations Law of the Australian Capital Territory…
Mr Wakim was victorious. In contrast, the whole Court rejected Mr Spinks’ argument that the conferral was invalid, finding s 51(1) valid and applying its then recent decision in GPAO. The Corporations Law (ACT) was a law of the Commonwealth Parliament enacted pursuant to s 122; and Parliament may confer jurisdiction on a Federal Court with respect to a matter arising under a law made under s 122. 
The difference between judicial power and arbitral power
The difference between judicial power and arbitral power was drawn clearly by the High Court in CFMEU v AIRC and TCL Air Conditioner. In the latter case, there was a wholesale attack on the capacity of an Australian court to recognise and enforce an arbitration award under the UNCITRAL Model Law, unless the court had authority to determine whether the arbitral tribunal had applied the law correctly in reaching the award. If accepted, the argument would have destroyed the utility of Australia as an attractive venue in which to enforce awards or, indeed, conduct arbitrations. The High Court identified the difference between the two types of power, as rooted in the source of the power: Judicial power’s fundamental character is sovereign or governmental power; the power is exercisable, on application, independently of the consent of those whose legal rights are determined. Arbitral authority is private, having its source in contract, in the agreement to submit the dispute to a third party for decision. This is so notwithstanding, at one level of abstraction, that an arbitrator and a judge do very similar things – both adjudicate and decide upon rights and liabilities in a dispute. But, as with all questions of power, how the power is exercised and in what character it is exercised are crucial to its characterisation. An analogous distinction is made between executive power and judicial power in respect of subjects not, by their nature, exclusively ascribed to either branch, in the so-called chameleon cases. 
The private character of arbitral power should subsist, through the choice of the parties, even though they may choose a state-created or state-sponsored institution to support and administer arbitration. The critical aspect is that the power is dependent upon the agreement of the parties and the resultant award is not binding of its own force. 
The nature of a federal court and the judicial power of the Commonwealth 
It is now beyond doubt that, subject to the Territories power in s 122 and the validity of a separate system of military justice, the power of the Commonwealth Parliament to create courts and to confer judicial power is found only in Ch III. 
Just as the defence power does not extend to creating a court exercising judicial power not under Ch III unless strictly within the historical exception of courts-martial, so, inevitably, would the corporations, interstate and overseas trade and commerce and external affairs powers be lacking as Constitutional bases to create an international commercial court, outside the framework of Ch III. 
The judicial power exercised by courts-martial is to be viewed as an historical exception (embedded deeply in one of the elemental functions and powers of the national polity, defence) to the rigidity of the federal constitutional structure in which the ultimate protective place of Ch III is enshrined. Section 51(vi) is not a particular example of a general power in s 51 that would authorise a special court exercising judicial power outside Ch III. 
United States legislative courts are set up outside the operation of Art III and (with two exceptions) have no equivalent in Australia. They are territory courts, including for the District of Columbia; specialised military courts; specialised courts for claims against the government such as the Court of International Trade and the Tax Court; and courts as adjuncts to federal courts, such as bankruptcy and federal magistrates’, and the Foreign Intelligence Surveillance Court. 
In particular, the reasons of French CJ and Gummow J in Lane v Morrison express, in strong terms, the rejection of any proposition that would lend support to the creation of courts or court-like structures exercising a form of governmental judicial power outside Ch III supported by a head of power in s 51. Their Honours referred to the well-known passage in the judgment of Dixon CJ, McTiernan, Fullagar and Kitto JJ in Boilermakers as the foundation for the rejection of such legislative courts. 
Given the subject under discussion, that is the resolution of commercial disputes by the application of the law to found facts by an independent tribunal to be characterised as a court, it is (perhaps with one exception) unnecessary to attempt a description of judicial power, no description being truly definitive. 
That exception flows from, or is reflected in, the above discussion of Boilermakers and Lane v Morrison. It is to be recognised as fundamental, even accepting the difficulty of describing, and the impossibility of defining, judicial power, that the judicial power of the Commonwealth is protective in character. The impossibility of definition comes from its nature as power; its character as judicial power does not just derive from its subject matter of activity (though that is relevant) but also crucially from its method of exercise and its function, not as sovereign will, but sovereign protection – by determination (and so protection of the individual and society) of rights and duties by method that is independent, fair and impartial. The protective character of the power can be seen as implicit in judicial power exercised under Ch III.
So, dispute resolution by sovereign power of the federal judicature cannot be divorced from this character of judicial power, from the monopoly of the courts to state the law, framed by Ch III with its terms and attendant doctrines, and from the place of the common law in the Constitution and the Constitution in the common law. 
The importance of these considerations to the entrenchment of the protection of a free society and to the guarding against the possibility of weakening that protection can be understood if one visualises the external affairs and the defence powers as sufficient to create courts for dealing with perceived political or national security threats to society, exercising judicial power, set up otherwise than under Ch III. The difficulties of analysis and the divisions of opinion in Rasul v Bush, Hamdan v Rumsfeld, and Boumediene v Bush perhaps illuminate some aspects of this.  
The conferral of jurisdiction on the Federal Court by reference to ss 51(i), 51(xx), 51(xxix), 76(ii) and 77(i)	
The method referred to in 1(c) above has the support of existing High Court authority involving the operation of s 76(ii). The technique is shown by the approach of a majority of the High Court in Ruhani to the validity of the Nauru (High Court Appeals) Act 1976 (Cth). 
As both Latham CJ and Dixon J pointed out in Ex parte Barrett, s 77(i) does not require the “matter” to exist independently of the legislation conferring jurisdiction. The provision may have a double function: giving rise to the matter, and conferring jurisdiction. The operation of this double function, and the engagement of ss 76(ii) and 77, of the Constitution can be seen in the decision in Ruhani. 
Ruhani concerned the validity of the Nauru (High Court Appeals) Act 1976 (Cth) (the Nauru Act) insofar as it conferred jurisdiction on the High Court to hear appeals from the Supreme Court of Nauru in accordance with the terms of an agreement between Australia and Nauru. The Act was said to be invalid because it purported to confer appellate jurisdiction on the High Court that was outside Ch III and s 73. Though styled an “appeal”, the enactment, and the jurisdiction, survived as the conferral of original jurisdiction under s 76(ii) of the Constitution. 
Chief Justice Gleeson approached the matter as follows. The Nauru Act was the relevant law under which the matter arose. That law operated by reference to the law of another polity, Nauru. The Commonwealth law picked up the law of Nauru as the law to be applied in determining the rights and liabilities of the parties and in the one provision conferred jurisdiction upon the Court. So the law of the Parliament created both the right and provided the remedy. That remedy, under the original jurisdiction of the Court, was a power to affirm, reverse or modify a judgment, decree, order or sentence of the Nauru Supreme Court. The source of the Constitutional authority for the Act was the external affairs power (s 51(xxix)) or the power to make laws with respect to the relationship between Australia and the islands of the Pacific (s 51(xxx)). Importantly, Gleeson CJ rejected an alternative argument that if the jurisdiction was not original based on s 76(ii), it was appellate jurisdiction capable of being conferred by authority of ss 51(xxix) or (xxx), notwithstanding the terms of s 73. The Chief Justice, whilst recognising that s 122 has been held to stand apart from this constitutional scheme, and that the defence power supports the creation of courts-martial, rejected the notion that ss 51(xxix) and (xxx) extend to conferral of jurisdiction outside Ch III, or to the creation of courts outside Ch III. This view was later brought home in Lane v Morrison. 
Justice McHugh, and Gummow and Hayne JJ in their two respective judgments approached the matter likewise. The matter or controversy was the determination of the parties’ rights and liabilities by reference to the law of Nauru, which included the right to have correctness of the judgment of the Supreme Court of Nauru reviewed by reference to Nauruan law. The creation of these rights by Commonwealth statute was supported by ss 51(xxix) and 51(xxx). The matter owes its existence to a law of the Parliament, though by reference to Nauruan law. Thus it is a matter that arises under a law of the Parliament: Ex parte Barrett and LNC v BMW. The Nauru Act applied Nauruan law as federal law. Nauruan law is the factum that gave rise to federal rights, in respect of the resolution and determination of which jurisdiction can be conferred on a federal court under s 76(ii) and s 77(i). Support for this adoption of law other than federal statute as the factum or basis upon which federal rights are created or as the basis for federal law can be seen in Hooper v Hooper, LNC v BMW, Evans Deakin Industries, and Western Australia v Commonwealth. Further, it was no objection that the “matter” and the remedy are simultaneously provided for. This recognises that s 76(ii) requires more than a bare conferral of jurisdiction; there must be revealed a substantive law (supported by a head of power) under which there arise or arises the matter or matters the subject of the conferral of jurisdiction. 
Whilst the provision conferring jurisdiction had a double function, the jurisdiction had to be accompanied by a matter arising under a law of the Parliament, that is rights and duties which owed their existence to federal law. The federal law may be defined and adopted by reference to State or foreign law, which was picked up by the federal law. As McHugh J said in Ruhani: 
	The subject matter of proceedings in respect of which this Court is invested with jurisdiction is defined by the Nauru Appeals Act. That Act identifies Nauruan law as the factum by reference to which the Act operates and Nauruan law as the law to be applied in the resolution of proceedings brought under the Act.
Ruhani was applied by the Full Court of the Federal Court in Crosby v Kelly to support common law defamation jurisdiction in the Federal Court. The decision of the Full Court (Robertson J, with whose reasons Bennett and Perram JJ agreed) rested on the terms of s 9(3) of the Commonwealth Cross-vesting Act which provided relevantly:
	The Federal Court…may:
(a)	exercise jurisdiction (whether original or appellate) conferred on that court by a provision…of a law of the Australian Capital Territory or the Northern Territory relating to cross-vesting of jurisdiction… 
The ACT Cross-vesting Act provided by s 4(1), read with the Dictionary to the Act, as follows:
The Federal Court has and may exercise original and appellate jurisdiction in respect of ACT matters [being a matter in which the Supreme Court has jurisdiction otherwise than by reason of a law of the Commonwealth or of another State]…
The submission of the Commonwealth Attorney-General that was accepted by the Court was as follows:
	Consistently with the approach of the High Court in Ruhani…s 9(3) of the Jurisdiction of Courts (Cross-vesting) Act 1987 should be read as picking up, as Commonwealth law, the Supreme Court’s jurisdiction to hear and determine the present dispute. No second law under s 122 was necessary…as the same provision could, and here did, both confer jurisdiction and create rights, those rights having the force of laws of the Commonwealth in respect of which a matter may arise within s 76(ii) of the Constitution: reference was made to Ex parte Barrett…; Hooper v Hooper…and Ruhani. 
The reasoning of Robertson J was as follows:
	Here, the content of the law is derived from the law of the Australian Capital Territory: see Ruhani at 499. Although there is some infelicity in that law being defined to mean a matter “in which the Supreme Court has jurisdiction otherwise than by reason of a law of the Commonwealth or of another State”, it is sufficiently clear that the reference is to matters in which the Supreme Court has jurisdiction otherwise than by reason directly of a law of the Commonwealth or of another State, that is, where the Supreme Court exercises jurisdiction by virtue of Australian Capital Territory enactments. In the case of a State, such a direct law of the Commonwealth would be s 39(2) of the Judiciary Act 1903 (Cth). 
The foundation of the law was s 122. Justice Robertson said as follows:
	As I have set out, the respondent submitted that Spinks v Prentice and GPAO were to be distinguished on the basis that in each of those cases there was another law made by the Parliament under s 122. In my opinion this search for a second law made under s 122 was misplaced and was not a viable basis of distinction. This is because there is no reason why a law made under s 122, here the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth), may not confer jurisdiction on this Court by reference to the law of the Australian Capital Territory rather than laws made by the Commonwealth Parliament, assuming the Supreme Court Act 1933 (ACT) and Chapter 9 of the Civil Law (Wrongs) Act 2002 (ACT) or the common law to be such territory laws. This is because s 9(3), in my opinion, both confers jurisdiction and creates rights arising under that provision. Those rights have the force of laws of the Commonwealth in respect of which a matter may arise. 
In Crosby v Kelly, the matter involved an alleged defamation that had been published in the Australian Capital Territory. Effective jurisdiction for an international commercial court would require the same conclusion in respect of matters the subject of a submission to jurisdiction. 
In Crosby, the law under which there arose the matter the subject of conferral was supported by s 122. But s 122 is not a necessary element if there is another head of Constitutional authority upon which to found the creation of the matter. In Ruhani, it was s 51(xxix) or s 51(xxx). The subject matter of the conferral was the federal law (the Nauru Act) which identified (by that law) the determination of the rights and duties between people in Nauru in the parties’ position as referable to Nauruan law in the proceedings brought in the High Court under the Nauru Act. 
Likewise, a federal law (if appropriately founded) could confer a matter, being the determination of the rights and duties of foreign parties or Australian and foreign parties, by reference to the law governing their relationship should they submit to the jurisdiction of the Court. The appropriate foundation for the creation of the matter in the double function could be foreign corporations and external affairs where both parties are foreign, and additionally trade and commerce with other countries insofar as one party was Australian. 
The provision for dispute resolution involving foreign corporations or foreign corporations with an Australian can be seen to fall within s 51(xx); within s 51(i) insofar as it regulates an aspect of trade and commerce with other countries; and within the external affairs power (s 51(xxix)) as dealing with matters occurring outside Australia, being the commercial relations, including formation of rights and obligations and the arising of disputes between and among foreign parties, and as a matter of international treaty or agreement or international concern.
The word “external” is to be given a full and unconstrained meaning of “outside”, and “external affairs” is “wide enough to cover places, persons, matters or things” outside Australia. Even if the narrower view of Brennan J and Toohey J in Polyukovich that there must be some connection between Australia and the act, person or thing were to prevail, there is such a connection with the interests of Australia in the dispute and its resolution for the reasons discussed earlier. 
The resolution of international disputes by peaceful means is a matter of international concern, having been a matter of international public policy and concern for over a century. The importance of international commercial arbitration to international affairs, to the peaceful resolution of international commercial disputes, and to the health and strength of international commerce can be seen in the terms of the Resolution adopted by the General Assembly of the United Nations on 11 December 1985 in requesting the Secretary General to transmit the UNCITRAL Model Law to governments, arbitral institutions and other interested bodies: 
	The General Assembly, 
	Recognising the value of arbitration as a method of settling disputes arising in international commercial relations,
	Convinced that the establishment of a model law on arbitration that is acceptable to States with different legal, social and economic systems contributes to the development of harmonious international economic relations,
	Noting that the Model Law on International Commercial Arbitration was adopted by the United Nations Commission on International Trade Law at its eighteenth session, after due deliberation and extensive consultation with arbitral institutions and individual experts on international commercial arbitration, 
Convinced that the Model Law, together with the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the Arbitration Rules of the United Nations Commission on International Trade Law Recommended by the General Assembly in its resolution 31/98 of 15 December 1976, significantly contributes to the establishment of a unified legal framework for the fair and efficient settlement of disputes arising in international commercial relations,
1.	Requests the Secretary-General to transmit the text of the Model Law on International Commercial Arbitration of the United Nations Commission on International Trade Law, together with the travaux préparatories from the eighteenth session of the Commission, to Governments and to arbitral institutions and other interested bodies, such as chambers of commerce;
2.	Recommends that all States give due consideration to the Model Law on International Commercial Arbitration, in view of the desirability of uniformity of the law or arbitral procedures and the specific needs of international commercial arbitration practice. 
(Emphasis in bold added.)
There being a matter of international concern is likely itself a sufficient basis for the attraction of the external affairs power, a position favoured by the majority in the Tasmanian Dam Case as recognised by the plurality in XYZ.  
Sub-sections 51(i), (xx) and (xxix) and the creation of an international arbitral tribunal 
These heads of power could also found the authority to legislate for an international arbitral and ADR institution to resolve by arbitration or mediation disputes arising externally to Australia between or among foreigners or foreign corporations, Australian parties and foreigners or foreign corporations, and Australian corporations. 
The doctrine of incompatibility and federal judges sitting in another court as ad hoc judges or as arbitrators 
The question of whether federal judges can act as private arbitrators (with the knowledge and consent of the head of jurisdiction and the Attorney-General, on behalf of the Government) or as ad hoc judges in another court has been seen to raise the question of incompatibility of function.
There has never been any objection to a federal judge taking a State or Territory commission. It occurs on a standing basis with judges of the Federal Court holding commission as judges of Territory Supreme Courts. It has occurred on a regular, albeit not frequent basis, when federal judges sit in State courts on matters of importance. There is, by definition, no incompatibility of character or function. 
The sitting of judges as private arbitrators may involve other considerations. They would not act as judges, but the State would have to be prepared to have them spend their time in resolution of private disputes by private power. The question of payment of a fee would arise. The judge is being paid his or her salary, but the polity is not obtaining his or her service. Would a fee to the institution by the parties affect any notion of incompatibility or in any way transform private power into state power? One would have thought that careful provision in the legislation creating the arbitral and ADR institution would provide for the availability of judges in a private capacity with a fee payable to the institution, without affecting the character of the private power.
The notion of incompatibility laid down in Wilson provides for three elements. First, there must be no permanent and complete commitment to the performance of the non-judicial function as to make further performance of substantial judicial functions not practicable. Secondly, the non-judicial function must not be of such a nature as to compromise or impair judicial functions. Thirdly, the non-judicial function must not be of such a nature such that public confidence in the integrity of the judiciary as an institution or in the capacity of the individual judge to perform judicial functions with integrity is diminished. None of this would appear to be the case by acting as an arbitrator and exercising private power, even in private hearings, without public reasons. It would simply be the resolution of controversies. 
The question of payment to the institution would not affect incompatibility. That factor, if relevant, might only be a factor as to the characterisation of the power as private or public. 
The nature of a Territory court and of Territory judicial power
The possible availability of the Territories power as a foundation in bases 1 (a) and (b) above makes relevant some discussion of that power in relation to Ch III and the creation of courts and the exercise of judicial power.  Section 122 of the Constitution is as follows:
The Parliament may make laws for the government of any territory surrendered by any State to and accepted by the Commonwealth, or of any territory placed by the Queen under the authority of and accepted by the Commonwealth, or otherwise acquired by the Commonwealth, and may allow the representation of such territory in either House of the Parliament to the extent and on the terms which it thinks fit.
The consideration of the Territories power, courts and judicial power over the years by the High Court has given rise to some difficult and contradictory aspects of Constitutional doctrine. It is part, indeed, “at the core,” of the larger question about the relationship of Ch III, and the Constitution as a whole, with the Territories and s 122. Some of the difficulty, and perhaps part of the solution, is presented by the march of time and the changes in political integration of the Territories into the wider Australian federal polity. These considerations are reflected in what may be said to be the extent to which Territories are to be seen as separate from, or integrated with, the federal compact within the rest of the Constitution, best seen in the contrast between Bernasconi and the views of Dixon CJ in Lamshed v Lake, and cases such as A-G (WA) v ANA, and the difference of expression and views in Kruger, Teori Tau, Newcrest, and finally with the emergence of a majority for the “integrationist” view in Wurridjal. The difficulties are illuminated by the discussion of the authorities by Gummow J in Kruger. 
The nature of Territory jurisdiction awaits full and complete exposition. Its relationship, in whole or in part, with federal jurisdiction is not only important for understanding the law of the Territory, the nature of the federal compact, and the appellate jurisdiction of the High Court under s 73, but also for understanding what jurisdiction of the Territory might be conferred upon a federal court, and how it might be conferred. An important aspect of that subject for present purposes lies in whether Territory jurisdiction is, in whole or in part, federal jurisdiction, or at least involves matters which answer the description of provisions of s 75 or s 76.
Some matters have a degree of clarity.
The first proposition of relevance and clarity is that Territory courts, whether created by Commonwealth legislation or subordinate Territory legislation, are not “federal courts” for the purposes of s 71 and Ch III. Such flowed initially from the position of the Court in Bernasconi that no part of Ch III (there relevantly, s 80 and jury trials in New Guinea) had any application to the Territories. It was later entrenched (though without full acceptance of the complete separation of s 122 from Ch III that underlay Bernasconi) by Spratt v Hermes, Capital TV v Falconer, Ex parte Eastman, and North Australian Aboriginal Justice Agency v Northern Territory. The acceptance is perhaps as much a practical and necessary outcome, as a satisfactory doctrinal conclusion, given the potential consequences of overruling Bernasconi. Thus, judges of Territory courts are not federal judges; and their appointment and tenure need not comply with s 72.
The second proposition of relevance and clarity is that a law made by the Parliament under s 122 is a “law made by the Parliament” for the purposes of s 76(ii). Thus, such a law can give rise to a Ch III matter (“a matter arising under laws of the Parliament” for s 76(ii)).
The third proposition of relevance and some clarity is that a Territory court can be invested with federal jurisdiction. Capital TV v Falconer denied that a Territory court could be invested with federal jurisdiction. That position was seen to move in Ex parte Eastman, Ebner, Pfeiffer v Rogerson, and Blunden. There now appears a clear majority for the view that Territory courts can be invested with and exercise the judicial power of the Commonwealth. The source of the authority to vest federal jurisdiction may be seen as s 122, or s 76(ii) in combination with s 122. 
Other questions perhaps lack the above clarity: whether Territory courts invariably exercise federal jurisdiction; and, if not, the nature of that other jurisdiction. The proposition that Territory courts invariably exercise federal jurisdiction was one which was expressed by Professor Zines. The proposition requires analysis by reference to at least four categories of jurisdiction of a court of a Territory:  The first is jurisdiction conferred directly by the terms of a law of the Commonwealth Parliament under s 122. This involves a matter arising under a law of the Commonwealth Parliament under s 76(ii) and invests federal jurisdiction and the judicial power of the Commonwealth. The second is a claim of right conferred by or under an ordinance made by the Governor-General under the Seat of Government (Administration) Act 1910 (Cth). This can also be seen as a matter arising under a law of the Commonwealth Parliament: Laristan, approved by the Court in LNC v BMW. This leaves the third and fourth categories: matters referable to laws made by the self-governing Territory and matters referable to the general or common law. These matters lie unresolved in a field of some complexity, requiring an analysis of questions of the nature of federal jurisdiction and the relationship between it and the curial institution administering it involving Capital Duplicators, Ex parte Eastman, Laristan, LNC v BMW, Austral Pacific, Kruger, Lamshed v Lake, Boilermakers, Mann v O’Neill, and North Australian Aboriginal Justice Agency amongst other cases.
The complexity and lack of resolution of many of these matters concerning the nature of Territory jurisdiction make bases 1(a) and (b) above for the creation of the international commercial court as part of the Federal Court of Australia more than problematic.  It is necessary then to turn to a more simple foundation referred to in (c) above.
Conclusion				
The above discussion reveals that it is too simplistic to assert that only a State Parliament could provide legislatively for the conferral of jurisdiction upon an international commercial tribunal in Australia.
The foundation for the Commonwealth arguably exists to do so (whether curial or arbitral) based on s 51(xxix) supported by ss 51(i) and (xx) to legislate for the resolution of the rights between foreigners, and foreigners and Australians in international trade and commerce by reference to the law or legal system chosen by the parties, or otherwise applicable to the parties by designated rules of private international law. A matter arising under such a law can be conferred upon a federal court (whether existing or otherwise created). This approach has nothing of the complexity arising from the use of the Territories power. The recognition of the importance to Australia and to the international community of the fair, just and skilled resolution of international commercial disputes and of the importance to Australia of its participation in an international justice system must surely place these matters firmly within the purview of s 51(xxix), even before ss 51(i) and (xx) are considered. 
7 September 2019