Arbitration in Australia and ACICA

Georgia Quick, Partner, Sydney and Lorraine Hui, Senior Associate, Sydney

Speedread

International arbitration in Australia is a growth area. In this feature article we look at the factors which have contributed to the increase in the number of international arbitrations seated in Australia and parties choosing to arbitrate under the auspices of the Australian Centre for International Commercial Arbitration (ACICA). We also highlight the particular issues parties need to bear in mind when agreeing to arbitration in Australia.

Why arbitrate in Australia and ACICA?

Australia has consistently had a reputation for being a safe, neutral seat for arbitration, supported by a stable political environment, a well-developed and independent legal system and a pool of sophisticated arbitrators and counsel, with a deep understanding and appreciation of issues prevalent in the Australasian landscape. The Australian International Disputes Centre based in Sydney has provided a world-class venue for arbitrations since opening its doors in 2010.

Furthermore, not only is Australia a signatory to the New York Convention,⁽¹⁾ it has also enacted legislation - the International Arbitration Act 1974 (Cth) (IAA) - which gives effect to the 2006 version of the UNCITRAL Model Law on International Commercial Arbitration. Since undergoing significant amendments in 2010, the IAA now contains important provisions on obtaining from, and enforcing interim measures made by, the arbitral tribunal, confidentiality of information relating to the arbitral proceedings, and consolidation of two or more arbitrations.

The Australian courts have also demonstrated a good track record of enforcing arbitral agreements and awards. Notable examples include: TCL Air Conditioner (Zhongshan) Co Ltd -v- The Judges of the Federal Court of Australia⁽²⁾ where the High Court upheld the constitutional validity of Articles 35 and 36 of the UNCITRAL Model law, and Cape Lambert Resources Ltd -v- MCC Australia Sanjin Mining Pty Ltd⁽³⁾ which upheld the decision to stay proceedings in favour of the parties' agreement to submit disputes to arbitration.

Adding to the appeal of arbitrating in Australia is the availability of an institution with a set of rules which are at the forefront of international best practice. Amendments made to ACICA's Arbitration Rules in 2011 include the introduction of provisions on seeking urgent interim relief prior to the constitution of the arbitral tribunal (also known as 'emergency arbitration'). ACICA has also played a crucial role in the development of arbitration law in Australia. The ACICA Judicial Liaison Committee, chaired by a former Chief Justice of the High Court of Australia and whose members include arbitration judges, aims to promote uniformity in the rules and procedures relating to arbitration in Australia.

With the combination of an advanced legislative regime supporting arbitration, and a set of modernised institutional rules, it is unsurprising that both Australia as a seat of arbitration, and ACICA as the administering body, have become increasingly popular in recent years.

Furthermore, the number of disputes being arbitrated in Australia or involving Australian parties has particularly grown in the energy and resources sector.

Distinguishing features of ACICA arbitration

While ACICA arbitration shares many of the features commonly found in institutional arbitration, it has some distinguishing features. In particular:

1. Emergency Arbitration: ACICA's Arbitration Rules allow a party to apply to ACICA for emergency interim measures of protection (e.g. orders preventing dissipation of assets) prior to the constitution of the arbitral tribunal. The application for emergency arbitration may be made at the same time, or following the filing of the notice of arbitration. ACICA will use its best endeavours to appoint an emergency arbitrator within one business day. Once appointed, the emergency arbitrator is required to decide the application within five business days. The emergency interim measure is binding on the parties.
2. Confidentiality: Parties and arbitrators are required to keep confidential all matters relating to the arbitration, the award, the materials created for the purposes of the arbitration, and the documents produced by parties to the arbitration. To the extent that a witness is given access to evidence or other information produced in the arbitration, the party calling the witness is responsible for the maintenance of confidentiality by the witness.
3. Interim measures: Parties may apply to the arbitral tribunal for interim measures, including any temporary measure ordering a party to preserve evidence that may be relevant to the dispute, or provide security for legal costs. An interim measure ordered by the tribunal is enforceable under the IAA.
4. Rules of evidence: The arbitral tribunal is required to have regard to, although it is not bound to apply, the International Bar Association Rules on the Taking of Evidence in International Arbitration.
5. Expedited procedure: Separate from the Arbitration Rules, ACICA also has Expedited Arbitration Rules, which provide a simplified arbitration procedure whereby a sole arbitrator determines the dispute based on documents, without the need for a hearing unless exceptional circumstances exist, and renders a final award within four or five months.

Aside from these particular features, ACICA's Arbitration Rules contain provisions on the appointment of arbitrators, similar to many other institutional rules. For example ACICA's Arbitration Rules provide that the parties have 15 days after the receipt by the respondent of the Notice of Arbitration to reach an agreement on the number of arbitrators. In the absence of such agreement, ACICA will determine the appropriate number of arbitrators (usually one or three), taking into account all relevant circumstances. The parties are free to appoint any arbitrator of their choice. Where the parties fail to appoint an arbitrator in time, ACICA will make the appointment.

ACICA arbitration is generally considered a relatively inexpensive option. ACICA's institutional fees consist of a non-refundable registration fee of A$2,500 payable with the notice of arbitration, and an administration fee which depends on the amount in dispute. The maximum administration fee payable is capped at A$99,000. Arbitrators are generally remunerated on the basis of an hourly rate. This is in contrast to some other institutions, such as the Singapore International Arbitration Centre, where arbitrators charge a fixed fee based on the amount in dispute.

Issues when arbitrating in Australia

We highlight below some issues which parties may wish to consider when arbitrating in Australia, or when entering into arbitration agreements providing for arbitration in Australia.

1. Domestic and international arbitration regimes: There are separate statutory regimes for domestic arbitrations (governed by State and Territory legislation) and international arbitrations (governed by the IAA, which is Commonwealth legislation). As noted above, the IAA adopts the UNCITRAL Model Law. The State and Territory legislation adopts many (although not all) of the provisions of the UNCITRAL Model Law as well.
2. Opt in and opt out provisions: The IAA contains a number of optional provisions. Examples of "opt in" provisions (i.e. provisions which apply only if the parties have so agreed) include the requirement to treat confidential all matters relating to the arbitration, and the ability of a party to apply for consolidation of two or more arbitrations. Examples of "opt out" provisions (i.e. provisions which apply unless the parties have agreed they will not apply) include the ability of a party to apply to court to issue a subpoena, and the power of the arbitral tribunal to continue proceedings and render an award even if a party fails to appear.
3. Arbitrability: Certain disputes are not arbitrable as a matter of Australian law. For example, there is legislation voiding arbitration clauses in insurance contracts, although this does not prevent parties from agreeing to arbitrate after a dispute arises.
4. Similarities with court processes: There may be a degree of inclination on the part of arbitration practitioners to mould the arbitration process to reflect court procedure, which they are accustomed to and familiar with. This may include importing into the arbitration features of litigation in Australia such as discovery of documents, representation by barristers and cross-examination of witnesses.
5. Med-arb: Med-arb is a hybrid process of mediation and arbitration. It involves the mediator trying to facilitate a negotiated resolution between the parties and, if the mediation fails to achieve a settlement, the mediator proceeds to act as arbitrator to settle the parties' dispute. While med-arb has gained some momentum in Asia, there has been little uptake in Australia.

For more information about arbitration in Australia and ACICA, see the chapter Ashurst wrote for the International Comparative Legal Guide, 2013.

Please click on the links below for the other articles in the November 2013 Arbflash:

• Anyone for baseball? The rise of "baseball arbitration" in FRAND patent disputes
• "Public policy of India" - not an easy excuse any more
• English High Court decision highlights the need for caution when drafting for expert determination
• Australian Federal Court enforces LMAA award
• South Korea: Two arbitral awards refused enforcement this year
• International news

⁽¹⁾ _{United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958.}
⁽²⁾ _{[2013] 87 ALJR 410.}
⁽³⁾ _{[2013] WASCA 66.}