Epic Games, Inc v Apple Inc

Case [2021] FCAFC 122

FEDERAL COURT OF AUSTRALIA

Epic Games, Inc v Apple Inc [2021] FCAFC 122

Appeal from: Epic Games, Inc v Apple Inc (Stay Application) [2021] FCA 338
File number: NSD 325 of 2021
Judgment of: MIDDLETON, JAGOT AND MOSHINSKY JJ
Date of judgment: 9 July 2021
Catchwords: PRIVATE INTERNATIONAL LAW — stay application — proceedings alleging contraventions of Pt IV of Competition and Consumer Act 2010 (Cth) and s 21 of the Australian Consumer Law — where exclusive jurisdiction clause requires litigation relating to app developer agreement to occur in Northern District of California — whether there are strong reasons to refuse to grant the stay — whether there is a public policy that the proceeding should be heard in the Federal Court of Australia — whether clearly inappropriate forum — stay refused
Legislation:

Competition and Consumer Act 2010 (Cth)

Competition Policy Reform Act 1995 (Cth)

Corporations Act 2001 (Cth)

Federal Court of Australia Act 1976 (Cth)

Federal Court Rules 2011 (Cth)

International Arbitration Act 1974 (Cth)

Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth)

Jurisdiction of Courts (Miscellaneous Amendments) Act 1987 (Cth)

Trade Practices Act 1974 (Cth)

Trade Practices Amendment Act (No 1) 2001 (Cth)

Trade Practices Legislation Amendment Act 2008 (Cth)

Cases cited:

Akai Pty Ltd v People’s Insurance Co Ltd [1996] HCA 39; (1996) 188 CLR 418

Australian Health & Nutrition Association Ltd v Hive Marketing Group Pty Ltd [2019] NSWCA 61; (2019) 99 NSWLR 419

Casaceli v Natuzzi SpA [2012] FCA 691; (2012) 292 ALR 143

DA Technology Australia Pty Ltd v Discreet Logic Inc [1994] FCA 101

eBay Inc v MercExchangeLLC 547 US 388 (2006)

Faxtech Pty Ltd v ITL Optronics Ltd [2011] FCA 1320

Global Partners Fund Ltd v Babcock & Brown Ltd(in liq) [2010] NSWCA 196

Home Ice Cream Pty Ltd v McNabb Technologies LLC (No 2) [2018] FCA 1093

House v The King [1936] HCA 40; (1936) 55 CLR 499

ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248

Incitec Ltd v Alkimos Shipping Corporation [2004] FCA 698; (2004) 138 FCR 496

Petersville Ltd v Peters (WA) Ltd [1997] ATPR 41-566

Re Douglas Webber Events Pty Ltd [2014] NSWSC 1544; (2014) 291 FLR 173

Re Wakim; Ex parte McNally [1999] HCA 27; (1999) 198 CLR 511

Stevens v Head [1993] HCA 19; (1993) 176 CLR 433

The “Bremen” v Zapata Off-Shore Co 407 US 1 (1972)

Truth About Motorways v Macquarie Investment Management Ltd [2000] HCA 11; (2000) 200 CLR 216

Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55; (1990) 171 CLR 538
Davies, Bell, Brereton & Douglas, Nygh’s Conflict of Laws (10th  ed, 2019)
Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: Economic Regulator, Competition and Access
Number of paragraphs: 126
Date of hearing: 9 June 2021
Counsel for the Appellants: Mr N J Young QC with Mr N De Young SC, Mr C Brown and Ms D Forrester

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AGLC
Epic Games, Inc v Apple Inc [2021] FCAFC 122
Case
[2021] FCAFC 122
Decision Date

CaseChat Overview and Summary

In Epic Games, Inc v Apple Inc, the primary judge had granted a stay of proceedings to the defendant Apple Inc, compelling the plaintiff Epic Games to litigate its claims in the United States. Epic appealed this decision to the Full Court of the Federal Court of Australia. The primary issues were whether the primary judge had erred in considering whether there were strong reasons to refuse the stay and whether public policy considerations mandated that the proceeding remain in the Federal Court. The Full Court found that the primary judge had erred in his consideration of the strong reasons inquiry, failing to make a cumulative assessment of the reasons presented by Epic. The Full Court held that Epic had demonstrated strong reasons not to enforce the exclusive jurisdiction clause due to the significant advantages provided by Australian law, such as the statutory presumption of no undue influence in s 84 of the Competition and Consumer Act 2010 (Cth). Furthermore, the Full Court found that public policy considerations, while not mandating the proceeding remain in the Federal Court, did indicate strong reasons for the proceeding to stay in Australia. Accordingly, the Full Court set aside the primary judge's orders granting the stay and dismissed Apple's application. The Full Court also ordered that Apple pay Epic's costs of the interlocutory application and the appeal.

Orders

Orders of the court

1. The appeal be allowed.

2. Orders 1 to 5 of the primary judge made on 9 April 2021 be set aside and in lieu thereof, the interlocutory application filed on 22 December 2020 be dismissed.

3. The respondents pay the appellants’ costs of the interlocutory application and of the appeal as taxed, assessed or otherwise agreed.

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

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Contrary to Epic’s submissions, we do not consider that the majority in Akai were proposing that where a party responds to a stay application by asserting that a law of the invoked jurisdiction confers upon it a juridical advantage, the onus shifts to the party seeking the stay of proceedings. In such a case, in our view, the onus remains on the party seeking to resist the enforcement of the exclusive jurisdiction clause to prove strong reasons not to enforce the exclusive jurisdiction clause: Australian Health at [79]. It does not generally matter if the exclusive jurisdiction clause is itself part of the contract sought to be impugned on some or other ground. Provided the exclusive jurisdiction clause appears to bind the party resisting the stay and the commencement of the proceedings involves a prima facie contravention of the exclusive jurisdiction clause, it is for the party resisting the stay to prove the existence of the strong reasons not to enforce the clause. Conclusion on whether primary judge erred in relation to “strong reasons” On this basis, in the present case, Epic had established that being required to litigate these proceedings in the US Court would deprive it of the legitimate forensic advantage presented by, at the least, ss 84, 80 and 87 of the CCA. As such, these considerations were capable of constituting strong reasons not to grant the stay. The three kinds of error discussed above are material, and any one of them is sufficient to vitiate the primary judge’s decision to grant the stay. It follows that it is necessary for this Court to consider for itself if the stay should be granted. RE-EVALUATION OF THE EXISTENCE OR NOT OF STRONG GROUNDS TO REFUSE THE STAY It will be apparent from our discussion as to the errors of principle made by the primary judge that it is our view a stay should have been refused. In addition to the matters raised above, we have come to the view that there are public policy considerations which (cumulatively) indicate strong reasons for this proceeding to remain in this Court, even if such considerations do not statutorily mandate the proceeding be heard in the Federal Court. At the outset it is clear that a stay may be refused if the exclusive jurisdiction clause offends the public policy of the forum “whether evinced by statute or declared by judicial decision”: Akai at 445 (Toohey, Gaudron and Gummow JJ). Epic relies upon this statement in Akai to assert that public policy considerations “override” the exclusive jurisdiction clause and mandate that the proceeding be heard in the Federal Court, an argument which is put (as noted above) on a separate basis to the strong reasons inquiry. Yet it is clear that the majority in Akai considered public policy as part of its inquiry into whether there are strong reasons against a stay (rather than as some special rule that necessarily trumps all other considerations). This can be illustrated by having regard to the statement in context (at 445): In Huddart Parker Ltd v The Ship “Mill Hill” Dixon J referred with approval to English authority which indicated that, where there was a special contract of this nature between the parties, a foreign jurisdiction clause, the courts begin with a firm disposition in favour of maintaining that bargain unless strong reasons be adduced against a stay, it being the policy of the law that the parties who have made a contract should be kept to it. A stay may be refused where the foreign jurisdiction clause offends the public policy of the forum whether evinced by statute or declared by judicial decision…(Footnotes omitted).

Ratio Decidendi

Legal Principle Established

As we have alluded to, the other grounds of appeal relate to the second argument, namely whether the primary judge erred in evaluating whether there were “strong reasons” to enable Epic to proceed before this Court in contravention of the exclusive jurisdiction clause. Many of the matters addressed in relation to this issue (and the related issues of onus of proof and forum non conveniens raised in Apple’s notice of contention) are relevant to the public policy considerations said to compel the conclusion that a stay should be refused.ERRORS IN PRIMARY JUDGE’S CONSIDERATION OF “STRONG REASONS” NOT TO STAY? We will deal with the determinative issue of whether the primary judge otherwise erred in evaluating whether, as he described it, Epic had demonstrated strong reasons to enable it to proceed before this Court in contravention of the exclusive jurisdiction clause in cl 14.10 of the DPLA, referring to Akai at 427-429, 445: at [43] J. In resolving this issue, appellate review must accord with the principles in House v The King [1936] HCA 40; (1936) 55 CLR 499 at 504-505. We do not need to determine the first argument raised by Epic as to the existence of mandatory laws and an “overriding” public policy in light of our views as to the existence of the strong reasons we identify below. We will return to the issue of onus later. For present purposes, we proceed on the same basis as the primary judge, that Epic had the onus of demonstrating strong reasons for the refusal of the grant of the stay given that Epic’s proceeding in this Court involves, on the face of it at least, a contravention of cl 14.10 of the DPLA. On that basis, we are nevertheless satisfied that the primary judge’s reasoning involved three errors of principle. The first error: failure to make a cumulative assessment The first error, raised in ground 9 of the notice of appeal, may be explained as follows. The primary judge posed the relevant question in the heading above, “[i]s a strong reason for refusing a stay otherwise shown?”: at [43] J. The primary judge answered that question at [44] J, saying he did not think that strong reasons had been shown. He explained his consideration of this question at [44]-[54] J. At [55] J, albeit under the same heading, the primary judge turned to the part of the case which he said concerned him most — “whether there is something about the nature of proceedings under Pt IV which means they should generally be heard in this Court”. The primary judge explained that he had in mind “the statement of the majority in Akai at 445 that a stay ‘may be refused where the foreign jurisdiction clause offends the public policy of the forum whether evinced by statute or declared by judicial decision’”. The primary judge then identified these concerns, but concluded at [64] J that:Despite those matters, however, I do not consider that the state of the law concerning choice of forum clauses permits me to refuse Apple’s application although I am distinctly troubled in acceding to it. For completeness, I have not included ACL s 21 in the above discussion. No such issues appear to me to arise in relation to it.