Federal Court Confirms ACCC's Jurisdiction to Arbitrate Telstra Network Access Disputes

Monday 17 March 2014 @ 10.45 a.m. | IP & Media | Trade & Commerce

In Telstra Corporation Limited v Vocus Fibre Pty Ltd [2014] FCA 198 (12 March 2014) Justice Flick of the Federal Court of Australia has confirmed the Australian Competition and Consumer Commission's (the ACCC's) jurisdiction to arbitrate disputes notified to it under the Telecommunications Act 1997 (Cth).

The Federal Court decision resulted from a judicial review application initiated by Telstra in January this year (3 January 2014) against the ACCC and three network facilities access seekers (namely, Vocus Fibre Pty Ltd, Adam Internet Pty Ltd and Chime Communications Pty Ltd).

Background

The case revolved around contractual issues relating to the terms of agreements with Telstra by which the access seekers were given access to Telstra's network facilities. The terms and conditions of those contracts were in dispute with respect of Telstra's power to vary the agreements to increase charges for access to its network facilities and the reservation of rights by the access seekers to dispute such a variation.

Further, the case gave rise to the issue, raised by Telstra, of the jurisdiction of the ACCC to arbitrate in such matters. The disputes were notified to the ACCC under the Telecommunications Act 1997 (Cth) Schedule 1 Clause 18(1) and Clause 36(3) and concerned Telstra’s proposed variations to charges for access to facilities, including space for equipment in Telstra’s telephone exchanges, pursuant to agreements with the access seekers which allowed Telstra to notify variations to charges. The access seekers did not agree to the varied charges notified by Telstra.

Key Issues

The issue before the court was whether there was a “dispute” which could be arbitrated by the ACCC in these circumstances. Telstra arguing that the company it had a "commercial contract" with the three access seeker and that there was no suggestion that Telstra had breached it, and that therefore, there was no "failure to agree" and  nothing for the ACCC to arbitrate when it comes to the increased charges sought by Telstra.

The Result

Justice Flick rejected Telstra’s argument that there was no "failure to agree" between Telstra and each of the access seekers, and accordingly found that there was a dispute which could be arbitrated by the ACCC as paras [32] to [34] of his judgment indicate:

32. The initial objection taken by the First to Third Respondents as to the jurisdiction of the Court to resolve the present dispute was overtaken by the Applicant’s belated reliance upon s 39B(1A)(c) of the Judiciary Act. It was thereafter common ground between all the parties to the proceeding that the Court had jurisdiction to resolve the construction of cl 6 and the consequential assumption of power by the Commission to arbitrate the “disputes” between Telstra and the First to Third Respondents “failing agreement” as to the terms and conditions.

33. Clause 6, it has been concluded, is not to be given the limited construction advanced on behalf of Telstra, but rather that advanced by the First to Third Respondents.

34. It follows that the Amended Originating Application should be dismissed with costs . . .

ACCC Reaction

The ACCC's Chairman Rod Sims by way of a media release has said that: “The ACCC welcomes this clarification of its jurisdiction to arbitrate access disputes notified to it”.

Mr Sims also indicated that arbitration of these disputes would now proceed in private and that the ACCC would not be making any further public comment on the matter.

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