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Department of Corrections v Fujitsu: is the Australian CCA (potentially) applicable in a New Zealand court?

The High Court recently upheld a claim by the Department of Corrections (the Department) against Fujitsu New Zealand Ltd (Fujitsu) for breach of contractual warranties in the amount of close to $4 million: Chief Executive of the Department of Corrections v Fujitsu New Zealand Limited [2023] NZHC 3598. Fujitsu had promised to provide staff rostering software to the Department with “out of the box” functionality. It turned out that the software, which was supplied by Dassault Systèmes Australia Pty Ltd (Dassault), required expensive customisation to meet the Department’s requirements. This was contrary to Fujitsu’s representations to the Department, and also contrary to Dassault’s representations to Fujitsu.

In this note, I want to focus on the cross-border aspects of Fujitsu’s consequential claims against Dassault. Fujitsu advanced its claims under both the Australian Competition and Consumer Act 2010 (CCA) and its New Zealand equivalent, the Fair Trading Act 1986 (FTA). A potential advantage of the CCA, for Fujitsu, was that – unlike the FTA – it did not allow parties to contract out of liability, in circumstances where Fujitsu and Dassault had included exclusion and limitation of liability provisions in their contract. The case had connections to Australia, because Dassault was an Australian company, and some of the allegedly wrongful conduct occurred, at least partly, in Australia. Unsurprisingly, Dassault took the position that the CCA could not be relied upon.

Cooke J decided that the CCA was not applicable because it conferred exclusive jurisdiction on the Federal Court of Australia (at [251]), and that the exclusion and limitation of liability clauses were generally effective under the Fair Trading Act 1986 (except in relation to one of Dassault’s misrepresentations, concerning payment of a licence fee).

The question whether foreign statutes are available to New Zealand litigants is not entirely straightforward. This is not the first time that a New Zealand court has had to grapple with the issue. However, there are some useful general principles that courts may turn to, which are outlined in this note.

The decision

Dassault argued that the CCA could not be applied because the relevant choice of law rules identified New Zealand law as the law governing the issue (at [246]). Thus, regardless of whether the issue was characterised as tortious or contractual, New Zealand law was applicable, and the question whether the CCA was applicable on its terms did not arise. Moreover, the CCA could not apply on its terms, because s 138 conferred exclusive jurisdiction on the Federal Court of Australia.

Cooke J disagreed that the issue was “to be resolved by choice of law analysis” (at [247]). Considering that Dassault’s conduct occurred partly in Australian and partly in New Zealand, it was possible “that both the FTA and CCA could apply to Dassault’s conduct”. Hence, it was “not a matter of determining which law applies under choice of law principles” (at [247]). Rather, it was a matter of statutory interpretation, “much as it is when the Court interprets New Zealand legislation with apparent extra-territorial effect”, in cases such as Brown v New Zealand Basing Ltd [2017] NZSC 139, [2018] 1 NZLR 245.

The CCA has been construed as having a broad scope of cross-border application. Section 5 extends the application of the Act to the engaging in conduct outside Australia by companies incorporated or carrying on business in Australia, and in a case delivered shortly before Cooke J’s judgment, the High Court of Australia confirmed that s 5 is not subject to further limitations, whether they are implied (unilateral) cross-border limits or common law choice of law rules: Karpik v Carnival plc [2023] HCA 39. In any case, some of Dassault’s conduct had taken place in Australia.

Cooke J acknowledged that “[t]he starting point for Fujitsu was promising” (at [248]). However, there was “an insurmountable difficulty with Fujitsu’s argument”, which was s 138, which conferred exclusive jurisdiction on the Federal Court of Australia. This provision “means what it says”, even though it was “no doubt primarily directed to the question of state and/or federal jurisdiction” (at [251]). The effect of the provision, as interpreted by the Australian courts themselves, was “that nobody can bring proceedings under the CCA in any other Court” and that “[t]he High Court of New Zealand is in no different position from any of the State Courts of the Commonwealth”. Cooke J here referred to the decision in Home Ice Cream Pty Ltd v McNabb Technologies LLC [2018] FCA 1033, where the Federal Court granted an anti-suit injunction in relation to US proceedings on the basis that the CCA claim was not available in the United States.

The result was that the FTA alone was applicable, with the result that the parties’ ability to exclude and limit liability was not, in principle, excluded.

The application of foreign law depends on choice of law

The first point is that foreign law cannot usually be applicable in a New Zealand court unless the court has given effect to a choice of law rule designating the foreign law as the law that governs the issue. Cooke J’s assumption that the approach in Brown v New Zealand Basing Ltd [2017] NZSC 139, [2018] 1 NZLR 245 applies equally to foreign statutes was incorrect. In other words, foreign statutes cannot apply on their own terms (Maria Hook and Jack Wass The Conflict of Laws in New Zealand (LexisNexis, 2020) at [4.127]). As the High Court of Australia has noted only recently, “whether Australian law, and Australian judgments, are recognised in other jurisdictions, and in what circumstances, is a matter for foreign law” (Karpik v Carnival plc [2023] HCA 39 at [50]).

In theory, there may be exceptions to this principle – for example, some scholars argue that there are (defined) circumstances in which courts may need to give effect to foreign overriding mandatory rules (see Uglješa Grušić “Some Recent Developments Regarding the Treatment of Overriding Mandatory Rules of Third Countries” [2020] ELTE Law Journal 89). Yet the general principle must surely be correct. It would not be right for New Zealand courts to apply foreign law simply because a foreign legislator has deemed its application to be appropriate. What about, for example, a Ruritanian statute that is intended to apply universally, to cases that have no connection to the forum whatsoever? This is an extreme example, but it illustrates the point. Or what if Dassault was incorporated in France, and French law provided that exclusion clauses in contracts with French companies must always be given effect?

In this context, choice of law rules serve a quasi-constitutional function. Dispensing with them, as Cooke J here did, was not an option, even though this means that foreign statutes are (potentially) treated differently from domestic ones.

No concurrent application of New Zealand and foreign law

The second point, which follows from the first, is that New Zealand law and foreign law do not usually apply cumulatively (see Hook & Wass at [6.91]). The very purpose of choice of law is to identify the law of the country that is best suited to govern a matter. Thus, where the respective claims (under New Zealand and foreign law) are concerned with the same issue, and New Zealand law applies, there is no need to go on to ask whether choice of law rules also lead to the application of foreign law.

Where New Zealand law applies unilaterally, as it does in the case of the FTA (see s 3), the start and the end point is New Zealand law, unless the case falls outside of the cross-border scope of the statute. In this latter scenario, if New Zealand law has been found not to be applicable, it would then be necessary to characterise the issue to identify the relevant choice of law rule (eg, tort or contract), in order to determine whether the claim can nevertheless be brought under foreign law.

This approach is not only principled but also convenient. If New Zealand and foreign law were able to apply cumulatively, then how would a court resolve a potential conflict of laws? For example, if Cooke J had found that s 138 was no bar to the CCA’s application in New Zealand, how would his Honour have approached the enforceability of the exclusion and limitation of liability provisions, which were effective in principle under the FTA but not the CCA?

This point is contrary to Cooke J’s view that both the FTA and CCA could apply to Dassault’s conduct, unless his Honour was referring to the relevance of the CCA in a hypothetical Australian proceeding. Cooke J’s approach is not, in fact, unprecedented. In Murren v Schaeffer [2018] NZHC 3176, the Court apparently assumed that the Nevada Deceptive Trade Practices Act applied in New Zealand on its own terms, with the result that the claimants were entitled to judgment under both the US Act and the FTA. In effect, this would mean that a plaintiff gets to pick the legislation that is most favourable to them. The better view, therefore, is that the approach adopted in Murren v Schaeffer was incorrect.

The subject-matter jurisdiction of the New Zealand court to apply a foreign statute

In certain circumstances, the New Zealand court may not have subject-matter jurisdiction to determine a claim based on foreign law. This is primarily a question of New Zealand law. For example, it may not be appropriate for a New Zealand court to apply foreign consumer legislation tailored to the market demands of the particular forum (but see Hook & Wass at [6.90]).

Even though the question is primarily a question of New Zealand law, foreign law, too, may become relevant, if it purports to exclude a foreign court’s jurisdiction to give effect to it. There is an argument that such foreign provisions should play no role in a New Zealand court, based on the general principle that the New Zealand court does not usually give effect to foreign rules of the conflict of laws (in other words, the court does not usually apply the principle of renvoi). However, an appropriate compromise may be to treat the foreign law as self-limiting (Hook & Wass at [4.129]-[4.130]). The question whether a foreign statute is self-limiting would then be a question of statutory interpretation (assuming, of course, that the foreign law has already been identified as being applicable as a matter of choice of law).

Ordinarily, provisions such as s 138 are interpreted as having a purely domestic focus. In Rimini Ltd v Manning Management and Marketing Pty Ltd [2003] 3 NZLR 22 (HC), for example, Randerson J concluded that the definition of “Court” in the Contractual Mistakes Act 1979, which referred to the High Court, a District Court or a Disputes Tribunal, did not preclude the Supreme Court of New South Wales from granting remedies under the Act (see also Amaca Pty Ltd v Frost (2006) NSWCA 173, (2006) 67 NSWLR 635). In Thomas v A2 Milk Company Ltd (No 2) [2002] VSC 725, the Supreme Court of Victoria considered Rimini when determining that the FTA and the Financial Markets Conduct Act 2013 (NZ) should not be construed as conferring exclusive jurisdiction on New Zealand courts (for my blog post on this, see here).

Interestingly the Federal Court in Home Ice Cream Pty Ltd v McNabb Technologies LLC [2018] FCA 1033 did not seem to follow this approach when, in relation to a claim under the CCA, it restrained proceedings brought by the defendant in the United States because “[t]he only court which is capable of determining the questions which [the plaintiff] seeks to litigate (other than the High Court of Australia in exercising its appellate jurisdiction) is the Federal Court of Australia …” (at [19]). Thus, based on the evidence of Australian law before Cooke J, s 138 was arguably intended to be self-limiting in an international sense. So if the FTA had not been applicable, and Cooke J had found Australian law to be the governing law, his Honour would have been correct to exclude the application of the CCA (in the absence of contrary evidence on the meaning of s 138), assuming that it is right that the application of foreign territorial provisions does not fall foul of the principle against renvoi.

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