International Commercial Arbitration 101 PDF

International Commercial Arbitration 101 With the increasing in foreign courts. Should a final and binding What is international determination to a dispute be required, commercial arbitration? internationalisation o...

International Commercial Arbitration 101 With the increasing in foreign courts. Should a final and binding What is international determination to a dispute be required, commercial arbitration? internationalisation of business, the general global consensus is that more clients are engaging in arbitration is the most effective process Arbitration is a process by which parties due to the enforceability of arbitral awards. agree to have their disputes determined cross-border commercial activities. Transactional lawyers need to understand by a neutral third party, namely an arbitrator If your clients are involved in transactions this, and ensure that the contracts they are or arbitral tribunal, in the form of a final and with any foreign element, they need to drafting contain arbitration clauses. To fail binding award. be aware of the alternative dispute to do so could mean that clients are left An arbitration is commercial when it arises resolution mechanisms available so that with no effective process to enforce their out of a relationship of a commercial they can avoid the prospect of litigation substantive rights. nature.1 The Model Law notes that the 16 PROCTOR | December 2017 back to contents  Arbitration Russell Thirgood and Erika Williams share the basics of international commercial arbitration, from start to finish. term ‘commercial’ should be given a wide International Arbitration Act 1974 (Cth) (IAA) legislative standards for the recognition interpretation. which is based on the UNCITRAL Model Law. and enforcement of arbitration agreements An arbitration is international if the parties and awards. At the time of writing, 157 to an arbitration agreement have their places Why choose arbitration? countries were party to the New York of business in different countries or if the Convention, meaning that if your client There are a number of features which make place of arbitration or a substantial part of international arbitration appealing but, by obtains an arbitration award in a ‘convention the obligations of the commercial relationship far, one of the most important features is country’, that award should be capable is in a country outside that of the place of the enforceability of the arbitration award. of enforcement in the courts of the 157 business of the parties.2 The Convention on the Recognition and convention countries. This is in stark contrast The legislative framework supporting Enforcement of Foreign Arbitral Awards (the to the 36 countries with which Australia has international arbitration in Australia is the New York Convention) provides common reciprocal recognition of court judgments. back to contents PROCTOR | December 2017 17 Another key feature of arbitration is How to enforce an confidentiality. Because arbitration is a arbitration agreement private dispute resolution mechanism, it is generally accepted that it is confidential. This If your client has an arbitration agreement means that if your client finds themselves in and another party attempts to commence a contested legal battle, they do not need to court proceedings, it should be relatively have dirty laundry aired in court where media straightforward to apply for a stay of that or anybody can observe the proceedings. action and have the matter referred to Another feature is the ability to avoid Bonus content arbitration. Australian courts are known litigation in a foreign jurisdiction. By choosing To read the full version for holding parties to their bargain and will arbitration, parties can agree to have their take a ‘broad, liberal and flexible approach’ of this article, please visit to interpreting language used in a dispute disputes determined under the supervision of the law of a neutral third country and avoid medium.com/qldlawsociety resolution clause.3 encounters with unfamiliar legal systems. How to enforce an arbitral award How to choose arbitration e. seat of the arbitration – the seat of The process of enforcing an award in the arbitration is the jurisdiction which Parties can refer disputes to arbitration by Australia should also be straightforward, oversees the process of the arbitration. including a simple arbitration clause in their with enforcement being the default position agreement. Another option is for parties to In addition to the basic elements set out subject to certain limited exceptions. The agree to refer existing disputes to arbitration. above, the parties to a contract can be court may only refuse to enforce an award Some of the basic elements to set out in the creative and tailor an arbitration process if a party proves to the satisfaction of the arbitration clause can include: that is efficient and cost effective. For court that:4 instance, they may decide to place limits a. selection of arbitration rules for the on disclosure, hearing time and even a. a party was under some incapacity at the conduct of the arbitration recoverability of legal costs. Generally, the time the arbitration agreement was made b. selection of an arbitration institute more thought that is given to the arbitration b. the arbitration agreement is not valid to administer the arbitral process clause at the beginning, the better and under the law of the agreement c. number of arbitrators – typically more appropriate the dispute resolution c. a party was not given proper notice one or three process will be should it be needed. of the arbitration proceedings or was d. language of the arbitration otherwise unable to present its case General Costs Mediation costing Assessment services services Kerrie Rosati and Leanne Francis are our court appointed costs assessors and are available to assess costs in all types of disputes including solicitor/client assessments and complex litigation matters. 18 PROCTOR | December 2017 back to contents  Arbitration d. the award deals with a subject best that such applications be brought matter beyond the scope of the in appropriate courts and on an ex parte arbitration agreement basis. Arbitration legislation based on the e. the composition of the arbitral UNCITRAL Model Law will generally provide tribunal was not in accordance for these interim measures. with arbitration agreement What now? f. the award is not yet binding on the parties or has been set aside in the law of the The dispute resolution provisions of country in which it was made contracts involving a foreign element need g. the subject matter is not capable of to be carefully considered. All too often, settlement by arbitration; or such clauses are given inadequate attention h. to enforce the award would be contrary during the negotiation of contracts, and to public policy. boilerplate jurisdiction clauses are inserted, which will destine any dispute to litigation The IAA further clarifies what would be in the nominated jurisdiction. Parties to contrary to public policy by stating that the such contracts would be better served by enforcement of a foreign award would be nominating international arbitration as their contrary to public policy if the making of the dispute resolution mechanism. award was affected by fraud or corruption, or a breach of the rules of natural justice The choice of forum and process is in your occurred in connection with the making client’s hands when arbitration is selected of the award. as opposed to such matters being potentially dictated by a foreign court. Notes When it comes to enforcement, there are 1 Footnote to Article 1(1) of the United Nations a number of strategic matters that a client Commission on International Trade Law needs to consider with its legal advisors. (UNCITRAL) Model Law on International Obviously, the enforcement process must Commercial Arbitration (1985), with amendments take place in a jurisdiction where the award as adopted in 2006 (Model Law). Russell Thirgood is an arbitrator and partner at 2 Article 1(3) of the Model Law. debtor has sufficient assets to meet the McCullough Robertson Lawyers. Erika Williams 3 Fitzpatrick v Emerald Grain Pty Ltd award. In addition to this, the client should is senior associate at McCullough Robertson WASC 206. consider bringing freezing orders to ensure Lawyers and a member of the Alternative Dispute 4 IAA s 8. that assets are not relocated and it is often Resolution Committee. back to contents PROCTOR | December 2017 19