Section 19 of Doing Business in Australia

Dispute Resolution: Sources of Law

The common law system forms the basis of Australian jurisprudence. It embodies judge-made law, whereby rules of law and precedent have been developed by the court. Judges are bound to follow interpretations of the law made by higher courts in cases with similar facts or legal principles. Legislation or statute is the primary body of law. Even in areas which are still primarily based on the common law, important modifications have been made by statute.

Court system in Australia

The Australian court system comprises Commonwealth (or federal), state and territory courts.

The High Court of Australia is the highest court of appeal. The High Court decides cases of special significance, including challenges to the constitutional validity of legislation, and hears appeals (by special leave) from the federal, state and territory courts.

The Federal Court of Australia typically deals with corporations, competition, constitutional and administrative law, along with other matters arising under Commonwealth legislation such as certain commercial, federal crime, federal tax and migration matters. The workload in respect of companies and securities litigation is shared between the federal and state courts.

The Federal Circuit Court of Australia oversees family law, bankruptcy, unlawful discrimination, consumer protection, competition, privacy, migration, copyright and industrial law.  Nearly all of its jurisdiction is shared with the Family Court or the Federal Court of Australia.

State and territory court systems operate independently.  These courts have inherent jurisdiction in respect of all disputes other than those arising under Commonwealth legislation. Each state and territory has a superior court known as a Supreme Court. The Commonwealth has enacted legislation conferring federal jurisdiction on the various Supreme Courts, in all matters except in certain specialist areas such as family law and competition law.

State courts typically deal with contract, tort and criminal matters, as well as cases arising under state legislation. Lower- level courts, including district/county and local/magistrates courts, decide the majority of serious criminal offences and civil litigation up to certain monetary limits.

There are a range of specialist courts and tribunals in each state. They include the Takeovers Panel, the Australian Competition Tribunal, various administrative decision review tribunals, migration review tribunals, land and environment courts, industrial courts, the Family Court and various consumer claims tribunals.

Australian Court System

Split legal profession

The legal profession in Australia is essentially a split profession. Lawyers will generally practise as either a solicitor or a barrister. Solicitors provide legal advice directly to a client and are involved in case preparation. Solicitors, upon commencement of court proceedings, may brief a barrister on behalf of a client to appear in court and advocate during the proceeding.

Commencement of proceedings

Selecting the correct court in which to commence proceedings is important, as the court must have the requisite jurisdiction for the matter to be heard.

Limitation periods for commencing proceedings differ according to the type of action and the court in which the action is to be commenced. For example, actions founded in contract and tort must be commenced within six years running from the date the cause of action first accrues.

Court procedure

Each court and tribunal has its own procedural rules.

The superior courts in all jurisdictions have the power to make interim orders on an urgent and ex parte basis. This includes interlocutory injunctions to operate pending a final hearing and determination of a proceeding, asset preservation orders and search orders. Each court has a duty judge who is available on short notice (outside business hours) to hear urgent applications which cannot be satisfactorily accommodated within the ordinary system.

The presumption in civil proceedings is that they will be tried without a jury, unless the interests of justice otherwise require. Civil proceedings are usually determined by a judge, or magistrate, without a jury. Exceptions include defamation and certain personal injury proceedings. The burden of proof in civil proceedings is on the ‘balance of probabilities.’


In all Australian jurisdictions, the courts have a discretion to award costs as they see fit. In most cases, an unsuccessful party will be required to pay the successful party’s costs. There are generally two types of costs in Australia:

  • solicitor/client costs are the costs incurred by the client for the work performed, pursuant to the retainer between the solicitor and the client; and
  • party/party costs are the costs recoverable by the client from the other party, if a cost order is made in their favour. Party/party costs are determined under a court scale with fairly rigid principles (which in practice means the successful party will only recover around 50%–70% of the total solicitor/client costs that they have incurred).

In some cases, costs will be awarded on a solicitor/client, or “indemnity” basis, where all but unreasonably incurred costs may be recovered. Indemnity costs are discretionary and awarded upon application, where there are good reasons for doing so – for example, where the party paying the costs unreasonably refused a settlement offer that was better than the judgment ultimately awarded or where there has been inappropriate conduct during the trial resulting in delays or additional costs.

Production of documents

“Discovery” is a process often ordered by a court, whereby a party is required to produce to the other party all documents within a party’s possession, custody or power that may shed light on any of the issues in the proceedings. This requires parties to discover documents in the possession of an agent or employee, which that party has a right to obtain, if it requests them.

The term “document” is broad and extends to any document, from electronic documents, emails, tape records, letters and accounts to scrap pieces of paper recording information relevant to the matters in issue. Confidential non-privileged documents are not exempt from production (but may be the subject of confidentiality undertakings given by the other party).

Each court has different rules relating to discovery.


The rules of evidence allow privilege to be claimed on certain types of documentation. Privileged documents usually fall within the following categories:

  • legal professional privilege – gives a client the right to refrain from producing confidential documents prepared for the dominant purpose of a lawyer, or one or more lawyers, providing legal advice to the client or for use in existing or anticipated litigation. The claim is for the client to make and may be waived. Legal professional privilege does not extend to documents created in furtherance of a crime or fraud;
  • privilege against self-incrimination – a witness is entitled to object to answering a question on the grounds that answering would have a tendency to show that they have committed an offence arising under an Australian or foreign law, or are liable to a civil penalty. This form of privilege does not extend to corporations; and
  • public interest immunity – if the public interest in preserving secrecy or confidentiality over a document or information that relates to matters of state outweighs the public interest in admitting it into evidence or disposing fairly of the proceedings, a court may of its own initiative, or on application by a party, direct that document to be privileged.

Arbitration and mediation

Arbitration proceedings and mediations are common in Australia.

Arbitration involves the referral of the dispute to one or more arbitrators to determine the dispute. The requirement to attend an arbitration requires the agreement of both parties and is usually set out in an existing contract. Generally, Australian courts have enforced arbitration agreements and require parties who agreed to attend arbitration to do so.

Arbitrations are usually conducted in a manner similar to a court process, but the hearing and determination are private and confidential to the parties. An Arbitrator’s determination is recorded in a “final award” which is binding on the parties and enforceable upon registration with the court.

Each of the Australian states and territories has enacted a Commercial Arbitration Act for the conduct of domestic arbitration, based on the UNCITRAL Model Arbitration Rules. The Commonwealth has enacted the International Arbitration Act 1974 (Cth). Under each Act there is provision for the courts to enforce arbitral awards as if they were judgments of the court.

Mediation is a negotiation process which is structured and facilitated by a mediator who assists with the negotiation. The mediator may be appointed by a court or privately agreed by the parties. The mediator does not make any binding determinations but may express views to facilitate the negotiation process. Most court rules and practice notes contain procedural requirements for parties to attend compulsory mediation.

Other forms of ADR

In addition to arbitration and mediation, there are other “alternative dispute resolution” (ADR) processes which involve a third party who either assists the parties in dispute or conflict to reach an agreement by consent or make a decision which may be binding or non-binding on the parties. Other forms of ADR include expert determinations, referees and adjudication.

Expert determinations are carried out by persons with specialised knowledge who actively gather information relevant to the dispute, rather than hear arguments from the parties. In the absence of factors such as fraud or collusion, expert determinations are binding in Australia if accompanied by an enabling contract. Referees are usually appointed by courts and tribunals on specific issues which are deferred to them. Referrals to referees usually involve complex technical issues such as building cases which involve determination by a technical expert. In the building and construction industry, adjudication is used to make timely and cost-effective interim determinations as to a party’s rights to payment under security of payment legislation.

Foreign judgements

The Foreign Judgments Act 1991 (Cth) (Foreign Judgments Act) establishes a statutory scheme under which judgments of specified foreign courts are recognised and enforced in Australia. It includes enforceable monetary judgments which are final and conclusive as between the parties. Notably, the Schedule excludes any courts of the United States. Where a statutory regime does not exist, it is also possible to apply for foreign judgments to be recognised and enforced applying common law principles.

To enforce a judgment, the judgment creditor must apply to the appropriate Australian court for registration within six years of the date of the judgment. For the purpose of enforcement, a registered foreign judgment has the same force and effect as a judgment given in the court in which it is registered, including the accumulation of interest on the judgment debt. A judgment debtor can apply to have the judgment set aside on a number of specified grounds.

Australia has enacted the Model Law on Cross-Border Insolvency, which allows a foreign representative, such as a foreign liquidator, to apply to an Australian court for recognition of the appointment in Australia. Upon recognition, at the request of the foreign representative an Australian court may grant relief to assist with the reorganisation or liquidation of a company or individual with assets, rights, obligations or liabilities in Australia.


This guide is current as of April 2021.

Expertise Area