Arbitration

UNCITRAL Model Law

Is the arbitration law based on the UNCITRAL Model Law?

Arbitration law in Australia differs based upon whether it is classified as domestic arbitration (both parties to the arbitration agreement have their places of business in Australia), or international arbitration (being anything else). Domestic arbitration in Australia is regulated under the Uniform Commercial Arbitration Acts, which are largely based on the UNCITRAL Model Law. Section 2(a) of these Acts requires courts to have regard to the Model Law in the process of interpretation. There are, however, some important differences between the two. For example, section 34A, which allows for appeals against awards, has no parallel in the Model Law.

International arbitration in Australia is regulated under the International Arbitration Act 1974 (Cth). Under section 16 of that Act, the Model Law has the force of law in Australia.

Arbitration agreements

What are the formal requirements for an enforceable arbitration agreement?

Under the Arbitration Acts, an arbitration agreement must exist in writing. However, a broad understanding of ‘writing’ is taken to include: electronic communications; any record of the agreement irrespective of whether it was concluded orally; or the exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other.

Choice of arbitrator

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 parties fail to make an agreement, there will be one arbitrator (noting also the difference with the Model Law, which provides for three). In such a situation, the court makes the appointment at the request of a party, having due regard to the qualifications required of the arbitrator and to such considerations as are likely to secure the appointment of an independent and impartial arbitrator.

An arbitrator can be challenged only if circumstances exist that give rise to justifiable doubts as to impartiality or independence, or if the arbitrator does not possess the qualifications agreed to by the parties. A justifiable doubt is one where there exists a real danger of bias.

Further, a party is restricted to challenging an arbitrator that they appointed only for reasons of which it becomes aware after the appointment was made, and must do so within 15 days. As is typical, the arbitral tribunal itself decides the challenge; however, if rejected, a party may request the court to also make a determination.

Arbitrator options

What are the options when choosing an arbitrator or arbitrators?

The parties are, as always, free to select whichever arbitrators they feel are best placed to resolve their dispute. The arbitrators of choice for major commercial arbitrations are often retired judges of superior courts.

Courts in Australia tend to adopt a pro-arbitration stance, and hence judges are often attuned to the differences between arbitration and litigation.

Arbitral procedure

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

The parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings. Of course, this is subject to the overriding duty imposed to treat the parties equally, and provide them with a reasonable opportunity to present their case.

Court intervention

On what grounds can the court intervene during an arbitration?

The court has a limited power of intervention. This may include a role in respect of appeals and deciding challenges to arbitrator appointments as well as the court having power to play an assistive role, such as in taking evidence or in enforcing interim measures granted by a tribunal. These powers cannot be overruled by the parties’ agreement.

Interim relief

Do arbitrators have powers to grant interim relief?

Yes, unless otherwise agreed between the parties. This power to grant interim measures allows the arbitral tribunal to make orders requiring a party to take action that would prevent current or imminent harm or prejudice to the arbitral process itself, or to preserve evidence that may be relevant and material to the resolution of the dispute. With limitation, this may include the ability to order relief such as security of costs, discovery of documents and inspection of property. As a precondition to granting this relief, however, the tribunal must be satisfied that:

  • harm not adequately reparable by an award of damages is likely to result if the measure is not ordered;
  • that harm substantially outweighs the harm that is likely to result to the party against whom the measure is directed if the measure is granted; and
  • there is a reasonable possibility that the requesting party will succeed on the merits of the claim.

 

An interim measure granted by an arbitral tribunal can be enforced, upon the application of a party, by the court.

Award

When and in what form must the award be delivered?

Domestic arbitration law imposes no time limits on the delivery of an award.

The parties can, however, agree to this, and many arbitral institutions also contain such limits.

Appeal

On what grounds can an award be appealed to the court?

An appeal from an award can be made on a question of law only if the parties agree that an appeal can be brought, and the court grants leave. The court, however, must not grant leave unless the following four conditions are satisfied:

  • the determination of the question will substantially affect the rights of a party;
  • the question is one that the tribunal was asked to determine;
  • the decision of the tribunal is either obviously wrong, or is of general public importance and the decision is at least open to serious doubt; and
  • that despite the arbitration agreement of the parties, it is just and proper for the court to determine the question.

 

An appeal must be brought within three months.

After an appeal is heard by the court, a party can bring a further appeal against that court’s judgment. Importantly, however, this is no longer an appeal against the award itself, but rather an appeal against the lower court’s judgment.

Enforcement

What procedures exist for enforcement of foreign and domestic awards?

With regard to domestic awards, an arbitral award is to be recognised as binding and, upon application to the court, can be enforced. The only exception to this is if the opposing party can convince the court that it should not recognise or enforce the award on the grounds found in section 36 (which mirror the grounds found in the Model Law and the New York Convention).

With regard to foreign awards, section 8 of the International Arbitration Act has the same effect as that described above for domestic awards. The courts do not have discretion to determine whether to recognise and enforce the award, but must do so unless one of the limited grounds provided are satisfied. This reflects the pro-arbitration stance of Australian arbitration law.

Costs

Can a successful party recover its costs?

The costs of an arbitration are at the discretion of the arbitral tribunal, which may make whatever orders it sees fit in this regard. In practice, many arbitral rules provide guidance on the considerations that the tribunal should have in mind when making such orders.

Law stated date

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28 April 2020