Dairy Code

The Dairy Industry Code (the Code) is a mandatory code to improve the clarity, transparency and fairness of trading arrangements between parties to a milk supply agreement within the dairy industry. The Code took effect on 1 January 2020 and only applies to contracts entered or amended on or after this date.

The Australian Competition and Consumer Commission (ACCC) regulate, monitor and investigate breaches of the Code. You can find more information about the Code and their role on the ACCC’s website.

The ASBFEO can provide you with information on the Code, options to resolve any disputes with access to mediation and/or arbitration services. The Code states that parties must act in good faith. This means parties must act honestly, and not arbitrarily, with each other and cooperate to resolve the dispute.

The Code states that the parties may use any appropriate dispute resolution process they choose to resolve dairy disputes, including mediation and/or arbitration as set out in the Code.

We can also help parties in dispute outside of this Code by guiding them through a dispute resolution process and assisting with alternative dispute resolution services.

Internal Dispute Resolution

The Code provides Code-based dispute resolution and internal dispute resolution and procedures for dairy suppliers and processors.

Under the Code, all milk supply agreements must contain provisions for complaint handling procedures to help manage and resolve complaints that arise in connection with the agreement. A milk supply agreement must also include mediation as a means of resolving disputes.

The internal process outlined in milk supply agreements means that a processor must have a complaint handling officer to manage complaints. Internal dispute resolution processes may be managed by the processor’s complaint handling officer.

Dairy Code Dispute Resolution Process

Under the Code, if a party to a milk supply agreement has a complaint or dispute in relation to their agreement, the dispute may be dealt with or resolved via the complaint handling procedure outlined in the agreement. If the matter remains unresolved, the parties may then try to resolve the dispute through mediation.

A matter may be resolved via arbitration if the milk supply agreement provides for arbitration as a dispute resolution option, or if the parties have agreed in writing to using arbitration to resolve their matter.

If the dispute is related to the termination of a milk supply agreement, it may be resolved via these options as long as those involved in the dispute were parties to the agreement before the termination.

Notifying the other party about the dispute

ADR Process

Parties to a dispute must try to resolve their matter via internal complaint handling procedures before trying to resolve their dispute via mediation or arbitration.

An ADR process under the Code means mediation, with arbitration also available to the parties as another means of resolving complaints. Each process is a cost-effective option for parties to a milk-supply agreement and may be accessed as part of their internal complaint handling process or under the Code.

The ASBFEO maintains a specialist list of independent ADR practitioners (mediators) and arbitrators experienced in Dairy Code matters across the country. All mediators are accredited under the National Mediator Accreditation Standards system. While the majority of the practitioners are practicing lawyers, they are not able to provide legal advice as part of the mediation process.

ADR Process - Mediation

Under the Code, mediation is a structured negotiation process in which an independent person, the mediator, assists the parties to identify and discuss options to resolve their dispute. The focus is on the interests of the parties (rather than their adopted position) and aims to avoid the need for arbitration or expensive and lengthy court proceedings.

A party to a milk supply agreement may request mediation for a dispute that cannot be resolved via the agreement’s internal procedures. The party must request that the mediation advisor or ASBFEO appoint a mediator for the dispute, and this appointment must be made within 14 days of the ASBFEO receiving the request.

Once a mediator has been appointed, the ASBFEO refers the whole process to them to manage independently. The mediator will decide the date, time, and place that the mediation will take place and the means by which it will be conducted (such as in person or video conferencing). The parties equally share the cost of the mediator unless the parties agree otherwise. The mediator will advise you of their costs. In general, the mediator has a half-day rate and a full-day rate, with the length of time for the process depending on the complexity of the dispute.

On average, the ASBFEO has found that mediation costs around $4,000 ($2,000 per party for a two-party dispute), but this may vary. The mediator may also seek costs for any associated expenses (such as travel expenses or room hire) and the cost of expert reports if necessary.

The mediator is obligated to report back to the ASBFEO to advise that the mediation has commenced. If the mediation is successful, the mediator must contact the ASBFEO to advise that an agreement has been reached (although the nature of the agreement remains confidential and will not be shared with the ASBFEO).

The party that requested mediation may withdraw their complaint at any time by writing to the other party and the mediator.

ADR Process - Arbitration

Under the Code, arbitration is a process in which an independent person, the dispute resolution practitioner (the arbitrator), is presented with arguments and evidence by the parties in dispute. The arbitrator considers this information and decides on the matter, with the decision of the arbitrator being binding and enforceable.

Under the Dairy Code of Conduct, arbitration is available if the parties to a milk supply agreement agree (in writing) to have their dispute resolved by arbitration (whether or not the milk supply agreement contains provisions for arbitration).

The parties must request the arbitration advisor (the ASBFEO) to appoint an arbitrator for the matter. Once the request has been made, the ASBFEO must appoint an arbitrator within 14 days of receiving the request.

Once an arbitrator has been appointed, the process is then passed onto them to manage fully and independently of the ASBFEO. The arbitrator will decide the date, time, and place that arbitration will take place, and the means by which arbitration will be conducted (such as in person or video conferencing). The parties share the cost of arbitration equally unless the parties agree otherwise. The arbitrator will advise you of their costs. In general, the arbitrator has a half-day rate and a full-day rate, with the length of time for the process depending on the complexity of the dispute. The cost of arbitration is generally higher than that of mediation, and, as such, the average cost of arbitration may be $5,000, but this may vary. The arbitrator may also seek costs for associated expenses (such as travel, or room hire) and the cost of expert reports if necessary.

The arbitrator is required to notify the ASBFEO in writing that arbitration has commenced. If the dispute is resolved, the arbitrator must contact the ASBFEO to advise it of this.

The arbitrator must terminate the process if the party that initiated the dispute resolution process requests that the arbitration be terminated. If this occurs, the arbitrator will issue a certificate to the parties and the ASBFEO stating the nature of the dispute, that the arbitration process was terminated, and that the dispute was not resolved.