Dispute Resolution Partner, Andrew Robertson discusses some significant developments happening with respect to arbitration. Governments at the State and Federal levels are taking some major steps to encourage the use of arbitration as a dispute resolution tool.
Arbitration is a process whereby parties to a dispute refer their dispute to a private individual to resolve their dispute. As a mechanism it has a very long history of 100s if not 1000s of years but its history in recent years in Australia has been that it has been neglected by parties. Seen as too inflexible compared to mediation, too long and expensive compared with expert determination and as technical as litigation without the support of the Court system arbitration has not prospered as a dispute resolution mechanism.
Arbitration promises a system where the private dispute resolver use their skill and expertise to resolve a dispute quicker, more flexible and therefore cheaper way than can ever be achieved in litigation, and potentially with more finality (as there are no rights to appeal findings of fact).
State and Federal Governments have identified arbitration as a mechanism with the prospect of reducing Court lists and provide a valuable tool to commerce. As a result they have been very active in a series of recent developments which are discussed below.
Modernising arbitration for international players
The Federal Attorney-General has been very active. In a speech in Melbourne in December 2009 the Attorney-General indicated that he was determined to make Australia a regional hub in international arbitration.
International commercial arbitration is a process of resolving disputes between parties from disparate parts of the world with disparate legal systems. Arbitral awards can be enforced in 142 countries (and the Cook Islands and the Holy See) because of an international treaty known as the New York Convention. This means it is easier to enforce an arbitral award in many countries than it is to enforce an Australian judgment. To develop Australia as that regional hub in 2008, the Attorney-General undertook a review of the Commonwealth International Arbitration Act and in 2009 introduced a Bill to Parliament to modernise the Act. That Act was passed on 18 June.
The Act is significantly based on the UNCITRAL Model Law. UNCITRAL is the United Nations Commission on International Trade Law. Such is the international nature of arbitration that this UN body has prepared a Model Law for arbitration. That Model Law has been part of Australian law since 1989.
In 2006 UNCITRAL amended the Model Law. The new Act largely adopts those amendments while also modernising other provisions in International Arbitration Act.
A new arbitration Act from the States and Territories
When arbitrating between Australians in Australia the arbitration law is governed by State and Territory legislation. The State and Territory arbitration law is quite different to the Federal arbitration law. While each State and Territory has its own law, the respective Attorneys- General have agreed to use a common form such that for over 20 years the States and Territories have largely had the same Commercial Arbitration Act (with some minor idiosyncratic differences). The Commercial Arbitration Acts do not reflect the UNCITRAL Model Law.
The State and Territory Attorneys- General have now agreed to pass new Commercial Arbitration Acts which will also be based on the Model Law. This will have the effect of both modernising the law with respect to domestic arbitration and creating a degree of consistency with the International Arbitration Act. The Model Law has been changed and supplemented in parts reflecting the particular needs of domestic commercial arbitration.
Although the decision was only made in early May the new Commercial Arbitration Bill is already before the New South Wales Parliament.
Assisting with facilities for the conduct of arbitration
This is not the end of Government support for increased use of arbitration. In March the Federal Government and New South Wales Government in conjunction with the Australian Centre for International Commercial Arbitration (ACICA) and the Australian Commercial Disputes Centre (ACDC) announced joint funding of $600,000 for a new special purpose centre for holding international arbitrations to be opened in Sydney’s CBD. That the Governments were willing to commit their own funds to this venture plainly demonstrates their commitment to developing arbitration.
This new centre already has competition before it opens with the Institute of Arbitrators and Mediators Australia (IAMA) having operated a Dispute Resolution Centre in Philips Street, Sydney for a number of years. Those rooms are already available for hire for use in arbitrations, mediations or similar processes where a neutral venue is required.