Arbitration: A Legal Overview PDF

**Arbitration** Arbitration is a private process whereby a panel of arbitrators make a binding decision after receiving evidence (either documents or in a hearing) about a dispute. It is through an agreement typically Party agreement/autonomy is fundamental Typically arises out of commercial cont...

**Arbitration** Arbitration is a private process whereby a panel of arbitrators make a binding decision after receiving evidence (either documents or in a hearing) about a dispute. It is through an agreement typically Party agreement/autonomy is fundamental Typically arises out of commercial contracts. Arbitration has been slower to develop in Australia than in other areas such as Singapore There was a report in 2020 called the Australian Arbitration Report (see website ACIC) reported on projects involving Australian parties, specialists ect (anything with an Australian link) of over 25 billion dollars Energy and resources are one of the most common users of arb followed by construction (high value projects) There are also low end disputes (first one Erika was involved in was for the construction of a boat) Investor state arbitration can bring a claim against a foreign country if that country has breach their obligations under an agreement (called investor-state arbitration) ### Key features of arbitration Enforceability, confidentiality, parties choose own arbitrator, neutral forum, more informal and flexible (can be more efficient),... The New York Convention: signed in 1958 is one of the most important trade treaties. Widely recognised as a foundational instrument of international arbitration. Requires courts to recognise arbitration awards as enforceable etc. The entirety of the Americas, Europe are contracting states. There are only 21 left who are not. There are 34 jurisdictions in which you can enforce the judgement of an Australian court, in contrast to the majority of the world where arbitration is enforceable If there is a contract with an international element, it would be negligent not to have an arbitration clause ### Other considerations (potential negatives) Costs, who are the parties, the risk of fractured dispute resolution, arbitrator's powers more limited, speed, limited rights of appeal/grounds for challenge You can only bring arb against a party who is party to that agreement. If there is a parent who is in agreement... you must be careful who is party to the contract and who you can bring into the arbitration (parent guarantees) Mennel dispute about the shareholder agreement which contained an arbitration clause, but the employment agreement did not. The dispute was fractured between two forums Arbitrators are mindful that parties must have an equal opportunity to present their case. Procedural fairness is a must. The process is up to the parties, as is the pace of the dispute. In the large disputes, they can last almost a decade. Limited rights of appeal means that there are few... most of the time courts will uphold an award, except if you can establish a few set grounds of appeal Arbitration is by default confidential. This can be beneficial for CEOs and companies etc. Kings Gate in Thailand is suing in Thailand and have to report the dispute to the ASX each year. That is one way in which some arb are not confidential. The ability to select your own arbitrator is key to the process. You might need a specific expertise e.g. engineering, maritime etc. You can agree to exclude or limit a number of processes which are required by courts (e.g. disclosure) ### Overview of arbitration -- The Australian Context *International Arbitration Act 1974* (Cth) implementing: the NY convention, UNCITRAL Model Law (s 16) and ICSID Convention (settlement of investor state arbitration) On the domestic level, all states and territories have adopted Domestic Commercial Arbitration Acts which reflect the Model Law. This means all cases which have adopted the Model Law can refer to decisions in each state for precedential value All arbitration decisions fall under the Commercial List in QLD Federal and State Courts have specialist arbitration lists Australian Centre for International Commercial Arbitration (ACICA). They focus on international arb and look after domestic cases where it is agreed as such The resolution institute also has a determinative branch. Erika is chair of the arb sub committee ### Types of Arbitration International (parties from different countries, subject matter from different countries, project in ) Domestic (not an Arb to which a Model Law applies) Institutional v ad hoc (institutional does not mean an institution decides the matter, they just provide administrative assistance. They have rules which the parties can follow and if the parties don't agree on the arb the institution can appoint. They can fix fees) All fees are 50/50 until a decision but the claimant pays the registration fee at the beginning (can be ordered back through costs) ### Investor state arb Bilateral Investment Treaties and some free trade agreements Australia's involvement so far: Philip Morris, Clive Palmer suite of claims Philip Morris claimed against Australia under the Hong Kong BIT for introduction of plain packaging legislation. They intentionally restructured into HK for this sole/principal purpose. The claims were held unenforceable Clime Palmer used his newly established SG company is suing Australia for breaches of the Asian \_\_ Free Trade agreement. This is in respect of the 2020 WA decisions related to the Balmoral Coal Mine. The Commonwealth is arguing that he established this company for the sole purpose of using the treaty. Not yet decided Potential Future Investor-State Disputes: APR wind turbines, NuCoal cancellation of mining licences APR: 60 million dollars of wind turbines were leased to \_\_ and the US company did not register the interest on the PPSR that they held the interest. The WA company went insolvent and the 64 million vested in the WA company. APR wrote to the WA Government that they will sue. WA responded that there was no arbitration clause in the US-Aus Free Trde agreement ### Australians as claimants in ISDS Matters White Industries v The Republic of India: W secured a 4 mill arb award against Coal India (state owned). They tried to enforce the award in Indian Courts between 2004-2009. White then sued the \_\_ for failure to provide effect means of asserting claims and enforcing rights Tethyan Copper Company Limited v Islamic Republic: Pakistan granted T a mining lease. When P found out T was doing well, they cancelled the mining lease. T sued for breach of obligation not to expropriate. T won and was granted 8 billion. They settled by P reinstating the mining licence Western African Aquaculture v Gamia: related to a tiger prawn farm. ### Drafting Arbitration Clauses Keep it simple Key elements: broad definition of dispute, arbitration institution/rules, seat, language, number of arbitrators There is no need for exclusive jurisdiction clause A broad definition of dispute ensures that awards are enforceable. The court of the seat is the relevant court you would go to. It does not need to be the place of the dispute. It just means that they would go to the courts of that region to enforce/subpoena. It is the procedural supervising court. Typically, it is the law governing the contract The number of arbitrators as one is only good if you think it won't be a big dispute, however, more are required if there is the potential for it. To avoid this issue, you can rely on the ACICA Arbitration Rules ### Enforcing Arbitration Agreements Arbitration agreement must be in writing Where proceedings are commenced in court and the proceedings involve the determination of a matter that is capable of settlement by arbitration pursuant to the arbitration agreement the court shall stay the proceedings and refer the parties to arbitration The court shall not refer the parties to arbitration if the agreement is null and void, inoperative or incapable of being performed ### Robotunits v Mennel \[2015\] VSC 268 Each party irrevocably and unconditionally submits to arbitration in accordance with the arbitration guidelines of the Law Institute of Victoria There was no such thing as the Law institute of Victoria Each party agreed that the clause was pathological, R conceded that the clause could be rendered \_\_\_ by a court because of the strong words used The judge determined that the parties had to agree on the seat and the rules of the arbitration. References to Victoria mean they might agree that the seat is Victoria This shows that the courts in Australia are very pro-arb and will go to great lengths to uphold arb clauses ### HKL Group Co Ltd v Rizq International Holdings Pte Ltd Clause contained reference to the 'Arbitration Committee at Singapore' which does not exist Even though there is no such entity, the court held that if another institution in SG agreed to conduct the arbitration the clause was operable ### Lee v Lin \[2022\] QCA 140 Clause contained a reference 'for final settlement by a single arbitrator appointed in accordance with the Rules of the ACDC' Issue was that \_\_\_ ### Arbitration Procedure How to commence an arbitration, how to respond to a notice of arbitration, how to appoint an arbitrator... 9/10 you will look to an institution such as ACICA SIAC, ICC, HKIAC, LCIA etc. Usually, to commence you file a notice of arbitration. The rules you are using stipulate what you need to include. The ACICA rules require that the form contain certain things, see their form online. Even if you do not participate, you have to issue a response to arbitration. The claimant cannot get summary judgement like in court, they still have to prove their case One of the grounds for enforcement is failure to properly inform of the arbitration in the first place Once a dispute is filed with ACICA the parties have 41 days to agree on the arbitrator. It is common to specify the level of experience they are looking for or the type of speciality The arbitrator will need to know the other arbs names, parties names and solicitors names as they might have conflicts Once an arb is appointed, they will write to the parties to organise a case management conference which will establish the procedure of the arbitration In arb memorial style pleadings are encouraged which are more narrative than court style pleadings If one party requests a hearing, you have to hold a hearing usually Whatever is agreed by the parties is documented in PO1 which sets out how the entire process will be run. It usually has a who set of instructions on how things will be done For risk of procedural fairness, an arbitrator is more likely than not to award extensions of time Awards must be in writing, signed, dated, place of arbitration and reasons for the award ### Enforcing Arbitration Awards The court may only refuse to enforce an award if: - A party was under some incapacity at the time the arbitration agreement was made - Arb agreement not valid under the law of the agreement - Party not given proper notice of the arb proceedings or was otherwise unable to present case - Award deals with subject matter beyond scope of arbitration agreement - Award not yet binding on parties or has been set aside in law of country in which made - The subject matter is not capable of settlement by arbitration - To enforce the award would be contrary to public policy: award affected by fraud or corruption, breach of rules of natural justice ### How to enforce an Arb award Produce to the court in the relevant language The duly authenticated original.... If no grounds of appeal are made out the award is enforceable ### Hankuk Carbon SEE PHOTOS FOR THE NOTES! If there is no arb agreement, you still need to reach agreement. There is a submissions agreement on ACICA that can be used as a sample. Fundamental cornerstone of the arbitration process is that the parties must agree In an arbitration if there is a self-represented party, all the arb has to do is to provide a reasonable opportunity to present their case