Commercial Arbitration

Last verified on Thursday 2nd April 2020

Commercial Arbitration: Australia

Gitanjali Bajaj and Erin Gourlay

DLA Piper

Infrastructure

1. Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?

Australia

Yes, Australia is a state party to the New York Convention. The New York Convention was enacted into Australian domestic law in the International Arbitration Act 1974 (Cth) (IAA) and has been in force in Australia since 24 June 1975.

Australia has not made any declarations or notifications under articles I, X and XI of the New York Convention.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

2. Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?

Australia

Australia is not currently a party to any other bilateral or multilateral convention regarding the recognition and enforcement of arbitral awards.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

3. Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?

Australia

In Australia, international arbitrations are governed by the International Arbitration Act 1974 (Cth) (IAA), which was significantly amended in 2010 and 2015. Pursuant to section 16 of the IAA, the 2006 version of the Model Law has the force of law in Australia. The Model Law is set out in full in Schedule 2 of the IAA.

The IAA supplements the Model Law with additional provisions, such as section 22 which provides that the confidentiality provisions (sections 23C to 23G) apply on an opt-out basis; section 23, which concerns the parties rights to obtain subpoenas; section 18B which expressly disallows ex parte preliminary orders under article 17B of the Model Law and section 19, which clarifies the meaning of the term ‘public policy’ for the purposes of article 34 and 36 of the Model Law.

Domestic arbitrations are governed by various state and territory acts which are modelled on the Model Law.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

4. What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?

Australia

The Australia Centre for International Commercial Arbitration (ACICA) is Australia’s main international arbitration institution. ACICA is seated in Sydney, but also has registries in Victoria and Western Australia. Pursuant to the International Arbitration Regulations 2011 (Cth), ACICA is prescribed as the sole default appointing authority to appoint arbitrators  pursuant to articles 11(3) and 11(4) of the Model Law. As such, ACICA may be asked to appoint arbitrators in international arbitrations seated in Australia where parties have not agreed upon an appointment procedure or where their appointment procedure fails. ACICA has its own arbitration rules, which are based on the UNCITRAL Arbitration Rules, and a model arbitration clause that is suitable for both domestic and international arbitrations.

The Australian National Committee of the International Chamber of Commerce is the Australian arm of the International Chamber of Commerce.

The Australia Chapter of the Chartered Institute of Arbitrators (CIArb) also provides arbitration services and has a cooperation agreement with ACICA.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

5. Can foreign arbitral providers operate in your jurisdiction?

Australia

Yes, there is nothing prohibiting foreign arbitral providers operating in Australia.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

6. Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with, and supportive of, the law and practice of international arbitration?

Australia

Australia does not have a specialist arbitration court. Under section 18(3) of the IAA, the Federal Court of Australia and the various State and Territory Supreme Courts are designated as the competent courts under article 6 of the Model Law.

The Federal Court of Australia has an International Commercial Arbitration sub-area within the Commercial and Corporations National Practice Area. There is a dedicated group of Federal Court judges with special expertise in international commercial arbitration who are allocated international commercial arbitration matters. As such, there is a good degree of familiarity with the law and practice of international arbitration and the Federal Court has generally been supportive of international arbitration and has developed a pro-arbitration jurisprudence.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

Agreement to arbitrate

7. What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?

Australia

The formalities of an arbitration agreement follow the minimal requirement of article 7 (Option 1) of the Model Law. The agreement may take any form but must be in writing. It can also be a clause in a contract, in the form of a separate agreement, appear in an exchange of letters or in pleadings.

Section 3(4) of the IAA provides that an agreement is in writing if:

  • its content is recorded in any form, whether or not the agreement has been concluded orally, by conduct, or by other means; or
  • it is contained in an electronic communication and the information in that communication is accessible so as to be usable for subsequent reference; or
  • it is contained in an 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.

Subject to issues of arbitrability, the type of disputes that are referable to arbitration are limited only by the agreement between the parties. Thus, the agreement can cover future disputes provided this is what the parties agreed to.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

8. Are any types of dispute non-arbitrable? If so, which?

Australia

Generally, disputes involving criminal offences, divorce, custody of children, property settlement, wills, employment grievances, some intellectual property disputes, competition law disputes, and bankruptcy and insolvency cannot be the subject of private arbitration. 

The common element to the notion of non-arbitrability is an element of legitimate public interest in the subject matter that would make the enforceable private resolution of disputes concerning them outside the national court system inappropriate (see Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 238 ALR 457 at [199] – [200]).

Answer contributed by Gitanjali Bajaj and Erin Gourlay

9. Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?

Australia

The general rule 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 his or her authority, binds his or her principal.

Under section 7(4) of the IAA, a non-party to an arbitration agreement can rely on the agreement by claiming ‘through or under’ a party to the arbitration agreement. This has been interpreted broadly, and includes:

  • invoking a derivative cause of action, vested in a party to the arbitration agreement; and
  • where an essential element of the third party’s defence relies on a cause of action or claim of a party to the arbitration agreement (e.g. in a claim for knowing receipt of trust property, the third party’s defence is that the party to the arbitration agreement had not committed a breach of trust) (Rinehart v Hancock Prospecting Pty Ltd [2019] HCA 13).

Answer contributed by Gitanjali Bajaj and Erin Gourlay

10. Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?

Australia

Yes, Australia is one of three jurisdictions in the Asia-Pacific which has adopted limited consolidation provisions into its arbitration law (the others being New Zealand and Hong Kong).

Under section 24 of the IAA, a party to arbitral proceedings may apply to the arbitral tribunal for separate arbitral proceedings to be consolidated on the grounds that:

  • a common question of law or fact arises in all those proceedings;
  • the rights to relief claimed in all those proceedings are in respect of, or arise out of, the same transaction or series of transactions; or
  • for some other reason specified in the application, it is desirable that an order be made.

However, section 24 does not apply automatically and the parties must opt-in for it to apply to their arbitration (see section 22(5) of the IAA).

Answer contributed by Gitanjali Bajaj and Erin Gourlay

11. Is the "group of companies doctrine" recognised in your jurisdiction?

Australia

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 or agency (ie, where a subsidiary company acts as an agent for its parent company).  

Answer contributed by Gitanjali Bajaj and Erin Gourlay

12. Are arbitration clauses considered separable from the main contract?

Australia

Unless the parties express an intention to the contrary, an arbitration clause will generally be treated as separable from the main contract, as reflected in article 16(1) of the Model Law.  As Allsop J stated in Comandate Marine Corp v Pan Australia Shipping (2006) 238 CLR 457 at 512, “the doctrine of separability is not so much a fiction as an approach by the law to accommodating commercial practicality and common sense to the operation of legal rules.“

Answer contributed by Gitanjali Bajaj and Erin Gourlay

13. Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunals jurisdiction and competence?

Australia

Yes. Article 16 of the Model Law, which has the force of law in Australia by virtue of the IAA, provides for the principle of competence-competence and allows arbitrators to rule on their own jurisdiction. Article 16(3) provides that if an arbitral tribunal rules on its competence as a preliminary issue, any party may, within 30 days, request the court to finally rule on that issue. 

Answer contributed by Gitanjali Bajaj and Erin Gourlay

14. Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?

Australia

Australian courts adopt a liberal, pro-arbitration approach to the interpretation of arbitration clauses, construing them by reference to the language used by the parties, in light of the surrounding circumstances and the purposes and objects of the legal instrument in which the clause is contained (Rinehart v Hancock Prospecting [2019] HCA 13). Nevertheless, a clearly worded arbitration clause is always recommended. Parties may also consider whether and to what extent they wish to opt out of any non-mandatory provisions under the IAA, or opt in to any provisions that do not apply automatically (eg, the consolidation provision in section 24 of the IAA).

Answer contributed by Gitanjali Bajaj and Erin Gourlay

15. Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?

Australia

Most arbitrations in Australia are conducted under institutional rules, with the ACICA Rules, SIAC Rules and ICC Rules being popular choices. Specialised industries may choose industry-specific rules, such as the Australian Maritime & Transport Arbitration Commission (AMTAC) Rules or the Perth Centre for Energy & Resources Arbitration (PCERA) Rules. For ad hoc arbitrations, parties typically choose the UNCITRAL Arbitration Rules.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

16. What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.

Australia

Multiparty arbitration can cause procedural complications that need to be considered during the drafting of an arbitration clause. There are no specific provisions or restrictions in the IAA relating to multi-party arbitration agreements. In general, if there are two or more parties to a contract, it is important to ensure that each of the parties, regardless of how many there are, receives equal treatment in the formation of the tribunal and throughout the arbitration.  It may be helpful to agree on a set of arbitration rules which contain provisions dealing with the issues surrounding multi-party and multi-contract disputes. For example, the ACICA Arbitration Rules contain a specific procedure for appointing arbitrators in a multi-party arbitration in article 13. That article provides that the multiple parties are to act jointly when appointing arbitrators, and that if they cannot act jointly, ACICA shall appoint the arbitrators and designate one of them to act as Chairperson.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

Commencing the arbitration

17. How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?

Australia

Arbitral proceedings are commenced in accordance with the relevant procedural rules chosen by the parties. For example, under the ACICA Rules, an arbitration is deemed to commence on the date on which the notice of arbitration or the registration fee is received by ACICA, whichever is the later. Article 21 of the Model Law provides that unless otherwise agreed by the parties, the arbitral proceedings commence on the date on which a request for the dispute to be referred to arbitration is received by the respondent.

In Australia, limitation periods are considered a matter of substantive law and the relevant limitation periods will be those under the law chosen by the parties. As Australia is a federation, each state and territory has its own legislation regarding limitation periods. Under the various state and territory limitation acts, the same limitation periods apply to arbitration as to other legal proceedings (eg, section 70 Limitation Act 1969 (NSW), section 41 Limitation of Actions Act 1974 (Qld), section 28 Limitation of Actions Act 1958 (Vic)).

Answer contributed by Gitanjali Bajaj and Erin Gourlay

Choice of law

18. How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

Australia

Parties are free to choose the substantive law applicable to the dispute and article 28(1) of the Model Law compels arbitral tribunals to decide the dispute in accordance with the law chosen by the parties. Where the parties do not designate a substantive law, article 28(2) of the Model Law requires the tribunal to apply the conflict of laws rules which it considers applicable to determine the substantive law.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

Appointing the tribunal

19. Does the law of your jurisdiction place any limitations in respect of a partys choice of arbitrator?

Australia

No - under article 11(2) of the Model Law, the parties are free to agree on the arbitrators including the number of arbitrators.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

20. Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?

Australia

Under article 11(1) of the Model Law, non-nationals can act as arbitrators in arbitrations held in Australia. In Australia, foreign lawyers working on a ‘fly-in, fly-out basis’ are entitled to come to Australia and act for their clients and provide legal services, including in an international arbitration, for a maximum period of 90 days in any 12-month period.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

21. How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?

Australia

Where the parties fail to determine the number of arbitrators, article 10(2) of the Model Law provides that the number of arbitrators shall be three. If the selection mechanism fails, article 11(3) of the Model Law provides that in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two party-appointed arbitrators shall appoint the third.

If a party fails to appoint the arbitrator within 30 days, or if the two arbitrators fail to agree on a third within 30 days, the appointment can be made by the court or other specified authority. By regulation, the court’s power to appoint arbitrators under the IAA has been delegated to ACICA.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

22. Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?

Australia

Under section 28 of the IAA, arbitrators have immunity for anything done or omitted to be done in good faith in his or her capacity as arbitrator.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

23. Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?

Australia

There is nothing in the IAA relating to payment of arbitrator fees. If the parties choose the ACICA Arbitral Rules to govern the arbitration, Rule 47.1 requires, as soon as practicable after the establishment of the arbitral tribunal, that the parties deposit an equal amount as an advance for the costs of the arbitration including the arbitral tribunal’s costs.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

Challenges to arbitrators

24. On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?

Australia

Under article 12(2) of the Model Law, an arbitrator may only be challenged if circumstances exist that give rise to justifiable doubts as to his or her impartiality or independence, or if he or she does not possess qualifications agreed to by the parties.

Section 18A of the IAA provides that, for the purposes of article 12(2) of the Model Law, there are justifiable doubts as to the impartiality or independence of an arbitrator only if there is a real danger of bias on the part of the arbitrator in conducting the arbitration.

Courts have held that the relevant test for determining whether there is a real danger of bias is whether a fair-minded lay observer might reasonably apprehend that the arbitrator might not bring an impartial mind to the relevant adjudication and determination (Sino Dragon Trading Ltd v Noble Resources International Pte Ltd [2016] FCA 1131. In Sino Dragon, it was insufficient that two of the three arbitrators had worked for an Australian law firm that had previously acted for a company associated with one of the parties.

The IBA Guidelines on Conflicts of Interest are often referred to for guidance on arbitrator challenges although these guidelines are not strictly binding.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

Interim relief

25. What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?

Australia

An arbitral tribunal in Australia may order interim relief under article 17 of the Model Law.  The powers of an arbitral tribunal to award relief under article 17 are wide, and include any temporary measure to:

  • maintain or restore the status quo pending determination of the dispute;
  • take action that would prevent, or refrain from taking action that is likely to cause current or imminent harm or prejudice to the arbitral process itself;
  • provide a means of preserving assets out of which a subsequent award may be satisfied; and
  • preserve evidence that may be relevant and material to the resolution of the dispute.

The Model Law also recognises that even though an arbitral tribunal may have the power to grant interim relief, sometimes recourse to a domestic court is necessary. Under article 17J, courts have the same power of issuing an interim measure in relation to arbitration proceedings. However, courts will generally only grant interim relief in arbitrations where urgent relief is sought: Amcor Packaging (Aust) Pty Ltd v Baulderstone Pty Ltd [2013] FCA 253 at [41], and they will exercise the article 17J power sparingly and only if there are compelling reasons to do so: Cape Lambert Resources Ltd v MCC Australian Sanjin Mining Pty Ltd (2013) 298 ALR 666 at [127]-[129].

Australian courts will order anti-suit injunctions restraining breach of an arbitration agreement (CSR Ltd v Cigna Insurance Australia Ltd). Australian courts will also enforce international arbitration agreements by staying their own proceedings (see, eg, Tanning Research Laboratories Inc v O’Brien).

Answer contributed by Gitanjali Bajaj and Erin Gourlay

26. Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?

Australia

Yes - section 23K of the IAA and article 17E of the Model Law both allow an arbitral tribunal to order security for costs.

Under section 23K of the IAA, the tribunal must not make an order for security for costs solely on the basis that:

  • the party is not ordinarily resident in Australia; or
  • the party is a corporation incorporated or an association formed under the law of a foreign country; or
  • the party is a corporation or association the central management or control of which is exercised in a foreign country.

Under article 17E(1) of the Model Law, an arbitral tribunal may require a party requesting an interim measure to provide appropriate security in connection with the measure, and under article 17E(2), an arbitral tribunal shall require a party applying for a preliminary order to provide security.

 

Answer contributed by Gitanjali Bajaj and Erin Gourlay

Procedure

27. Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?

Australia

The Model Law mandatorily governs the procedure of all international commercial arbitrations seated in Australia. However, parties are generally free to tailor the arbitration procedure to their particular needs. Fundamental principles of due process and natural justice are required to be complied with, and parties cannot derogate from the requirement under the Model Law that parties are treated with equality and are afforded a reasonable opportunity to present their case.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

28. What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?

Australia

Under article 25(b) of the Model Law, if the respondent fails to communicate its statement of defence, the arbitral tribunal shall continue the proceedings without treating such failure as an admission of the claimant’s allegations. Article 25(c) allows the arbitral tribunal to continue the proceedings and make an award on the evidence before it even if a party fails to appear at a hearing or produce documentary evidence.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

29. What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Arbitration generally be taken into account?

Australia

Under article 19 of the Model Law, arbitral tribunals have the power to determine the admissibility, relevance, materiality and weight of the evidence, subject to the mandatory rules of procedural fairness and any specific rules agreed by the parties (eg, through the adoption of arbitration rules that contain specific provisions on evidence).

In practice, evidence is often given in the form of witness statements, which are subsequently orally verified at the evidentiary hearing, followed by cross-examination and re-examination of the witness.

Section 23J of the IAA allows an arbitral tribunal to make an order allowing the tribunal, a party to the proceedings, or an expert to inspect, photograph, observe or conduct experiments on evidence that is in the possession of a party to the arbitral proceedings.  The arbitral tribunal also has the power to appoint experts under article 26 of the Model Law.

The IBA Rules on the Taking of Evidence in International Arbitration are frequently referred to.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

30. Will the courts in your jurisdiction play any role in the obtaining of evidence?

Australia

Article 27 of the Model Law provides that an arbitral tribunal or a party (with the tribunal’s approval) may request assistance in the taking of evidence from a competent court, which may execute the request according to its rules on taking evidence.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

31. What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?

Australia

Arbitral tribunals have broad powers under article 19 of the Model Law to conduct the arbitration including in relation to document production, however, tribunals have limited powers of compulsion under the IAA and Model Law to require parties to produce documentary evidence. Arbitral tribunals do tend to have regard to international standards as reflected in the IBA Rules on Taking Evidence

Parties can, with the tribunal’s permission, apply to the court to obtain subpoenas or other orders under sections 23 and 23A of the IAA. Section 23B of the IAA provides that if a person defaults in failing to attend for examination or to produce a document ordered by a court, the arbitral tribunal may continue with the proceeding, and make an award on the evidence before it.

Australian courts have generally been willing to issue subpoenas in aid of international arbitration seated in Australia (see, eg. UDP Holdings Pty Ltd v Esposito Holdings Pty Ltd [2018] VSC 316).

Answer contributed by Gitanjali Bajaj and Erin Gourlay

32. Is it mandatory to have a final hearing on the merits?

Australia

Under article 24(1) of the Model Law, arbitral tribunals can conduct proceedings on the papers subject to any contrary agreement of the parties. In practice, oral hearings are usually held unless the parties opt to proceed with the arbitration on a documents-only basis.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

33. If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?

Australia

Yes, there are no limitations as to where hearings and procedural meetings must take place.  In practice, procedural meetings are often conducted electronically to accommodate foreign parties and arbitrators.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

Award

34. Can the tribunal decide by majority?

Australia

Yes – article 29 of the Model Law provides that in arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made, unless otherwise agreed by the parties, by a majority of all its members. However, questions of procedure may be decided by a presiding arbitrator, if authorised to do by the parties or all members of the tribunal.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

35. Are there any particular types of remedies or relief that an arbitral tribunal may not grant?

Australia

There are no specific limits on the types of remedies that can be awarded by an arbitral tribunal.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

36. Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?

Australia

Yes, there are no specific restrictions on giving a dissenting opinion. 

Answer contributed by Gitanjali Bajaj and Erin Gourlay

37. What, if any, are the legal and formal requirements for a valid and enforceable award?

Australia

Article 31(1) of the Model Law provides that the award shall be made in writing and shall be signed by the arbitrators. Where there are more than one arbitrator, only the majority is required to sign, provided that the reason for any omitted signature is stated. The award is also required to state its date and the place of arbitration under article 31(3).

Under article 31(2), the award must state the reasons upon which it is based, unless the parties have agreed otherwise. In Westport Insurance Corporation v Gordian Runoff Ltd [2011] HCA 37, the High Court of Australia rejected the argument that an arbitrator’s reasons should be of a judicial standard. However, failure to provide sufficient reasons in an arbitral award may leave the award open to challenge: see Ottoway Engineering Pty Ltd v ASC AWD Shipbuilding Pty Ltd [2017] SASC 69.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

38. What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?

Australia

Excessive delay in issuing the award may result in the award being set aside, but only where the delay has had an actual or potential impact on the decision-making process: Structural Monitoring Systems Ltd v Tulip Bay Pty Ltd [2019] WASCA 16.

Under article 33(1) of the Model Law, parties have 30 days from receipt of the award to request any corrections to or interpretations of the award by the arbitral tribunal.

The arbitral tribunal must make any correction or issue any interpretation deemed necessary within 30 days of receipt of the request; whether by amending the original award itself or by way of a separate memorandum.

Article 34(3) of the Model Law provides that an application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the award or, if a request had been made under article 33, from the date on which that request had been disposed of by the arbitral tribunal.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

Costs and interest

39. Are parties able to recover fees paid and costs incurred? Does the "loser pays" rule generally apply in your jurisdiction?

Australia

Article 27(1) of the Model Law provides that the costs of an arbitration shall be at the discretion of the arbitral tribunal. However, the general position in Australia is that costs follow the event, with the unsuccessful party paying the costs of the successful party.  The general rule may be displaced in certain circumstances, such as where the successful party fails on a particular issue or conducts itself in a manner that justifies it being deprived of costs.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

40. Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?

Australia

The arbitral tribunal has the power to make an order for interest for both pre-award and post-award periods (see articles 25 and 26 of the Model Law). The tribunal may set a “reasonable rate” of interest.

Generally, in the absence of agreement to the contrary, the rate of interest will be the maximum rate prescribed for judgment debts.  In the Federal Court of Australia, the pre-judgment interest rate is currently 5.5 per cent and the post-judgment interest rate is 7.5 per cent.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

Challenging awards

41. Are there any grounds on which an award may be appealed before the courts of your jurisdiction?

Australia

The grounds on which an award may be appealed are set out in article 34 of the Model Law, and include:

  • incapacity of a party or invalidity of the arbitration agreement;
  • proper notice of the appointment of an arbitrator or of the arbitral proceedings was not given, or the party was otherwise unable to present its case;
  • the dispute falls outside the arbitration agreement;
  • the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties;
  • the subject matter of the dispute is not capable of settlement by arbitration; and
  • the award is in conflict with public policy.

An award will be in conflict with the public policy of Australia if it was affected by fraud or corruption or breaches the rules of natural justice: section 19 of the IAA. Australian courts have taken a pro-arbitration approach to setting aside awards, and will generally only do so where there is “demonstrated real unfairness or real practice injustice” in how the dispute was resolved (TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd [2014] FCAFC 83).

Denying a party a reasonable opportunity to present its case can be a breach of the rules of natural justice that may warrant setting aside an arbitral award, provided real unfairness has resulted: Hui v Esposito Holdings Pty Ltd [2017] FCA 648. Real unfairness means there was a realistic rather than fanciful possibility that the award may not have been made or may have differed in a material respect but for the denial of the opportunity (Hui v Esposito). In contrast, in Mango Boulevard Pty Ltd v Mio Art Pty Ltd [2018] QCA 39, the court found that there had been no real unfairness or practical prejudice to a party in circumstances where the arbitrator decided the case using a valuation methodology not advance by either party’s experts, where the party challenging the award had chosen not to recall its expert witness to comment on that methodology.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

42. Are there any other bases on which an award may be challenged, and if so what?

Australia

No, there are no other bases on which an award may be challenged.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

43. Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?

Australia

The courts have not ruled on the issue of whether the parties to an arbitration agreement may exclude the grounds for challenging an award under article 34 of the Model Law.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

Enforcement in your jurisdiction

44. Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?

Australia

Under article V(1)(e) of the New York Convention (which is incorporated in the IAA), Australian courts have discretion to enforce an award that has been set aside at the seat of arbitration. As Allsop CJ noted in Ye v Zeng [2015] FCA 1192, “‘it does not follow from the fact that an award is set aside in the seat country that the award will not be enforced elsewhere.”

Answer contributed by Gitanjali Bajaj and Erin Gourlay

45. What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?

Australia

The general approach of the Australian courts has been to narrowly interpret the grounds for resisting enforcement of an arbitral award (see IMC Aviation Solutions Pty Ltd v Altain Khuder LLC [2011] VSC 248). Once the award creditor has established that there is a foreign award made pursuant to an arbitration agreement, and that the person against whom the award was made was also a party to that arbitration agreement, the onus shifts to the award debtor to establish the grounds for non-enforcement.

In IMC Aviation Solutions, the Court refused to enforce the part of the award that ordered a payment from a non-party to the arbitration agreement. However, in Sauber Motorsport AG v Giedo Van Der Garde BV [2015] VSCA 37, the Court enforced the arbitral award even though it would result in one driver, who was not a party to the arbitration, not being able to participate in the 2015 Formula One season. The Court held that the fact that the non-party’s rights would be affected by enforcement did not necessarily mean that enforcement was against public policy.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

46. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

Australia

The Foreign States Immunities Act 1985 (Cth) (FSIA) provides for immunity from jurisdiction unless certain statutory exceptions apply, including that the actions of the foreign state were commercial. Further, section 17 of the FSIA provides that where a foreign state is party to an arbitration agreement, the foreign state is not immune in court proceedings to set aside the award.

The FSIA also provides foreign states with immunity from execution unless the state has waived immunity or the property is being used for commercial purposes.

In Firebird Global Master Fund II Ltd v Republic of Nauru [2015] HCA 43, the High Court considered the commercial transaction exception to jurisdiction and the commercial use of property exception in the FSIA. In the context of an application for registration of a foreign judgment, the High Court held that Nauru was not immune from the jurisdiction of Australian courts as the transaction was commercial. However, it upheld Nauru’s claim to immunity from execution against its property, which included bank accounts held in Australia, as those accounts were not used for commercial purposes.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

Further considerations

47. To what extent are arbitral proceedings in your jurisdiction confidential?

Australia

For arbitrations commenced after 2015, the default position is that arbitrations will be confidential unless the parties otherwise agree (section 23C of the IAA). The exceptions to this rule are set out in section 23D of the IAA and include:

  • where all parties consent to the disclosure;
  • where the disclosure is made to a party’s professional or other adviser;
  • the disclosure is necessary to ensure that a party to the arbitral proceedings has a full opportunity to present the party’s case;
  • the disclosure is necessary for the establishment or protection of a party’s legal rights in relation to a third party;
  • the disclosure is necessary for the purpose of enforcing an arbitral award;
  • the disclosure is required by the IAA or the Model Law;
  • the disclosure is in accordance with an order made or a subpoena issued by a court; and
  • the disclosure is required by a competent regulatory body, and the person making the disclosure gives written details of the disclosure, including an explanation of reasons for the disclosure, to the parties and the tribunal.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

48. What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?

Australia

Yes, evidence and pleadings are considered confidential under the IAA. Confidential information is defined broadly in section 15 of the IAA, and includes:

  • all pleadings, submissions statements or other information supplied to the arbitral tribunal by the parties;
  • any evidence, whether documentary or otherwise, supplied to the arbitral tribunal;
  • transcripts of oral evidence or submissions given before the arbitral tribunal; and
  • any rulings and awards made by the arbitral tribunal.

Further, the actual hearing itself is also likely to be considered confidential even though it is not included in the definition of "confidential information": see Esso v Plowman (1995) 183 CLR 10.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

49. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

Australia

Australian legal practitioners are bound by the Legal Profession Uniform Rules in each State and Territory, which cover both court and arbitral proceedings. The Rules require legal practitioners to maintain a paramount duty to the court (or tribunal) and the administration of justice. Foreign legal practitioners would be bound by the ethical rules that apply in their own jurisdiction.

In respect of arbitrators, article 12 of the Model Law requires an arbitrator to "disclose any circumstances likely to give rise to justifiable doubts as to his [or her] impartiality or independence", both when approached in connection with possible appointment as an arbitrator and "from the time of his [or her] appointment and throughout the arbitral proceedings".

Answer contributed by Gitanjali Bajaj and Erin Gourlay

50. Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?

Australia

No, the IAA, which incorporates the Model Law, governs all international arbitrations seated in Australia. Under article 19 of the Model Law, parties are free to adopt any rules they wish to govern the proceedings, failing which, the tribunal may conduct the arbitration in such manner as it considers appropriate.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

51. Is third-party funding permitted in your jurisdiction? If so, are there any rules governing its use?

Australia

Litigation funding is lawful in Australia and very common in practice. There are no formal rules governing third-party funding in arbitration. Australian lawyers are prohibited from entering into contingency fee arrangements with clients, although this prohibition does not apply to litigation funders. Lawyers can, however, enter into conditional costs agreements, under which an uplift is calculated by reference to the legal fees charged, as opposed to the amount of the judgment or award.

Answer contributed by Gitanjali Bajaj and Erin Gourlay

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