Australia: International Arbitration Comparative Guide

1 Legal framework

1.1 What is the relevant legislation on arbitration in your jurisdiction? Are there any significant limitations on the scope of the statutory regime – for example, does it govern oral arbitration agreements?

The International Arbitration Act 1974 (Cth) (IAA) governs international commercial arbitrations in Australia. Part II of the IAA sets out Australia's accession to, and implementation of, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (see IAA, Section 8). Part III of the IAA provides that the UNCITRAL Model Law on International Commercial Arbitration 1985 (with the amendments adopted in 2006) has the force of law in Australia (see IAA, Section 16(1)).

Under the IAA, an ‘international arbitration' is an arbitration seated in Australia with at least one of the characteristics specified in Article 1(3) of the UNCITRAL Model Law, being:

1. the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different States; or
2. one of the following places is situated outside the State in which the parties have their places of business:
   
   1. the place of arbitration if determined in, or pursuant to, the arbitration agreement;
   2. any place where a substantial part of the obligations of the commercial relationship is to be performed or the place with which the subject-matter of the dispute is most closely connected; or
3. the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country.

For the purposes of defining those arbitration agreements to which the Model Law will apply, the IAA adopts the definition of ‘arbitration agreement' set out in Option 1 of Article 7 of the Model Law. The practical effect of this choice is that only an agreement in writing is an arbitration agreement for the purposes of the IAA (see further discussion in question 3.1).

The enforcement of foreign arbitration agreements is dealt with in Part II of the IAA. For this purpose, the IAA adopts the definition of ‘arbitration agreement' set out in Article II(1) of the New York Convention, which similarly provides that an arbitration agreement must be in writing.

1.2 Does this legislation differentiate between domestic arbitration and international arbitration? If so, how is each defined?

Yes. As explained in question 1.1, under the IAA, an ‘international arbitration' is an arbitration seated in Australia with at least one of the characteristics specified in Article 1(3) of the UNCITRAL Model Law.

All Australian states and territories have adopted largely uniform legislation governing domestic commercial arbitrations which is in turn modelled, in many respects, on the Model Law. For example, Section 1 of the Commercial Arbitration Act 2010 (NSW) indicates that "This Act applies to domestic commercial arbitrations". Section 1(3) states that an arbitration is ‘domestic' if:

1. the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in Australia, and
2. the parties have (whether in the arbitration agreement or in any other document in writing) agreed that any dispute that has arisen or may arise between them is to be settled by arbitration, and
3. it is not an arbitration to which the Model Law (as given effect by the International Arbitration Act 1974 of the Commonwealth) applies.

If the IAA applies to an arbitration, Australian state or territory arbitration laws will not apply (IAA, Section 21(2)). Under Section 21 of the IAA, parties cannot opt out of the Model Law, notwithstanding that the relevant arbitration agreement may specify that the procedural rules of an arbitral institution apply. This provision of the IAA was amended in 2010 by the International Arbitration Amendment Act 2010 (Cth), largely in response to Eisenwerk Hensel Bayreuth Dipl Ing Burkhardt GmbH v Australian Granites Ltd [2001] 1 Qd R 461 per Pincus JA (Thomas JA and Shepherdson J agreeing), in which the Queensland Court of Appeal held that an arbitration agreement which purported to adopt the Rules of Arbitration of the International Chamber of Commerce operated to exclude the application of the Model Law for the purposes of the arbitration.

The relevant state and territory legislation is set out below.

1.3 Is the arbitration legislation in your jurisdiction based on the UNCITRAL Model Law on International Commercial Arbitration?

Yes (see discussion at question 1.1). The IAA also includes several opt-in and opt-out provisions that may apply to arbitrations in addition to the UNCITRAL Model Law provisions (see IAA, Section 22 for an exhaustive list). These additional provisions are as follows:

• Opt-out provision: Obtaining subpoenas (IAA, Section 23);
• Opt-out provision: Failure by a party to attend arbitral proceedings or to comply with orders of the tribunal and default of a party to the arbitration agreement more generally (IAA, Sections 23A and 23B);
• Opt-out provision: The disclosure of confidential information in relation to arbitral proceedings (IAA, Sections 23C–23G);
• Opt-out provision: The death of a party to an arbitration agreement (IAA, Section 23H);
• Opt-out provision: The tribunal's power to make orders relating to the analysis of evidence (IAA, Section 23J);
• Opt-out provision: The tribunal's power to order security for costs (IAA, Section 23K) and costs generally (IAA, Section 27);
• Opt-in provision: The consolidation of arbitral proceedings (IAA, Section 24); and
• Opt-out provision: The calculation and payment of interest on awards (IAA, Sections 25–26).

1.4 Are all provisions of the legislation in your jurisdiction mandatory?

No, not all provisions are mandatory. Pursuant to Article 19 of the UNCITRAL Model Law (and subject to the parties' agreement), arbitral tribunals are empowered to conduct proceedings in such a manner as they consider appropriate. However, there are several mandatory provisions in both the IAA and the Model Law:

• Section 7 of the IAA: This requires the Australian courts to stay any proceedings and refer them to arbitration on an application by a party to a relevant arbitration agreement, subject to specific requirements (see Section 7(1) of the IAA, which outlines certain threshold requirements in relation to an arbitration agreement to enliven the court's power to stay proceedings pursuant to Section 7(2). See also Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd (2013) 298 ALR 666, 681 at [43] per Martin CJ, with Buss JA agreeing, and the authorities cited therein);
• Section 8 of the IAA: This requires Australian courts to recognise foreign arbitral awards as though they were orders of state or territory courts or the Federal Court of Australia, subject to the exceptions outlined in question 14 (IAA, Sections 8(2), (3)) (see also IAA, Sections 8(5), (7) for the circumstances in which Australian courts may not enforce foreign arbitral awards);
• Article 18 of the Model Law: This provides that parties are to be treated equally and be given a full opportunity to present their case;
• Article 24(2) of the Model Law: This provides that parties are to be given sufficient advance notice of any hearing and of any meeting of the tribunal for the purposes of the inspection of goods, other property or documents; and
• Article 35 of the Model Law: This requires Australian courts to recognise and enforce foreign arbitral awards.

In addition to the statutory mandatory requirements, Australian courts require that arbitral proceedings meet the requirements of natural justice (Castel Electronics Pty Ltd v TCL Air Conditioner (Zhongshan) Co Ltd (No 2) [2012] FCA 1214 per Murphy J at [29]–[32], citing IMC Aviation Solutions Pty Ltd v Altain Khuder (2011) 38 VR 303, 313 at [35] and 314 at [37] per Warren CJ and 342 at [129] per Hansen and Kyrou JJ). Indeed, Section 19(b) of the IAA provides that a foreign award will be contrary to Australian public policy if the rules of natural justice have been contravened in connection with the making of the award. As an exception to the general mandatory provision in Section 8 of the IAA, Australian courts are not required to enforce an award that would be contrary to Australian public policy (IAA, Section 8(7)(b)).

1.5 Are there any current plans to amend the arbitration legislation in your jurisdiction?

As of January 2021, there are no proposed Senate or House Bills that propose amendments to the IAA. The last amendment to the IAA was the Civil Law and Justice Legislation Amendment Act 2018 (Cth) which incorporated the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration into Australian law. The amendments took effect on 26 October 2018.

1.6 Is your jurisdiction a signatory to the New York Convention? If so, have any reservations been made?

Australia has been party to the New York Convention since 24 June 1975 and has made no reservations. Part II of the IAA sets out Australia's accession to, and implementation of, the New York Convention (IAA, Section 8).

1.7 Is your jurisdiction a signatory to any other treaties relevant to arbitration?

Australia is also a party to:

• the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (IAA, Part IV); and
• the United Nations Convention on Transparency in Treaty-based Investor State Arbitration (the Mauritius Convention). Australia ratified the Mauritius Convention on 18 September 2020 and it will enter into force for Australia on 17 March 2021.

Australia has further entered into a number of bilateral and multilateral free trade and investment protection agreements which provide for diverse forms of dispute resolution, including arbitration.

2 Arbitrability and restrictions on arbitration

2.1 How is it determined whether a dispute is arbitrable in your jurisdiction?

For a dispute to be arbitrable, it must:

• be arbitrable under Australian domestic law; and
• fall within the scope of the relevant arbitration agreement.

In WDR Delaware Corporation v Hydrox Holdings Pty Ltd (2016) 245 FCR 452, Foster J noted at [124]: "The issue of arbitrability goes beyond the scope of an arbitration agreement. It involves a consideration of the inherent power of the national legal system to determine what issues are capable of being resolved through arbitration. The issue goes beyond the will or the agreement of the parties. The parties cannot agree to submit to arbitration disputes that are not arbitrable."

Foster J went on to say (at [128]) that it was uncontroversial that "criminal offences; divorce; custody of children; property settlement; wills; employment grievances; some intellectual property disputes; competition law disputes; bankruptcy and insolvency" matters cannot be the subject of private arbitration.

In Comandante Marine Corp v Pan Australian Shipping Pty Ltd (2006) 157 FCR 45, Allsop J held (at [200]) that, for those categories of dispute that are not arbitrable, the common element is that there is a "sufficient element of legitimate public interest in these subject matters making the enforceable private resolution of disputes concerning them outside the national court system inappropriate".

Further to these overarching principles, several specific legislative provisions operate to invalidate arbitration agreements in respect of specific subject matter:

• The International Arbitration Act 1974 (Cth) is subject to Sections 11 and 20(2) of the Carriage of Goods by Sea Act 1991 (Cth), which declares void arbitration agreements included in bills of lading or similar documents relating to the carriage of goods to or from Australia, unless the agreement provides that the arbitration must be conducted in Australia;
• Section 43(1) of the Insurance Contracts Act 1984 (Cth) declares void arbitration agreements within a contract of insurance. However, Section 43(2) provides that Section 43(1) does not affect an arbitration agreement made after the relevant dispute arose; and
• Certain provisions of the Corporations Act 2001 (Cth) restrict arbitration agreements relating to insolvency and winding-up orders (see A Best Floor Sanding Pty Ltd v Skyer Australia Pty Ltd [1999] VSC 170 at [18], in which Warren J declined an order staying a winding-up proceeding on the basis that the arbitration agreement was invalid because it had the effect of obviating the statutory regime for the winding up of a company – meaning that the relevant dispute was not arbitrable), though the arbitrability of matters under the Corporations Act 2001 (Cth) will usually depend on the nature of those matters (WDR Delaware Corporation v Hydrox Holdings Pty Ltd (2016) 245 FCR 452, [144]).

2.2 Are there any restrictions on the choice of seat of arbitration for certain disputes?

Parties domiciled or operating in Australia are free to choose another seat of arbitration for the resolution of any dispute, without any legal restrictions. Any such seat should be specified in the arbitration agreement.

3 Arbitration agreement

3.1 What are the validity requirements for an arbitration agreement in your jurisdiction?

For the purposes of defining those arbitration agreements to which the UNCITRAL Model Law will apply, the International Arbitration Act 1974 (Cth) (IAA) adopts the definition of ‘arbitration agreement' set out in Option 1 of Article 7 of the Model Law (IAA, Section 16(2)). That definition provides that an ‘arbitration agreement' is "an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement".

Option 1 of Article 7(2) requires that an arbitration agreement be in writing. Option 1 of Article 7(3) goes on to provide that "an arbitration agreement is in writing if its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means". Option 1 of Article 7(4) provides that "[t]he requirement that an arbitration agreement be in writing is met by an electronic communication if the information contained therein is accessible so as to be useable for subsequent reference".

For the purposes of enforcing foreign arbitration agreements, the IAA adopts the definition of ‘arbitration agreement' set out in Article II(1) of the New York Convention, which provides that an ‘arbitration agreement' is "an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration". An ‘agreement in writing' is defined in Article II(2) of the New York Convention to include "an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams".

For the avoidance of doubt, and without limiting the definition in Article II(2) of the New York Convention, Section 3(4) of the IAA provides that an agreement will be in writing when:

• its content is recorded in any form, whether or not the agreement or the contract to which it relates 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.

Section 3(5) of the IAA provides that, for the avoidance of doubt and without limiting the definition of ‘arbitration agreement' in the New York Convention, "a reference in a contract to any document containing an arbitration clause is an arbitration agreement, provided that the reference is such as to make the clause part of the contract".

3.2 Are there any provisions of legislation or any other legal sources in your jurisdiction concerning the separability of arbitration agreements?

The doctrine of separability (whereby the arbitration agreement is to be regarded as separate from the main contract) is recognised in Australia. The doctrine underpins Article 16(1) of the UNCITRAL Model Law, which forms part of the IAA and which provides that "an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract" for the purpose of allowing the arbitral tribunal to rule on its jurisdiction.

This has been recognised as part of the common law of Australia (see Hancock Prospecting v Rinehart (2017) 257 FCR 442 at 531 [360]; see also Ferris v Plaister (1994) 34 NSWLR 474; Walter Rau Neusser Oel und Fett AG v Cross Pacific Trading Ltd [2005] FCA 1102; Comandate Marine Corp v Pan Australian Shipping Pty Ltd [2006] FCAFC 192).

However, it has been observed that the approach adopted by the High Court in Rinehart & Anor v Hancock Prospecting Pty Ltd [2019] HCA 13 stopped short of providing additional certainty as to how arbitration clauses will be construed (including with respect to the doctrine of separability) by the Australian courts. In that case, the High Court determined that orthodox principles of contractual interpretation were to be applied in construing the arbitration clauses at issue. Accordingly, the High Court found it unnecessary to consider the correctness of the approach taken in the English case of Fiona Trust & Holding Corporation v Privalov [2007] 4 All ER 951, where the House of Lords adopted a presumption that the parties were likely to have intended that any dispute arising out of their commercial relationship would be decided by the same tribunal, in the same venue (in that case, by arbitration). As a result, there has been no clear endorsement of the Fiona Trust presumption by the Australian courts.

3.3 Are there provisions on the seat and/or language of the arbitration if there is no agreement between the parties?

Where no agreement is made between the parties about the seat of the arbitration, the tribunal shall determine the place with regard to the circumstances of the case, including the convenience of the parties (UNCITRAL Model Law, Article 20(1)). Where no agreement is made between the parties about the language of the arbitration, the tribunal shall determine the language to be used (Model Law, Article 22(1)).

4 Objections to jurisdiction

4.1 When must a party raise an objection to the jurisdiction of the tribunal and how can this objection be raised?

An objection to the jurisdiction of the tribunal must be raised by no later than the submission of the statement of defence (UNCITRAL Model Law, Article 16(2)). As discussed at questions 4.2 and 4.3, jurisdictional objections are, in the first instance, to be directed to the tribunal itself (Model Law, Article 16(1)). Article 16(3) of the Model Law provides that the tribunal may hear a challenge to its jurisdiction as a preliminary question, separately before the hearing, or as part of the substantive hearing.

4.2 Can a tribunal rule on its own jurisdiction?

Yes. The doctrine of kompetenz-kompetenz, which provides that a tribunal is empowered to rule on its own jurisdiction, is reflected in Article 16(1) of the UNCITRAL Model Law. In teleMates (previously Better Telecom) Pty Ltd v Standard SoftTel Solutions Pvt Ltd (2011) 257 FLR 75, Hammerschlag J rejected the argument that Article 16 did not apply because the arbitrator was not validly appointed. Hammerschlag J held (at [56]): "In every case where there is a total challenge to jurisdiction on the basis an arbitrator has not been validly appointed, if the tribunal is to decide its own jurisdiction it must first, and is entitled to, assume it."

4.3 Can a party apply to the courts of the seat for a ruling on the jurisdiction of the tribunal? In what circumstances?

As noted at question 4.1, the tribunal must first make a ruling on jurisdiction before a party can seek a determination in an Australian court. Article 16(3) of the UNCITRAL Model Law also permits a tribunal to rule on a jurisdictional objection at a later stage (in the context of an award on the merits) as opposed to as a preliminary question. In Sino Dragon Trading Ltd v Nobel Resources International Pte Ltd (2015) 246 FCR 479, Edelman J considered the application of Article 16(3) of the Model Law in circumstances where the relevant tribunal had notified the parties it would deal with the jurisdictional challenge as part of the substantial hearing, and not as a preliminary question. At [114], Edelman J held that the court had no power to "intervene and make a ruling about the jurisdiction of the Tribunal prior to the Tribunal having made that determination".

If the tribunal makes a ruling that it has jurisdiction as a preliminary question, either party may request, within 30 days of that ruling, a court specified in Article 6 of the Model Law (being any of the state or territory Supreme Courts or the Federal Court of Australia) to finally decide the matter. Article 16(3) of the Model Law provides that any such court decision "shall be subject to no appeal". While a court application is pending, the tribunal may continue proceedings and make an award.

If the tribunal's ruling as to jurisdiction is made in the context of an award on the merits, an objection will need to be brought in the context of setting-aside proceedings under Article 34 of the Model Law or a challenge to enforcement under Article 36 of the Model Law.

5 The parties

5.1 Are there any restrictions on who can be a party to an arbitration agreement?

There are no restrictions on who can be party to an arbitration agreement under the International Arbitration Act 1974 (Cth) (IAA) and the term ‘party' is not defined in the IAA. Any party with the legal capacity to enter into a contract or agreement can be a party to an arbitration agreement, including individuals, corporate bodies, partnerships, states, state entities and public authorities.

5.2 Are the parties under any duties in relation to the arbitration?

While there is no express legislative duty on a party to assist a tribunal in carrying out its functions, there are remedies available in the event of default of a party. The available remedies include the ability to seek court assistance (see IAA, Section 23A) and provisions permitting an arbitration to proceed in the event of non-participation by a party, such as the failure of a party to appear at a hearing or produce documentary evidence (see Model Law, Article 25). Article 11(4) of the Model Law also provides for a party to seek court assistance where a party has failed to adhere to the agreed procedure for the appointment of arbitrators.

The IAA contains an opt-out confidentiality regime for Australian-seated arbitrations (IAA, Sections 23C–23G; see questions 2 and 15.1). Provided that the parties do not opt out of this regime and subject to some limited exceptions, the parties to the arbitration and the tribunal cannot disclose ‘confidential information'. There is no implied obligation of confidentiality in respect of arbitrations under Australian law (Esso Australia Resources v Plowman (1985) 183 CLR 10).

5.3 Are there any provisions of law which deal with multi-party disputes?

As discussed further at question 7.1, Section 24 of the IAA provides an ‘opt-in' consolidation mechanism. Where parties have agreed to its application (whether in their arbitration agreement or otherwise in writing), Section 24 of the IAA provides that a party may apply to the tribunal for a consolidation order, provided that one or more of the applicable grounds are met. There is no express provision in the IAA for the joinder of additional parties to an arbitration which has already commenced (see question 7.2).

6 Applicable law issues

6.1 How is the law of the arbitration agreement determined in your jurisdiction?

Australia's recognition of the doctrine of separability means that an arbitration agreement may be governed by a different law from the law of the substantive contract. It is widely accepted that the governing law of an arbitration agreement is to be determined by reference to three factors (see Sulamérica CIA Nacional de Seguros SA v Enesa Engenharia SA [2012] EWCA Civ 638):

• express choice (eg, the parties may expressly agree on the governing law of the arbitration agreement);
• in the absence of express choice, an implied choice of law (eg, based on the governing law of the substantive contract or the choice of seat); and
• failing that, the law with the "closest and most real connection" to the arbitration agreement (it is likely that the governing law of the substantive contract and the choice of seat will be relevant to this analysis).

6.2 Will the tribunal uphold a party agreement as to the substantive law of the dispute? Where the substantive law is unclear, how will the tribunal determine what it should be?

Australia adopts the position set out in the UNCITRAL Model Law – namely, a tribunal will decide the dispute in accordance with the rules of law as chosen by the parties to be applicable to the substance of the dispute. If the parties have not agreed, the tribunal will determine the applicable law under conflict of laws rules (Model Law, Article 28).

7 Consolidation and third parties

7.1 Does the law in your jurisdiction permit consolidation of separate arbitrations into a single arbitration proceeding? Are there any conditions which apply to consolidation?

Section 24 of the International Arbitration Act 1974 (Cth) (IAA) provides a mechanism for consolidation. However, Section 24 does not apply by default (ie, the parties must ‘opt-in' per IAA, Section 22(5)). If the parties have opted-in to the consolidation mechanism, Section 24 of the IAA provides that either party may apply to the tribunal for a consolidation order on the basis of one or more of the following grounds:

• A common question of law or fact arises in different proceedings;
• The rights to relief claimed in all those proceedings are in respect of, or arise out of, the same transaction(s); or
• It is desirable for some other reason.

Where the separate proceedings are before different tribunals, Section 24 of the IAA provides for the tribunals to meet and consult as to the appropriate course. If separate tribunals are unable to agree on the orders for consolidation, the separate arbitrations will proceed undisturbed.

If the parties have not opted for Section 24 of the IAA to apply, they may decide to take steps to consolidate separate proceedings of their own accord, on their own terms and in accordance with the applicable arbitration rules chosen by the parties.

7.2 Does the law in your jurisdiction permit the joinder of additional parties to an arbitration which has already commenced?

There is no express provision for the joinder of additional parties to an arbitration which has already commenced, but such a power could be conferred by agreement between the parties. The rules for some arbitral institutions, including the Australian Centre for International Commercial Arbitration (ACICA) Arbitration Rules 2016, provide for joinder. The parties may choose to adopt those rules, or agree to their own terms.

7.3 Does an arbitration agreement bind assignees or other third parties?

Generally, by operation of the common law doctrine of ‘privity', only a party to a contract (including an arbitration agreement) may enforce or be bound by its terms (see BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd (2008) 168 FCR 169 at [18]; Rinehart v Hancock Prospecting Pty Ltd (2019) 366 ALR 635, [84]).

Applying general contractual principles:

• a principal may be bound to an arbitration agreement by its agent because it is the true party to that agreement (eg, see Filatona Trading Ltd & Anor v Navigator Equities Ltd [2020] EWCA Civ 109; Jasmin Solar Pty Ltd v Trina Solar Australia Pty Ltd (2015) 331 ALR 108, [107] et seq);
• a non-signatory may be estopped from denying that it is a party to the arbitration agreement because of its conduct (eg, see IMC Aviation Solutions Pty Ltd v Altain Khuder LLC (2011) 38 VR 303, [281]–[282]); and
• a non-signatory may be found to have impliedly consented to be a party to the arbitration agreement (eg, see IMC Aviation Solutions Pty Ltd v Altain Khuder LLC (2011) 38 VR 303, [281]-[282], [289]).

A limited statutory exception to the doctrine of privity is contained in Section 7(4) of the IAA, which provides that a ‘party' to a foreign arbitration agreement includes "a person claiming through or under a party" for the purpose of seeking a stay of proceedings to enforce a foreign arbitration agreement. The definition of ‘party' is not extended in any other part of the IAA, including for international arbitrations seated in Australia.

The extended definition of ‘party' to include those "claiming through or under a party" is interpreted broadly (see Rinehart v Hancock Prospecting Pty Ltd (2019) 366 ALR 635). Authorities show that the extended definition may include:

• assignees (see Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332, 341–342; Heller Financial Services Ltd v Thiess Contractors Pty Ltd [2000] FCA 802, [11]–[13]; BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd (2008) 168 FCR 169, [13]); and
• persons with subrogated claims (see Tensioned Concrete Pty Ltd v Munich Re [2020] WASC 431, [19]).

However, it is unlikely that the extended definition will include non-signatory third-party beneficiaries (see BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd (2008) 168 FCR 169, [26]–[27]).

8 The tribunal

8.1 How is the tribunal appointed?

Failing agreement between the parties on the appointment procedure for the tribunal, the number of arbitrators will be three (UNCITRAL Model Law, Article 10(2)). The appointment process is for each party to appoint one arbitrator and for the two arbitrators appointed by the parties to appoint a third arbitrator (Model Law, Article 11(1)).

If a party fails to appoint an arbitrator within 30 days of receiving a request to do so, or the two arbitrators fail to agree on a third within 30 days of their appointment, the appointment will be made by the Australian Centre for International Commercial Arbitration (ACICA) (International Arbitration Act 1974 (Cth) (IAA), Section 18; Model Law, Article 11(3)). Section 6 of the International Arbitration Regulations 2020 (Cth) prescribes the ACICA, for the purposes of Sections 18(1) and 18(2) of the IAA, as the appointing authority competent to perform the functions under Articles 11(3) and 11(4) of the Model Law.

8.2 Are there any requirements as to the number or qualification of arbitrators in your jurisdiction?

The parties are free to determine the number of arbitrators. Otherwise failing such determination, the default number of arbitrators will be three (UNCITRAL Model Law, Article 10).

Although there are no requirements as to qualifications, the appointing authority must consider independence and impartiality and the qualifications of the arbitrator, among other considerations (if agreed by the parties), when making the appointment (Model Law, Article 11(5)).

8.3 Can an arbitrator be challenged in your jurisdiction? If so, on what basis? Are there any restrictions on the challenge of an arbitrator?

If the parties have not agreed otherwise, an arbitrator can be challenged only if:

• there are "justifiable doubts" as to his or her impartiality or independence; or
• he or she does not in fact possess the qualifications agreed to by the parties (UNCITRAL Model Law, Article 12(2)).

Section 18A of the IAA provides further that for there to be justifiable doubts as to the impartiality or independence of an arbitrator (for the purposes of Article 12(2) of the Model Law), there must be a "real danger of basis" on the part of that arbitrator in conducting the arbitration.

A challenge to an arbitrator must be brought by sending a written statement of reasons for the challenge to the tribunal within 15 days of becoming aware of the constitution of the tribunal or becoming aware of the circumstance leading to the challenge (Model Law, Article 13(2)). If a challenge relating to an arbitrator's impartiality or qualifications is unsuccessful, under either the default procedure or any other procedure agreed by the parties, the challenging party may have recourse to the court to determine the challenge, provided that the request is made within 30 days of receiving a notice of the tribunal's decision rejecting the challenge (Model Law, Articles 13(3) and 14(1)).

Otherwise, an arbitrator may be removed only if he or she becomes unable to perform his or her functions or for some reason fails to act without undue delay, in which case the arbitrator's mandate terminates upon voluntary withdrawal or by agreement of the parties (Model Law, Article 14(1)).

8.4 If a challenge is successful, how is the arbitrator replaced?

The process for the appointment of a replacement arbitrator is the same as that which applied to the appointment of the original arbitrator, unless the parties have agreed to a different process (UNCITRAL Model Law, Article 15).

8.5 What duties are imposed on arbitrators? Are these all imposed by legislation?

Pursuant to Article 12(1) of the UNCITRAL Model Law, arbitrators are obliged to disclose any circumstances likely to give rise to justifiable doubts as to their impartiality or independence. As noted at question 8.3, the IAA adopts the ‘real danger' test for arbitrator bias.

Article 18 of the Model Law provides that "the parties shall be treated with equality and each party shall be given a full opportunity of presenting his case". This obligation is consistent with one of the grounds for setting aside an arbitral award – namely that an award may be set aside if it conflicts with public policy (Model Law, Article 34(2)(b)(ii)), of which one example is a breach of natural justice (IAA, Section 8(7A)).

The tribunal is also under a statutory duty to maintain the confidentiality of information relating to the proceedings, subject to limited exceptions (IAA, Section 23C(2)).

8.6 What powers does an arbitrator have in relation to: (a) procedure, including evidence; (b) interim relief; (c) parties which do not comply with its orders; (d) issuing partial final awards; (e) the remedies it can grant in a final award and (f) interest?

(a) Procedure, including evidence?

Unless the parties agree otherwise, the tribunal has the power to conduct the proceedings as it sees fit, subject to the provisions of the UNCITRAL Model Law (Model Law, Article 19).

In the absence of agreement between the parties, the tribunal's discretion includes determining:

• evidential matters (including the admissibility, relevance, materiality and weight of any evidence) (Model Law, Article 19(2));
• the place of arbitration (Model Law, Article 20); and
• the languages to be used (Model Law, Article 22).

(b) Interim relief?

Unless the parties agree otherwise, the tribunal may order a party to:

• pay security for costs (IAA, Section 23K);
• maintain or restore the status quo (Model Law, Article 17(2)(a));
• 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 (Model Law, Article 17(2)(b));
• provide a means of preserving assets out of which a subsequent award may be satisfied (Model Law, Article 17(2)(c)); or
• preserve relevant evidence (Model Law, Article 17(2)(d)).

Despite Article 17B of the Model Law, which provides for ex parte relief where an interim measure may be frustrated by disclosure of the request, Section 18B of the IAA specifies that no party to an arbitration may request a preliminary order on an ex parte basis and no tribunal may make such an order.

(c) Parties which do not comply with its orders?

Article 25 of the Model Law (which is applicable in the absence of a contrary agreement by the parties) sets out the consequences of a party's default:

• If a claimant fails to communicate its statement of claim in accordance with Article 23(1) of the Model Law, the tribunal shall terminate the proceedings (Model Law, Article 25(a));
• If a respondent fails to communicate its statement of defence in accordance with Article 23(1) of the Model Law, the proceedings may continue and the failure will not itself be treated as an admission of the claimant's allegations (Model Law, Article 25(b)); and
• If a party fails to appear at a hearing or to produce documentary evidence, the proceedings may continue and an award may be made on the evidence before the tribunal (Model Law, Article 25(c)).

The consequences outlined above are subject to the safeguard that the defaulting party must have defaulted without showing sufficient cause for the failure to comply (Model Law, Article 25).

(d) Issuing partial final awards?

There is no express restriction in the IAA that prevents the issuance of partial final awards. However, in contrast to other Model Law jurisdictions (including Singapore, where courts have clarified that partial and interim awards are also ‘final and binding', and therefore enforceable – see, for example, PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation [2015] 4 SLR 364 at [46]–[58]), the question of whether a partial award – such as a ‘final' award on liability pending calculation of quantum – is binding, and therefore enforceable in its own right, has not been definitively settled in Australian courts.

(e) The remedies it can grant in a final award?

The IAA does not limit the availability of final remedies. In the absence of any limits imposed by agreement between the parties, the tribunal can award any remedy that would be available to a court having jurisdiction over the same subject matter. This includes awarding damages, ‘final' injunctions, specific performance and declarations. As discussed further at question 10.1, pursuant to Section 27 of the IAA, the tribunal is expressly empowered to make an award as to costs.

(f) Interest?

Unless the parties have agreed otherwise, tribunals are expressly empowered to order the payment of pre-award interest (IAA, Section 25) and to award interest (including compound interest) at a "reasonable rate", from the date specified in the award as the due date for payment up to the date of payment (IAA, Section 26(2)).

8.7 How may a tribunal seated in your jurisdiction proceed if a party does not participate in the arbitration?

As discussed at question 8.6(c), Article 25 of the UNCITRAL Model Law provides that where a party fails to appear at a hearing or to produce documentary evidence, the tribunal may continue the proceedings and make the award on the evidence before it, without treating the failure in itself as an admission. The Federal Court of Australia recently affirmed that, even in the face of minor procedural irregularities, the court will uphold an award where a party simply chose to ignore the proceedings (see Energy City Qatar Holding Company v Hub Street Equipment Pty Ltd (No 2) [2020] FCA 1116).

8.8 Are arbitrators immune from liability?

An arbitrator is not liable for any act or omission in his or her capacity as an arbitrator, provided that he or she was acting in good faith (IAA, Section 28).

9 The role of the court during an arbitration

9.1 Will the court in your jurisdiction stay proceedings and refer parties to arbitration if there is an arbitration agreement?

Yes. A stay application may be made, pursuant to Article 8(1) of the UNCITRAL Model Law, in respect of an international arbitration agreement which specifies Australia as the seat of the arbitration. An application must be made by a party by no later than that party's "first statement on the substance of the dispute" (Model Law, Article 8(1)). Upon receipt of such an application, the court must refer the parties to arbitration, unless it finds that the arbitration agreement is "null and void, inoperative or incapable of being performed" (Model Law, Article 8(1)).

Article 8 of the Model Law operates independently from, but in a similar manner to, Section 7 of the International Arbitration Act 1974 (Cth) (IAA), which is applicable to foreign arbitration agreements. Accordingly, an application for a stay of court proceedings, in circumstances where a party seeks to invoke a foreign arbitration agreement, may also be brought under Article 8(1) of the Model Law (see Comandate Marine Corp v Pan Australian Shipping Pty Ltd (2006) 157 FCR 45; 238 ALR 457; [2006] FCAFC 192 at [50], [188] and [198]–[205] (Allsop J)).

Where an application is made pursuant to Section 7 of the IAA, the court must stay any court proceedings initiated by a party to an arbitration agreement, if the matter in dispute is capable of settlement by the arbitration agreement (IAA, Section 7(2)). As with an application made pursuant to Article 8 of the Model Law, a court in receipt of an application made pursuant to Section 7 of the IAA may decline to order a stay only where the arbitration agreement is null and void, inoperative or incapable of being performed.

9.2 Does the court in your jurisdiction have any powers in relation to an arbitration seated in your jurisdiction and/or seated outside your jurisdiction? What are these powers? Under what conditions are these powers exercised?

The Australian courts respect commercial parties' decisions to arbitrate their disputes and keep their intervention to a minimum (IAA, Section 2D; UNCITRAL Model Law, Article 5) (see Hui v Esposito Holdings Pty Ltd (No 2) (2017) 345 ALR 352 at [10]). Permissible interventions include:

• assisting with the appointment of or challenges to arbitrators, where necessary (Model Law, Articles 11 and 13–14);
• recognising and enforcing interim measures of arbitral tribunals and issuing interim measures in support of arbitral proceedings (Model Law, Articles 9, 17H and 17J));
• assisting with the taking of evidence at the request of, or with approval from, the arbitral tribunal (Model Law, Article 27 and IAA, Section 23A); and
• issuing subpoenas, with permission from the arbitral tribunal (IAA, Section 23). However, current authority suggests that the power to issue a subpoena in support of arbitral proceedings is available only in respect of Australian-seated international arbitrations (see Samsung C&T Corporation, in the matter of Samsung C&T Corporation [2017] FCA 1169 [48]).

As outlined above, a court will also stay court-initiated proceedings where the subject in dispute is covered by a valid arbitration agreement, whether in Australia or elsewhere.

As a party to the New York Convention, Australia offers recognition and enforcement of foreign arbitral awards through its courts. In this respect, the Australian courts have demonstrated a ‘pro-enforcement bias' (see IMC Aviation Solutions Pty Ltd v Altain Khuder LLC (2011) 38 VR 303 [127]–[129]). Recent authority from the Federal Court of Australia confirms that Australia will also enforce arbitral awards against foreign states where the state has signed the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (even in the face of claims of sovereign state immunity) (see Eiser Infrastructure Limited v Kingdom of Spain [2020] FCA 157).

9.3 Can the parties exclude the court's powers by agreement?

Parties can agree to opt out of some of the court's support functions, including the ability to apply to the court for a subpoena and the ability to seek assistance from the court with the taking of evidence (IAA, Section 22(2)).

However, it is not possible to exclude the court's power to stay proceedings; nor is it possible to exclude recourse to the court for the enforcement of interim measures.

10 Costs

10.1 How will the tribunal approach the issue of costs?

Unless the parties have agreed otherwise, the costs of the arbitration will be at the discretion of the tribunal (International Arbitration Act 1974 (Cth) (IAA), Section 27(1)). The tribunal may direct payment of the whole or any part of the costs by either party, and may also settle or limit the amount of costs to be paid (IAA, Section 27(2)).

If an award makes no provision for costs, either party may apply to the tribunal for directions within 14 days of receiving the award. Following a hearing (if either party wishes to be heard), the tribunal must amend the award by adding such directions on costs as it thinks proper to make (IAA, Section 27(4)).

The tribunal is not required to have regard to scales or other domestic court rules (IAA, Section 27(2AA)). However, as for the Australian courts, the ordinary position is for costs to follow the decision, such that an unsuccessful party will usually bear the reasonable costs of the successful party. The general rule may be displaced, for example, where the successful party's conduct has prolonged the proceedings unnecessarily or caused some expense to the unsuccessful party.

10.2 Are there any restrictions on what the parties can agree in terms of costs in an arbitration seated in your jurisdiction?

There is no express limit imposed by statute regarding the scope of agreement that the parties may reach in relation to costs in an arbitration.

11 Funding

11.1 Is third-party funding permitted for arbitrations seated in your jurisdiction?

Third-party funding is permitted for arbitrations seated in Australia. The High Court has held that third-party funding is not per se an abuse of process or contrary to public policy (see Campbell's Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386).

12 Award

12.1 What procedural and substantive requirements must be met by an award?

Pursuant to Article 31 of the UNCITRAL Model Law, awards must be in writing and signed by the arbitrator or arbitrators. Awards must state the reasons upon which the award is based, except where the parties have agreed that no reasons are to be given, and state the date and the place of the arbitration.

12.2 Must the award be produced within a certain timeframe?

Australian law imposes no limitations on the timeframe for the production of an arbitral award. However, time limits may be imposed under applicable arbitral rules selected by the parties. For example, the International Chamber of Commerce's 2021 Arbitration Rules (Article 31) and the Australian Centre for International Commercial Arbitration's Expedited Arbitration Rules 2016 (Section 27) include a timeframe within which an award shall be made.

13 Enforcement of awards

13.1 Are awards enforced in your jurisdiction? Under what procedure?

Yes. International and foreign arbitration awards are recognised and enforceable in Australia as if they were a judgment or order of an Australian court, subject to the limited grounds for refusal of enforcement set out in Article V of the New York Convention. Those grounds are adopted in Article 36 of the UNCITRAL Model Law (which is applicable to the enforcement of awards for international arbitrations seated in Australia) and Section 8 of the International Arbitration Act 1974 (Cth) (IAA) (which is applicable to the enforcement of foreign awards).

Under Australian law, if an award meets the requirements of the New York Convention or the Model Law, it is automatically recognised as binding for any purpose, as from the date of the award (see TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the Federal Court of Australia (2013) 295 ALR 596; [2013] HCA 5 at [23] (French CJ and Gageler J)). However, Section 3(2) of the IAA clarifies that ‘enforcement' also includes "recognition of the award".

Article 35(2) of the Model Law sets out the procedure for an application to enforce an award rendered in international arbitration proceedings seated in Australia. An application for enforcement may be made to the Supreme Courts of the states and territories of Australia, or to the Federal Court of Australia (see TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the Federal Court of Australia (2013) 295 ALR 596; [2013] HCA 5 at [2] (French CJ and Gageler J), and at [52] (Hayne, Crennan, Kiefel and Bell JJ)). The relevant procedural requirements are stipulated in Article 35(2) of the Model Law. An applicant must supply the original award or a copy of the award. If the award is not made in English, and if requested by the court, the applicant will also be required to supply a translation of the award (Model Law, Article 35(2)).

Pursuant to Section 8 of the IAA, foreign awards may be enforced by application to the Supreme Courts of the states and territories of Australia, and to the Federal Court of Australia, as if the award were a judgment of that court (IAA, Sections 8(2) and 8(3)). Where seeking to enforce a foreign award, the applicant must comply with the procedural requirements set out in Article IV of the New York Convention – that is, a party must produce to the court the original award and arbitration agreement, or duly certified copies, and a certified translation where the language of either the award or agreement is other than English (IAA, Sections 9(1)–(3)).

Australia is a reliable jurisdiction for the enforcement of foreign arbitral awards.

14 Grounds for challenging an award

14.1 What are the grounds on which an award can be challenged, appealed or otherwise set aside in your jurisdiction?

Article 34 of the UNCITRAL Model Law sets out the limited grounds upon which an application may be made to set aside an award rendered in an Australian-seated international arbitration. As with Article 36 of the Model Law (which provides the grounds for refusal of enforcement), the grounds are essentially identical to those set out in Article V of the New York Convention.

Pursuant to Article 34 of the Model Law, an award may be set aside if the party making the application demonstrates that:

• a party to the arbitration agreement was under some incapacity or the arbitration agreement is not valid under the applicable law agreed by the parties or, where no law is expressed to be applicable in the agreement, under the law of the relevant state (Model Law, Article 34(2)(a)(i));
• it was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present its case (Model Law, Article 34(2)(a)(ii);
• the award deals with a dispute not contemplated by, or not falling within the terms of, the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration (noting that if such decisions can be separated from those made in respect of matters that were submitted to arbitration, only part of the award may be set aside) (Model Law, Article 34(2)(a)(iii)); or
• the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties (unless such agreement was in conflict with a provision of the Model Law from which the parties cannot derogate) or, failing such agreement, was not in accordance with the Model Law (Model Law, Article 34(2)(a)(iv)).

An award may be set aside under Article 34 of the Model Law if the court finds that:

• the subject matter of the dispute is not capable of settlement by arbitration under the law of the relevant state (Model Law, Article 34(2)(b)(i)); or
• enforcing the award would be contrary to the public policy of the state (Model Law, Article 34(2)(b)(ii)).

Allegations of procedural unfairness will be closely scrutinised by the Australian courts, which have expressed an intention to enforce awards "whenever possible", notwithstanding minor procedural imperfections (eg, see Energy City Qatar Holding Company v Hub Street Equipment Pty Ltd (No 2) [2020] FCA 1116).

14.2 Are there are any time limits and/or other requirements to bring a challenge?

Pursuant to Article 34(3) of the UNCITRAL Model Law, an action to set aside an award must be made within three months of the date on which the party making the application received the award.

14.3 Are parties permitted to exclude any rights of challenge or appeal?

The UNCITRAL Model Law does not permit appeals from arbitral awards; and in Australia, courts may refuse an application to enforce an award only where the enforcement is challenged on the basis of the limited grounds set out above. There is no provision for parties to exclude the right to challenge an award.

15 Confidentiality

15.1 Is arbitration seated in your jurisdiction confidential? Is a duty of confidentiality found in the arbitration legislation?

As explained in question 5.2, the International Arbitration Act 1974 (Cth) (IAA) includes an opt-out confidentiality regime, by which parties can opt not to be bound by the confidentiality provisions. The confidentiality regime provides that the parties to an arbitration, and the tribunal, must not disclose confidential information in relation to the arbitration, except for one of the reasons set out in question 15.2 (IAA, Section 23C).

‘Confidential information' in relation to the arbitration is defined broadly as information that relates to the proceedings or to an award made in the proceedings (IAA, Section 15(1)), including:

• the statement of claim, statement of defence and all other pleadings, submissions, statements or other information supplied to the tribunal by a party to the proceedings;
• any evidence (whether documentary or other) supplied to the tribunal;
• any notes made by the tribunal of oral evidence or submissions given before the tribunal;
• any transcript of oral evidence or submissions given before the tribunal;
• any rulings of the tribunal; and
• any award of the tribunal.

15.2 Are there any exceptions to confidentiality?

A party, or the tribunal, may disclose confidential information in relation to the arbitration where the disclosure:

• is by consent of the parties (IAA, Section 23D(2));
• is made to a professional or other adviser (IAA, Section 23D(3));
• is necessary to ensure that a party has a full opportunity to present its case, and is no more than is reasonable for that purpose (IAA, Section 23D(4));
• is necessary for the establishment or protection of the legal rights of a party in relation to a third party, and is no more than is reasonable for that purpose (IAA, Section 23D(5));
• is necessary for the purpose of enforcing an arbitral award, and is no more than is reasonable for that purpose (IAA, Section 23D(6));
• is necessary for the purposes of the IAA or the Model Law, and is no more than is reasonable for that purpose (IAA, Section 23D(7));
• is in accordance with an order made or a subpoena issued by a court (IAA, Section 23D(8));
• is authorised or required by another relevant law, or required by a competent regulatory authority, and the person making the disclosure gives written details of the disclosure, including an explanation of the reasons for the disclosure, to the other parties to the arbitration and the tribunal (if the person is a party to the arbitration) or – if the tribunal is making the disclosure – to all the parties to the proceedings (IAA, Section 23D(9)); or
• is otherwise ordered by the tribunal (IAA, Section 23E(1)).

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.