‘Simply resolving disputes’
International Commercial Arbitration Conference: ‘Making it Work for Business’

Hotel InterContinental,
cnr Bridge and Phillip Streets, Sydney

Friday 21 November 2008, 9:00am

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Acknowledgements

Other Acknowledgements

Introduction

  1. Good morning and thank you for your welcome.
  2. Looking at today’s conference program - and seeing the high calibre of presenters and this morning’s live link-up with the UK - has re-confirmed to me how crucial international arbitration is for Australian business.
  3. May I open my remarks then by paraphrasing Robert Clow and Patrick Stewart who wrote that 'years of being embroiled in complex international litigation must be a business person’s worst nightmare. For those suffering litigation fatigue, arbitration must seem like an island of reason.'
  4. That statement sets the context for what I want to say this morning.
    And it’s a theme taken up in the title of the conference:- Making international commercial arbitration work for business.
  5. All of us here, whether arbitrators, lawyers, corporate counsel or from Government, have a responsibility to ensure international commercial arbitration works for Australian business.
  6. I believe that speed, certainty and fairness are the keys.

Importance of International Arbitration

  1. The dramatic growth of international commercial arbitration in recent years, particularly in the Asia-Pacific region, has been extraordinary.
  2. One measure of this growth is the number of requests for arbitration received by Asia-Pacific’s largest arbitral institutions - those requests have trebled since 1992.
  3. In part, this reflects the rapid growth of international trade and commerce in our region.
  4. But it also reflects the increased willingness of commercial parties to use international arbitration to resolve disputes.
  5. There is also empirical evidence about international arbitration to draw upon - thanks to invaluable research conducted by the School of International Arbitration at the University of London, commissioned by Pricewaterhouse Coopers.
  6. I understand the study’s co-authors are here today to introduce the report - and I don’t want to steal their thunder.
    But I do want to say that I think a number of the report’s conclusions will be critical to our understanding of the place of international commercial arbitration in the modern business world.
  7. Particularly those findings in relation to preferences for arbitration over litigation.
  8. But in the end, if international arbitration is going to work for business, then costs and time delays must be constrained.
  9. And arbitral procedures should not blindly mimic court proceedings.
  10. They should instead be flexible enough to suit the needs of the particular dispute.
  11. Ultimately, arbitral proceedings must be:
    1. just and efficient and
    2. fair and economical.
  12. Indeed, it’s likely that the need for the capping of expenses and time related to arbitration will be expressly incorporated into the Arbitration Rules currently under revision by the UN Commission on Trade Law UNCITRAL.
  13. I understand that it’s proposed that the revised Rules will require an arbitral tribunal, in exercising its discretion, to conduct the proceedings in a manner that avoids unnecessary delay and expense.
  14. For Australian businesses, strongly connected to the world economy through trading and business ties, it’s critical that international arbitration remains an effective form of dispute resolution.
  15. So one important aspect of international arbitration that I would ask you to keep forefront in your minds today is how the expense and time of arbitral proceedings can be limited, while still providing a fair and just process.

International Arbitration in Australia

  1. International arbitration practice has traditionally been dominated by an elite based in London and Paris, and in centres such as Geneva and New York.
  2. But it’s clear that there’s growing demand, particularly by non-European corporations, for strong regional arbitral institutions.
  3. Regional arbitration centres offer important advantages.
    They can be located closer to the parties, and be less expensive than longer established institutions.
  4. Australia is well placed to meet the growing demand for first-rate, cost-effective arbitration services in the Asia-Pacific.
  5. Australian arbitration practitioners are among the world’s best.
    Australia is also politically and economically stable - and it offers first-class communications and transport facilities.
    Furthermore, the Australia Centre for International Commercial Arbitration - which is hosting this Conference - provides excellent institutional support for international arbitration.
  6. Arbitration in Australia is also supported by an effective national arbitral law and by Australia’s renowned, independent judiciary.
  7. Indeed, I have recently written to my federal Ministerial colleagues, and to all State and Territory Attorneys-General, promoting Australia’s expertise in international arbitration. 
    I also invited them to consider adopting the Australian Centre for International Commercial Arbitration Model Arbitration clause, where appropriate, in cross-border contracts entered into by their agencies.

International Arbitration Act

  1. For all these reasons, the development of a modern, clear and fair international arbitration framework in Australia is essential to Australian business.
  2. As I said earlier, Government must play its part in this.
    That’s why today I am announcing a review of the International Arbitration Act.
  3. We want to make sure the Act provides a comprehensive and clear framework for international arbitration in Australia.
  4. When it was introduced over 30 years ago, the Act implemented Australia’s key obligations under the New York Convention and enabled Australia’s accession to that Convention.
  5. Importantly, the Act also implemented the Convention on a national basis.
    Since 1974 it has provided a single, effective framework for the recognition and enforcement in Australia of arbitration agreements and foreign arbitral awards.
  6. In 1989 the Act was amended to adopt the UNCITRAL UN Commission on International Trade Law Model Law on International Commercial Arbitration.
  7. Australia adopted the Model Law in full.
    We also implemented important supplementary provisions on issues such as costs, interest and arbitrator’s immunity which are not covered in the Model Law.
  8. Australia’s adoption of the Model Law sent a clear message that arbitration in Australia would be regulated and supported by a fair and progressive arbitral law, consistent with international best practice.
  9. While the Act has worked well, there comes a time - as in all things - when review is necessary.
    More than three decades after it was put in place, I believe that time is now.

Review of the International Arbitration Act

  1. We want to ensure the Act provides a clear and comprehensive framework governing international arbitration in Australia.
  2. And we want to ensure arbitral proceedings are effective and efficient.
  3. Our aim is to adopt international best-practice developments in arbitral law.
  4. One important reform to be considered is the adoption of some of the 2006 amendments to the UNCITRAL Model Law on International Commercial Arbitration.
  5. These amendments included extensive new provisions, many of which - I think - are straightforward and sensible.
  6. One controversial amendment, however, allowed arbitral tribunals to make preliminary orders on the application of one party, without the other party being notified.
  7. We believe this conflicts with the basic right of both parties to procedural fairness.
  8. And so at this stage, we do not intend to implement amendments allowing for ex parte preliminary orders.
  9. Another possible reform is to make clear that adoption of arbitral rules by the parties to an arbitration agreement does not equate to ‘opting out’ of the Model Law.
  10. This would reverse the Eisenwerk decision.
  11. Additionally, the Act could be amended to clarify that, where arbitral proceedings are governed by the Model Law, it will govern that arbitration exclusively.
  12. This could help ensure the laws governing international arbitration in Australia are simple, consistent and effective.
    These are important elements if Australia is to develop as an attractive forum for international arbitration. 
  13. We are also considering the appropriate court or courts to be given jurisdiction under the Act.
    There is a question, I think, about whether it is appropriate for each State and Territory court to possess jurisdiction in these matters, or whether it would more appropriate for the Federal Court to possess exclusive jurisdiction in this regard.
  14. One advantage of such a move may be the development of a more uniform body of jurisprudence in applying the Act.
    Clearly, it’s important that Australia project a single common law to the international business community on this important international issue.
  15. Relevantly, I expect that I will shortly be introducing a Bill to Parliament to give the Federal Court jurisdiction under Parts III and IV of the Act.
  16. The Federal Court will then have concurrent jurisdiction with the State and Territory Supreme Courts for all matters arising under the Act.
  17. We see this as a natural progression for the Federal Court in its emerging role as a regional hub for commercial litigation.
  18. And so today, I am releasing a discussion paper identifying key areas for review, including those I’ve raised.
  19. Mr Ian Govey, Deputy Secretary of my Department, will talk further about the review process later this morning.
  20. I would encourage you all to contribute comments to the Government’s discussion paper and other possible amendments.

Conclusion

  1. These are rapidly evolving times.
    The Rudd Government believes that a review of the International Arbitration Act is a natural, warranted progression if our businesses are to be properly equipped to meet the challenges of the 21st Century.
  2. International commercial survival demands far more than great products, services and knowledge - as important as these are.
  3. Negotiating different business standards, working through unfamiliar values and cultural barriers, adapting to complex regulatory frameworks and comprehending sophisticated laws, are equally critical to business success.
  4. This 50th anniversary of the signing of the New York Convention is a good opportunity to reflect on how rapidly the world has changed and how national borders no longer pose the same kind of barrier as they once did.
  5. Globalisation has brought Australia and those who help power our economic life many great opportunities.
    But this evolution has not finished.
  6. The Rudd Government’s review of the International Arbitration Act is intended to ensure that our nation has the best possible framework to host international arbitration.
  7. We are committed to developing Australia as a regional hub for international commercial dispute resolution.
  8. The development of Australian international arbitration expertise is an integral part of this - and it is good for Australian businesses.
  9. As I see it, conferences such as this one help put legal counsel, corporations and arbitrators on a solid footing.
  10. So I commend Doug and his committee and staff for organising the excellent program ahead of you all today.
  11. I wish you a very enjoyable and productive day of discussions, and it’s my great pleasure to declare this conference officially open.

ENDS