Australia advances arbitral law reform

Practical Law Legal Update 5-502-9623 (Approx. 5 pages)

Australia advances arbitral law reform

Amendments to the International Arbitration Act 1974

The amendments to the International Arbitration Act 1974 (1974 Act), which is based on the UNCITRAL Model Law, are the culmination of a review process of the Federal legislation which was commenced by the Federal Attorney-General in November 2008 (for further background information, see Legal update, Australia: important developments in 2009). The first amendments to the 1974 Act were made in 2009 and extended the jurisdiction of the Act to the Federal Courts. The recent amendments, which are far more wide-ranging, came into force on 6 July 2010, the same day as receiving Royal Assent.

In addition to adopting the 2006 amendments to the UNCITRAL Model Law, significant other changes are also being made to Australia's international arbitration legislation. Parliament has effectively legislated to correct the position where Australian arbitral jurisprudence had developed in an unsatisfactory manner, including:

Clarifying that the grounds for refusal for recognition of an award are limited to those in Articles V.1 and V.2 of the New York Convention.
Establishing rights of confidentiality with respect to the arbitral process (sections 23C - 23G).
Repeal of section 18 which allowed the Model Law to be excluded.
A more expansive definition of an agreement in writing and an arbitration agreement (sections 6(4) and (5)).
Increased powers of the arbitral tribunal with respect to:
- evidence (section 23J);
- allowing ex parte proceedings where a party refuses or fails to attend (section 23B);
- interest (section 26);
- costs (sections 27(2)(d) and (2A)).
The provision for parties to seek security for costs orders from the arbitral tribunal (section 23K).
Revised provision regarding the statutory protection for arbitrators and nominating authorities (section 28).
Provisions for the court to pursue enforcement of an award before a foreign court where that award is subject to an application to set aside and the application is not being properly and diligently pursued (sections 8(10) and (11)).
Article 18 of the Model Law is modified to require that each party is given a "reasonable opportunity" instead of a "full opportunity" of presenting their case (section 18C).
Domestic arbitration legislation is expressly excluded from applying to international arbitrations to avoid confusing overlaps (section 21). However, certain provisions of the domestic legislation in aid of arbitration (that is, the ability to issue subpoenas to deal with a defaulting party) have now been directly included in the 1974 Act (sections 22A, 23 and 23A).

Parliament has also expressly directed the courts on the object of the 1974 Act:

"2D Objects of this Act

The objects of this Act are:

(a) to facilitate international trade and commerce by encouraging the use of arbitration as a method of resolving disputes; and

(b) to facilitate the use of arbitration agreements made in relation to international trade and commerce; and

(c) to facilitate the recognition and enforcement of arbitral awards made in relation to international trade and commerce; and

(d) to give effect to Australia's obligations under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted in 1958 by the United Nations Conference on International Commercial Arbitration at its twenty fourth meeting; and

(e) to give effect to the UNCITRAL Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law on 21 June 1985 and amended by the United Nations Commission on International Trade Law on 7 July 2006; and

(f) to give effect to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States signed by Australia on 24 March 1975."

The International Arbitration Act 1974 now provides a modern and attractive legislative framework supportive of arbitration.

The domestic arbitration amendments

In addition to the amendments to international arbitration law, the Standing Committee of Attorneys-General, a grouping of all State, Territory, Federal Attorneys-General, have agreed to adopt a new Commercial Arbitration Act which is also modelled on the UNCITRAL Model Law. The New South Wales Parliament has already passed the new legislation which is not yet in force. It is not yet known when the New South Wales Act will come into force or when the other States will take steps to amend their Commercial Arbitration Acts.

The Standing Committee of Attorneys-General, have for some decades ensured that while domestic legislation falls within the jurisdiction of the individual States and Territories, those States and Territories have substantially consistent legislation in the common form Commercial Arbitration Acts (there are presently some modest and largely immaterial differences). This permits Australia to have uniform domestic arbitration jurisprudence notwithstanding the constitutional limitations. However, the new Commercial Arbitration Act is substantially in the same form as the International Arbitration Act, allowing Australia to establish uniform arbitration jurisprudence regardless of the form of the arbitration (that is, whether domestic or international arbitration).

Indeed the Commercial Arbitration Act expressly seeks to promote uniformity between the Commercial Arbitration Act and the Model Law as given effect by the International Arbitration Act (section 2A).

However, domestic arbitration does differ from international arbitration and so some provisions, particularly with respect to recourse to the courts, remain with one significant difference: the parties must now opt in (section 34A). Otherwise recourse is limited to the grounds in Articles V.1 and V.2 of the New York Convention (section 34).

While this process is on-going the July meeting of the Standing Committee of Attorneys-General was cancelled because of the calling of the Australian Federal election. The next meeting of the Committee is in November.

Support for arbitration

We are seeing in Australia a period of growing awareness and increasing support for arbitration as an effective dispute resolution mechanism. In addition to the legislative amendments, there has been a raft of other actions taken to provide an environment supportive of arbitration. The level of activity and those involved demonstrate that awareness of arbitration reaches to the highest levels in Australia.

The Victorian Supreme Court issued Practice Note No 2 of 2010 which commences with the words "…The Court is supportive of the wishes of disputants to resolve all or part of their dispute by arbitration and will assist parties in a variety of ways…". The Honourable Justice Croft has been appointed to manage the newly established Commercial Court, List G – Arbitration proceedings. The Victorian Chief Justice addressed the Australian Centre for International Commercial Arbitration in May 2010, highlighting the court's support for arbitration.

The Federal Court of Australia issued its own Practice Notes in December 2009 and appointed Justices in each state as "Arbitration Coordinating Judges" with general responsibility for the management of matters under the International Arbitration Act.

In July 2010, the Federal Court also hosted the 2010 Australian Maritime and Transport Arbitration Commission (AMTAC) in which the Federal Attorney-General delivered an address by a video link throughout Australia.

In July 2010, the Australian Pavilion at the World Expo in Shanghai hosted an Arbitration Forum and VIP lunch to promote Australia's credentials as an international commercial dispute resolution destination. The Chief Justice of the Federal Court and the Solicitor General for Australia gave an address to the Forum.

Further, the Australian and New South Wales Governments, alongside the Australian Centre for International Commercial Arbitration and the Australian Commercial Disputes Centre, have established and opened the Australian International Disputes Centre in Sydney to provide further physical facilities and infrastructure to support arbitration (see Legal update, New arbitration centre planned for Sydney) in addition to the domestic arbitration Dispute Resolution Centre.

Australia is presently in an election campaign and the amendments to the arbitration legislation secured bi-partisan support. The current level of activity suggests that looking forward Australia should achieve a greater presence in the international arbitration community.

Australia advances arbitral law reform | Practical Law