In brief: arbitration formalities in Australia

Arbitration

Is the arbitration law based on the UNCITRAL Model Law?

Australia is a Model Law state. International arbitration is governed by the International Arbitration Act 1974 (Cth) (IAA) that gives the Model Law the force of law in Australia.

Domestic commercial arbitration is separately governed by uniform legislation enacted in all states and territories, that substantially reflects the Model Law, with some departures to accommodate the domestic context. The domestic uniform legislation follows the structure and character of the Model Law and is marked up with reference to the Model Law.

Both the IAA (section 16) and domestic legislation (section 2A) recognise the international nature of the Model Law and permit reference to UNCITRAL documents and working groups to aide in its interpretation.

What are the formal requirements for an enforceable arbitration agreement?

Following the Model Law, to be enforceable, an arbitration agreement must be in writing. However, a liberal approach is adopted, so long as the content is in written form. This may include electronic communications or the exchange of statements of claim and defence (where the agreement is not denied) and whether or not concluded orally or by conduct.

To be binding, an arbitration agreement must also contain a procedure that compels the parties to arbitrate, it is not enough that arbitration is a possibility.

If the arbitration agreement and any relevant rules are silent on the matter, how many arbitrators will be appointed and how will they be appointed? Are there restrictions on the right to challenge the appointment of an arbitrator?

If the agreement is silent, either one or three arbitrators are appointed.

For international arbitrations, three arbitrators are appointed, with each party appointing one arbitrator and the appointees then appoint a third.

Under section 10(2) of the domestic arbitration legislation, one arbitrator is appointed. If the parties cannot agree on an arbitrator, either party can apply to the court for the appointment.

For both international and domestic arbitrations, an arbitrator may only be challenged in limited circumstances, such as if there is reasonable doubt about an arbitrator’s qualifications, impartiality or independence, and where a party is involved in the appointment, only if that circumstance is discovered after the appointment.

What are the options when choosing an arbitrator or arbitrators?

There are a number of arbitration institutions, such as Australian Centre for International Commercial Arbitration (ACICA), that organise and assist parties to select experienced arbitrators, including non-legal experts. Senior barristers and retired judges are also commonly engaged as highly experienced arbitrators.

ACICA is the only prescribed nominating authority for the appointment of arbitrators for international arbitrations.

Does the domestic law contain substantive requirements for the procedure to be followed?

Parties may agree on the procedure to be followed for arbitration, and although the domestic legislation provides for a process in default of agreement, it is generally subject to agreement. The domestic arbitration law extends the Model Law by imposing an obligation on parties to act in aide of proper conduct and with due expedition, and not to wilfully do or cause any delay or prevention of an award being made.

Parties to arbitration must be treated with equality and be given a reasonable opportunity to present their case.

What powers do national courts have to support the arbitral process before and during an arbitration?

Under both the international and domestic arbitration laws, the Federal Court or the Supreme Court of a State or Territory may only provide support during an arbitration where the Model Law or domestic law permits. This can include support in a limited capacity in relation to the appointment of arbitrators, jurisdiction, capacity, enforcement of interim measures, the taking of evidence and matters concerning procedural fairness or natural justice.

These cannot be overruled by agreement between the parties.

Do arbitrators have powers to grant interim relief?

Both the Model Law and the domestic law grant the arbitral tribunal with a range of powers to order ‘interim measures’ to preserve the status quo, evidence, or assets from which an award may be satisfied, or to prevent harm or prejudice to the arbitration process.

The domestic law extends the Model Law by making specific reference to orders such as for security for costs, discovery and interrogatories, and the giving of evidence by affidavit.

When and in what form must the award be delivered?

The award must be in writing and signed by the arbitrators and state the reasons on which the award is based, unless the parties have agreed no reasons are to be given. The award must also state its date and the place of arbitration. There are no time limits as to its delivery.

On what grounds can an award be appealed or challenged in the courts?

Under the domestic law, the parties may by agreement appeal to the court on questions of law.

Otherwise, the grounds to set aside an award are limited to those provided in the Model Law, that includes grounds such as incapacity, invalidity of the arbitration agreement, exceedances of the terms of reference, failure to give notice or errors in the arbitral composition or process.

In addition, an award may be set aside if it is not capable of settlement by arbitration under the law of the State or if it conflicts with the public policy of the state.

Challenges to awards must be brought within three months. The court has discretion to enforce an award even if a ground to set it aside is established. The award may be partially set aside or remitted to the tribunal for reconsideration.

What procedures exist for enforcement of foreign and domestic awards?

The High Court has recognised the enforceability of international arbitration awards. See Kingdom of Spain v Infrastructure Services Luxembourg S.a.r.l. [2023] HCA 11.

A party seeking to enforce an international award can apply to the Federal Court of Australia or the Supreme Court of any Australian State or Territory. Domestic awards are enforceable by application to the Supreme Courts of any State or Territory, irrespective of where they are made.

On application, the courts must recognise and enforce an award, unless one of the limited grounds for refusal apply, including if the award is not capable of settlement by arbitration under the law of Australia, or if it conflicts with public policy.

Australia is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly known as the New York Convention. Being a party to the New York Convention means that the recognition and enforcement of foreign arbitral awards and the referral by a court to arbitration will be according to the terms of the Convention.

Can a successful party recover its costs?

The arbitral tribunal has broad discretion to award and assess the amount of costs a party may recover, and to whom and by whom costs are paid. It is not limited to any costs scales or rules used by any court that may assist with orders or the taxation of costs.