The mining boom of the last decade saw a marked rise in commodity prices and immense investment in resources and energy (R&E) projects.  Following the recent completion of many of these large projects, a surge in R&E project-related disputes is expected.

The “one-size-fits-all” approach of litigation rarely meets the commercial needs or objectives of the often sophisticated and international parties to resource developments.  As a result, there has been an increasing trend for the resolution of such disputes through arbitration.

Arbitration is a private dispute resolution method that arises by agreement between parties.   Typically it involves the appointment of an independent arbitrator to rule on the dispute according to the parties’ own terms of reference in an efficient, informal and cost effective manner.

The recently launched Perth Centre for Energy and Resources Arbitration (PCERA) aims to achieve all that and more. 

In this Alert, Senior Associate Stephanie Tan and Solicitor Jasmin Semlitsch provide a summary of what PCERA can offer.

The PCERA framework

PCERA aims to “coordinate and facilitate the resolution of disputes by applying innovative and specialised methods of alternative dispute resolution” tailored to R&E projects.  Its unique model relies on disputes being decided by skilled arbitrators and experts with local industry knowledge. PCERA provides the institutional framework for R&E dispute resolution and, if chosen by parties to contractual agreements, will act as an appointing authority.

The founding directors of the not-for-profit company are prominent Perth barristers Kanaga Dharmananda SC, Craig Colvin SC and Michael Feutrill.

The key features of PCERA include:

  • Application to the full project life cycle: PCERA will support arbitrations concerning a broad spectrum of disputes relating to all aspects and stages of a project’s life; from exploration and project development through to operational aspects of fully established projects.
  • PCERA Arbitration Principles: PCERA has developed a set of specialised arbitration principles to produce fast-track arbitration outcomes.  The principles are designed to reflect practices that work in the context of R&E projects, and encourage time and cost savings.
  • Collaborative Expert Resolution: In addition to providing the service of an arbitration centre, PCERA will apply an innovative new model for combined expert determination. Each party appoints an expert legal assessor (retired judge or practicing senior counsel) to undertake an informal assessment of the merits of their case. The experts then work together through a unique consultative and collaborative process to reach a resolution, bearing in mind the likely outcome if the case went to court.  
  • Modified UNCITRAL Arbitration Rules: PCERA has specifically tailored the United Nations Commission on International Trade Law Arbitration Rules (as revised in 2010) to its unique R&E dispute resolution model.  The Arbitration Rules provide a comprehensive set of procedural rules for the conduct of all aspects of the arbitral process. PCERA is yet to publish its proposed modified version of the UNCITRAL Arbitration Rules.
  • Advisory Committee: One of PCERA’s features is its advisory committee responsible for appointing and maintaining a panel of expert resource sector arbitrators comprising advocates, professional arbitrators and industry experts drawn from Australia and Australia’s major international trading partners including parties from Asia.

A global contender in dispute resolution?

PCERA is poised to become a serious contender in the global arbitral space.

Australia’s natural resource exploration, exploitation and export activity is most dominant in Western Australia and its surrounding waters. 

Perth already sees a large number of disputes being resolved through arbitration.  Traditionally, however, these arbitrations have been carried out on an ad hoc basis.  While there are a multitude of institutions already operating domestically and overseas such as the Singapore International Arbitration Centre (SIAC) and the Hong Kong International Arbitration Centre (HKIAC), none cater specifically to R&E projects.