Arbitration agreement

Arbitrability

Are there any types of disputes that are not arbitrable?

Generally speaking, the following types of matters are not traditionally arbitrable in Australia:

  • criminal offences;
  • divorce and child custody proceedings;
  • property settlements; 
  • testamentary matters; 
  • grievances related to employment;
  • intellectual property disputes (except arbitrators can issue determinations declaring the IP rights of parties);
  • competition law disputes; and
  • certain bankruptcy and insolvency matters.
Requirements

What formal and other requirements exist for an arbitration agreement?

The International Arbitration Act 1974 (Cth) (IAA) has adopted the definition of an ‘arbitration agreement’ (section 3 of the IAA) from the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which provides that an arbitration agreement is ‘an agreement in writing under which the parties undertake to submit to arbitration any disputes arising from a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration’ (see also article 7 of the UNCITRAL Model Law and section 7 of the domestic Commercial Arbitration Acts (CAAs)).

Enforceability

In what circumstances is an arbitration agreement no longer enforceable?

An arbitration agreement will no longer be enforceable if the arbitration agreement is null and void, inoperative or incapable of being performed (section 7(5) of the IAA).

Australian courts may enforce an arbitration agreement notwithstanding there may have been a recission, avoidance and termination of the underlying contract (Hancock Prospecting v Rinehart (2017) 257 FCR 442 at paragraph 360). 

Separability

Are there any provisions on the separability of arbitration agreements from the main agreement?

The separability of arbitration agreements from the main agreement has been considered under common law in Australia. Unless an intention to the contrary is expressed, an arbitration clause will generally be treated as separable from the main contract, as reflected in article 16(1) of the UNCITRAL Model Law (adopted in Schedule 2 of the IAA)(see also, Comandate Marine Corp v Pan Australia Shipping (2006) 238 CLR 457 at 512).

Third parties – bound by arbitration agreement

In which instances can third parties or non-signatories be bound by an arbitration agreement?

The general rule in Australia is that non-parties cannot be bound by an arbitration clause without their consent. Some exceptions include where an arbitration agreement is assigned, and where an agent, acting within their authority, binds their principal.

Under section 7(4) of the IAA and section 2(1) of the domestic CAAs, a non-party to an arbitration agreement can rely on the agreement by claiming ‘through or under’ a party to the arbitration agreement.

Third parties – participation

Does your domestic arbitration law make any provisions with respect to third-party participation in arbitration, such as joinder or third-party notice?

Generally speaking, third parties cannot be joined to arbitration proceedings without their consent, and Australia’s arbitration laws do not provide for joinder of third parties.

However, rules of the arbitral institutions, if adopted by parties, provide for joinder of third parties and consolidation of arbitral proceedings (see, for example, article 16 of the Australian Centre for International Commercial Arbitration (ACICA) Rules), but only where all parties involved consent to the joinder or consolidation.  

In addition, third parties may be brought into arbitration proceedings by third party notices (ie, issuance of subpoenas). Subpoenas may be issued (with permission of the tribunal) to non-parties (section 23 of the IAA and section 27A of the domestic CAAs.

Groups of companies

Do courts and arbitral tribunals in your jurisdiction extend an arbitration agreement to non-signatory parent or subsidiary companies of a signatory company, provided that the non-signatory was somehow involved in the conclusion, performance or termination of the contract in dispute, under the ‘group of companies’ doctrine?

The ‘group of companies’ doctrine has not received wide acceptance in Australia. However, Australian courts may pierce the corporate veil if the company structure has been used to perpetrate a fraud or to enable a person to avoid an existing legal obligation, or in situations of agency (ie, where a subsidiary company acts as an agent for its parent company).  

Multiparty arbitration agreements

What are the requirements for a valid multiparty arbitration agreement?

There are no specific provisions or restrictions in the IAA or the domestic CAAs relating to multi-party arbitration agreements. Generally, if there are two or more parties to a contract, it is important to ensure that each of the parties receive equal treatment in the formation of the tribunal and throughout the arbitration.  

Consolidation is provided for under section 24 of the IAA and section 27C of the domestic CAAs. 

Additionally, rules of the arbitral institutions, if adopted by parties, provide for joinder of third parties and consolidation of arbitral proceedings (see for example, article 16 of the ACICA Rules).

Consolidation

Can an arbitral tribunal in your jurisdiction consolidate separate arbitral proceedings? In which circumstances?

Yes, under section 24 of the IAA, a party to arbitral proceedings may apply to the arbitral tribunal for separate arbitral proceedings to be consolidated. However, section 24 of the IAA does not apply automatically and the parties must opt-in for it to apply to their arbitration (see section 22(5) of the IAA). Similarly, section 27C of the domestic CAAs allow for an application to be made to the arbitral tribunal for consolidation on the same grounds as contained in the IAA. 

Additionally, rules of the arbitral institutions, if adopted by parties, provide for consolidation of arbitral proceedings (see for example, article 16 of the ACICA Rules).