Freedom Foods Pty Ltd v Blue Diamond Growers

• Jurisdiction: Australia Federal only
• Judgment Date: 05 March 2021
• Neutral Citation: [2021] FCA 172
• Court: Federal Court
• Date: 05 March 2021

Federal Court of Australia

Freedom Foods Pty Ltd v Blue Diamond Growers [2021] FCA 172

File number:	VID 644 of 2020
Judgment of:	MOSHINSKY J
Date of judgment:	5 March 2021
Catchwords:	ARBITRATION – international arbitration – arbitration agreement – application for stay of the proceeding pursuant to s 7(2) of the International Arbitration Act 1974 (Cth) – where the contract between the parties contained an arbitration agreement requiring disputes to be arbitrated in California – where the respondent sought a stay of the proceeding pursuant to s 7(2) – where the applicants contended that the arbitration agreement was invalid or of no effect by virtue of cl 21 of the Franchising Code of Conduct ; CONSUMER LAW – franchise – Franchising Code of Conduct – where the first applicant and the respondent entered into a License Agreement for the manufacture, distribution and sale of certain almond milk products in Australia – whether the License Agreement constituted a “franchise agreement” for the purposes of the Franchising Code of Conduct
Legislation:	Competition and Consumer Act 2010 (Cth), Sch 2, Australian Consumer Law, ss 18, 21, 134 International Arbitration Act 1974 (Cth), ss 3, 7 Competition and Consumer (Industry Codes—Franchising) Regulation 2014 (Cth), Sch 1
Cases cited:	Bank Mellat v Helliniki Techniki SA [1984] QB 291 Bautista v Star Cruises 396 F (3d) 1289 (11th Cir, 2005) Casaceli v Natuzzi SPA (2012) 92 ALR 143 Chan v Cresdon Pty Ltd (1989) 168 CLR 242 Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 Inghams Enterprises Pty Ltd v Hannigan (2020) 379 ALR 196 Lipman Pty Ltd v Emergency Services Superannuation Board [2011] NSWCA 163 Mitsubishi Motors Corp v Soler Chrysler-Plymouth Inc 473 US 614 (1985) Queensland Premier Mines Pty Ltd v French (2007) 235 CLR 81 Rafferty v Madgwicks (2012) 203 FCR 1 Rhone Mediterranee Compagnia Francese Di Assicurazioni E Riassicurazoni v Lauro 712 F(2d) 50 (3rd Cir, 1983) Rinehart v Hancock Prospecting Pty Ltd (2019) 366 ALR 635 Tanning Research Laboratories Inc v O’Brien (1990) 169 CLR 332 Transurban WGT Co Pty Ltd v CPB Contractors Pty Ltd [2020] VSC 476 Workplace Safety Australia Pty Ltd v Simple OHS Solutions Pty Ltd (2015) 89 NSWLR 594
Division:	General Division
Registry:	Victoria
National Practice Area:	Commercial and Corporations
Sub-area:	Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs:	145
Date of last submissions:	19 February 2021
Date of hearing:	4 and 17 February 2021
Counsel for the Applicants:	Mr PD Crutchfield QC with Dr AM Dinelli
Solicitor for the Applicants:	Arnold Bloch Leibler
Counsel for the Respondent:	Dr JP Moore QC, with Ms HA Tiplady and Mr T Farhall
Solicitor for the Respondent:	Norton Rose Fulbright Australia

ORDERS

		VID 644 of 2020
BETWEEN:	FREEDOM FOODS PTY LTD (ACN 068 972 181) First Applicant ; FREEDOM FOODS GROUP INGLEBURN PTY LTD (ACN 600 569 382) Second Applicant ; FREEDOM FOODS GROUP TRADING PTY LTD (ACN 614 863 286) (and another named in the Schedule) Third Applicant
AND:	BLUE DIAMOND GROWERS Respondent

order made by:	MOSHINSKY J
DATE OF ORDER:	5 MARCH 2021

THE COURT NOTES THAT: the respondent (BDG) by its counsel has provided the following undertakings:

1. BDG will consent to the second applicant (FF Ingleburn), the third applicant (FF Trading) and the fourth applicant (Pactum) joining the arbitration in California commenced by BDG against the first applicant (FFPL) on or about 25 September 2020 (the Californian Arbitration);

2. in the Californian Arbitration, BDG will accept that:

   1. insofar as those provisions are applicable to the conduct of BDG alleged by the applicants, ss 18 and 21 of the Australian Consumer Law (being Sch 2 to the Competition and Consumer Act 2010 (Cth)) are mandatory laws that the arbitrator must apply; and

   2. Australian law is to be applied by the arbitrator in determining the applicants’ claims under those provisions; and

3. BDG will discontinue the proceeding against FFPL in the United States District Court, Eastern District of California (with a view to bringing the claims in the Californian Arbitration).

THE COURT ORDERS THAT:

1. Pursuant to s 7(2) of the International Arbitration Act 1974 (Cth), the proceeding be stayed.

2. BDG’s interlocutory application dated 15 December 2020 otherwise be dismissed.

3. The applicants’ interlocutory application dated 20 November 2020 be dismissed.

4. Within 14 days, the parties file any agreed minute of order as to the costs of the interlocutory applications and of the proceeding.

5. If the parties cannot reach agreement:

4. within 21 days, each party file a written submission (of no more than two pages) as to costs; and

5. within 28 days, each party file a responding submission (of no more than two pages) as to costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MOSHINSKY J:

Introduction

1. The applicants are members of the Freedom Foods group of companies (the Freedom Foods group), the ultimate holding company of which is Freedom Foods Group Ltd (FFG). The applicants, and FFG, are each incorporated in Australia. FFG is listed on the Australian Stock Exchange. The Freedom Foods group is involved in the manufacture and sale of food and beverage products in Australia and elsewhere. The four applicants are:

1. Freedom Foods Pty Ltd (FFPL);

2. Freedom Foods Group Ingleburn Pty Ltd (FF Ingleburn);

3. Freedom Foods Group Trading Pty Ltd (FF Trading); and

4. Pactum Australia Pty Ltd (Pactum).

2. The respondent, Blue Diamond Growers (BDG), is a company incorporated under the laws of California, United States of America, and a cooperative of nearly 3,000 independent Californian almond growers that produces and sells over US$1.5 billion in almond products each year worldwide.

3. Disputes have arisen between BDG and the applicants. The disputes relate to a License Agreement between BDG as licensor and FFPL as licensee (the License Agreement). The License Agreement was entered into in October 2011 and amended in August 2014. The initial term of the agreement was five years. Pursuant to the terms of the agreement, in October 2016 the agreement...