The Australian position in relation to international arbitration
has always been complicated by virtue of its federal system of laws
which allows parties to choose to resolve their dispute under
arbitral laws other than in accordance with the internationally
accepted Model Law on International Commercial Arbitration adopted
by the United Nations Commission on International Trade Law
(UNCITRAL). This creates confusion and not insignificant legal
difficulties concerning the interaction of different laws.
Additionally, the finality sought by parties to an international
arbitration is not always certain by virtue of the appeal/review
powers contained in the State and Territory Commercial Arbitration
Acts. As well, there has been in recent years a general concern
about the trends surrounding the nature of international
arbitration with the widespread view that arbitration has become
too litigious with proceedings increasingly resembling those of a
court. Such complications and trends had led many to believe that
Australia was unlikely to establish itself as a major player in the
field of international arbitrations. In light of a new Bill
currently before Parliament, all of this could now change.
In an effort to counter such trends, overcome the difficulties
with Australia's federal system and in a bid to promote
Australia as a centre for international arbitration and dispute
resolution, the International Arbitration Amendment Bill 2009 was
introduced into Parliament on 25 November 2009, following the
Commonwealth Government's year long review of international
commercial arbitration in Australia.
The most significant amendment is the repeal of section 21 of
the International Arbitration Act 1974 (Cth). Under section 21, the
parties to an arbitration agreement could agree that the dispute
between them is to be settled otherwise than in accordance with the
Model Law. As such, the parties could elect to resolve their
dispute under applicable State or Territory legislation, which does
not always achieve the certainty and finality provided for under
the Model Law. In the case of "international commercial
arbitrations", the amendment Bill removes the capacity of the
parties to nominate an alternative arbitral tribunal, with the
Model Law set to "cover the field" for international
commercial arbitration in Australia. The State and Territory
legislation will therefore be limited to domestic arbitrations.
This is a major development for Australia and will largely do
away with many of the inherent difficulties of the current federal
system. A number of other proposed amendments also seek to make the
process of conducting international arbitration in Australia more
efficient by streamlining many of the procedural aspects (such as
legislating for confidentiality), so as to be of even greater
assistance to parties wishing to resolve their disputes other than
by way of the traditional court processes.
The amending legislation (which is currently at the second
reading stage and scheduled to be debated in the latter part of
2010) will, if passed, fundamentally change the way in which
international arbitration is regulated in Australia.
The TPP could have a significant positive impact on the investment and financial services of Australia and Singapore.
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