Uniform arbitration laws now in force throughout Australia: The ACT Commercial Arbitration Act commences
Overview of changes in the ACT
What you need to know
Following the commencement of the Commercial Arbitration Act 2017 (ACT) on 1 July 2017, all Australian States and Territories have now adopted the Model Law for domestic commercial arbitration.
The Commercial Arbitration Act 2017 applies to all arbitration agreements, including those entered in prior to the commencement of the Act, other than those that are presently in dispute before a constituted tribunal.
Parties that have selected the ACT as the seat of their arbitration should be aware that:
- an opt out confidentiality regime will now apply;
- their ability to bring an appeal on points of law will be reduced and subject to a time limitation;
- written consent from all parties will be required if an arbitrator is to continue to act following a mediation that the arbitrator has conducted; and
- the tribunal has greater powers in respect of costs and interest.
Overview
The ACT Parliament recently enacted the Commercial Arbitration Act 2017 (ACT) (CAA 2017). This Act is the last of a suite of uniform Arbitration Acts adopted across all Australian States and Territories for domestic commercial arbitration.
The CAA 2017 commenced on 1 July 2017 and replaced the existing Commercial Arbitration Act 1986 (ACT) (CAA 1986). It applies to all arbitration agreements whether or not they were entered into prior to the legislation commencing. The sole exception is for arbitration agreements in respect of which a dispute has arisen and a tribunal is already appointed (CAA 2017, s 201).
This update will briefly discuss the key features of the new ACT legislation and changes from the previous regime. These may be particularly relevant to those parties that previously selected the ACT as an arbitral seat to access features of the CAA 1986.
Key features of in the Commercial Arbitration Act 2017 (ACT)
Confidentiality Regime
Confidentiality of arbitrations in Australia has been a contentious issue since the decision of the High Court in Esso Australia Resources Ltd. v. Plowman (1995) 183 CLR 10, which found that submission to arbitration did not, of itself, imply a term of confidentiality. Consistent with the International Arbitration Act 1974 (Cth) and the other Commercial Arbitration Acts, Section 27E-H of the CAA 2017 creates an 'opt-out' confidentiality regime that will apply to arbitration in the ACT. This is a significant improvement on the CAA 1986, which did not address the confidentiality of arbitration proceedings.
Obligations on litigants to reduce cost and delay
Consistent with the legislation across the States and Territories, the CAA 2017 provides that the paramount object of the CAA 2017 is the fair and final resolution of commercial disputes without unnecessary delay or expense (see CAA 2017, s. 1C(2)). To achieve this the CAA 2017 imposes a variety of obligations upon the parties in respect of the conduct of proceedings and grants the tribunal broad powers to control the proceedings (including the dismissal of a claim for failure to expeditiously conduct proceedings) (CAA 2017, ss. 24B, 25). However, in the context of private arbitral proceedings, it remains to be seen how these provisions will be utilised in practice.
Adoption of the UNCITRAL Model Law
Other changes brought about by the adoption of the Model Law include:
- a shift in balance between the roles of the court and tribunal in the arbitration process towards a non-interventionist approach, where the powers of the court are restricted to those necessary to support an arbitration;
- a more streamlined process in respect of tribunal appointment; and
- greater ability to refer to authority from Model Law jurisdictions.
Simpler enforcement
Under the CAA 1986, leave of the court was required to enforce an arbitral award (CAA 1986, s. 33). Under the CAA 2017, leave is no longer required and the court is required to enforce the award upon application in writing unless the grounds for refusing enforcement can be established (CAA 2017, s.35 - 36).
A similar mechanism exists in respect of interim orders (CAA 2017, s. 17H, 17I).
Key changes from the Commercial Arbitration Act 1986 (ACT)
The new Act has very little in common with its predecessor, the CAA 1986, which it replaces in its entirety. Parties that have selected arbitration in the ACT as their preferred dispute resolution mechanism should be aware of the following differences.
Narrower Appeal Rights - Appeal on points of law
The CAA 2017 retains a right to appeal to the Supreme Court on questions of law arising out of the award. However, the approach to appeals in the CAA 2017 is restrictive.
An appeal may only be made where the parties agree to it and the court grants leave.
Leave may only be granted where the court is satisfied that:
- the determination of the question will substantially affect the rights of one or more of the parties;
- the question was before the tribunal;
- the decision is obviously wrong, or of general public importance and open to serious doubt; and
- it is just and proper in all circumstances for the court to determine the question (CAA 2017, s. 34A(3)).
The CAA 2017 also imposes a 3 month time limit from award on appeals.
The new requirement to 'opt in' to appeals on points of law may seem unfair to parties that entered into an arbitration agreement whilst the CAA 1986 was in force. This is because, under CAA 1986, appeals were allowed unless the parties had excluded them (ie an 'opt-out' regime) (CAA 1986, s. 38, 40) and so parties would not have expected that they needed to expressly 'opt-in'. The recent case of Ottoway Engineering v ASC AWD Shipbuilder [2017] SASC 69 suggests this seemingly unfair result may be avoided by arguing that, by agreeing to arbitrate in the ACT while the CAA 1986 was in force and not opting-out of appeals, parties may be taken to have implicitly 'opted-in' to appeals on points of law.
Other changes:
- Additional consent requirements for Med-Arb: The CAA 1986 permitted an arbitrator that had conducted mediation between the parties to the arbitration to continue as an arbitrator (CAA 1986, s. 27(2)). The CAA 2017 now requires written agreement of all parties following the conclusion of the mediation (CAA 2017, 27D).
- Interest: The CAA 2017 no longer restricts the award of post award interest to the amount payable on a judgment debt of the Supreme Court. The determination of the rate of interest is left to the tribunal (including whether or not to award compound interest) (CAA 2017 s. 33F, CAA 1986 s .31).
- Subpoenas: Tribunal leave is now required before approaching the court for a subpoena.
- Arbitrators fees: Section 35 of the CAA 1986 previously allowed the court to compel an arbitrator to publish the award despite not having been paid (CAA 1986 s. 35). As part of this power, the court could assess the amount of an arbitrators fees. These provisions are not included in the CAA 2017.
Overall, the adoption of the CAA 2017 and other uniform legislation brings a consistent approach across Australia to domestic commercial arbitration and the adoption of the Model Law. This will be most relevant to those parties that previously had a practice of selecting the ACT for the unique features of the CAA 1986 that are now no longer available.
Authors: Adam Firth, Partner; and Huw Watkins, Associate.
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