As more and more construction disputes are resolved through arbitration rather than litigation, careful consideration should be given to making domestic arbitration determinations publicly available for the benefit of the industry.
A logical approach would be to create a central repository for these arbitration decisions in much the same way that case law and SOPA adjudications are released to the public.
There has been a dramatic shift in the construction industry for parties to choose arbitration over litigation to resolve complex, large-scale disputes. One main reason underlying this change is that parties can keep their disputes out of the public gaze.
The flipside of this however is that arbitral decisions add nothing to accumulated case law and provide no guidance as to how similar disputes might be resolved in the future.
If arbitral determinations are made publically available, then parties in construction disputes with similar facts to those already decided will be better placed to assess the merits of their cases. This increased certainty will help parties determine whether or not they should resolve the issue commercially or proceed to arbitration or litigation.
While previous arbitral determinations have no precedent (i.e. binding) effect, they have inherent instructive value that may lead to fewer disputes ending in litigation.
The industry needs to find new ways to make arbitral determinations publically available without undermining the interests of the participants.
ARBITRATORS CAN HANDLE THE CRITICISM
It is argued that making determinations publically available exposes arbitrators to unfair criticism, particularly where an arbitration is not subject to the usual Court rules.
In practice, arbitrators are often ex-judges or senior lawyers with abundant judicial experience or experts with high levels of proficiency in their chosen fields. They are, therefore, unlikely to make decisions that would attract unwarranted criticism (at least no more criticism than a judge would be open to in the same circumstances).
If a determination is poor or is plainly wrong, then they should be open to scrutiny regardless.
Of course criticism, either warranted or unwarranted, does not change whether a determination is appealable – that is determined according to legislation and / or the rules of the arbitration. If anything, making awards publically available puts pressure on arbitrators to reach better decisions which ultimately benefits the parties.
SENSITIVE INFORMATION CAN BE KEPT CONFIDENTIAL
While confidentiality is claimed as an advantage of arbitration over litigation, the reality is that the dissemination of confidential information can be controlled in either forum. Arbitrators are in fact better placed to control the dissemination than judges because arbitrations are private hearings by nature and have no publically available transcript. If trade secrets or other commercially sensitive material needs to be referred to in the determination, then it can be done in a way that does not undermine its confidentiality.
Some may argue that the publication of arbitral decisions undermines the anonymity of the participants. However, if the parties object to particular information being publically released, including their identities or the amount awarded, then confidentiality can be maintained in a way that does not invalidate the benefit of releasing to the public.
A CENTRAL REPOSITORY
A logical approach to making arbitral decisions available more broadly is to create a central repository controlled by a leading arbitration body or judicially supervised body (e.g. the Federal Court). Determinations could be published much in the same way that case law is published by authorised reporting services or SOPA decisions are published by relevant State authorities.
Importantly, decisions could be vetted by the parties and arbitrators prior to publication; a safeguard mechanism affording them the opportunity to remove information they consider to be too sensitive to release. This system will give parties in dispute the confidence to voluntarily contribute to the accumulated "case law" which will ultimately benefit the industry without undermining their private interests .
The cost of running the central repository could be funded by the Federal and / or State governments on the basis that it would lead to a reduction in the number of disputes reaching litigation and may even create other efficiencies in the construction industry (i.e. as parties will spend more time building things and less time in dispute).
The repository should be limited to domestic arbitration only as publishing international arbitral determinations is unlikely to provide the same benefits to the local industry and may detract from Australia as a desirable arbitration seat of choice. Making domestic arbitral determinations publically available in this way will improve commercial certainty in the construction industry, improve the quality of arbitral decisions and ultimately decrease the work-load of the Courts.
For further information contact
Elena Waring Senior Associate
+61 3 9672 3108
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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