Series
Blogs
A Harmonious Australian Arbitration Framework: The ACT Adopts the Model Law
A Harmonious Australian Arbitration Framework: The ACT Adopts the Model Law
1 June 2017
Series
Blogs
1 June 2017
On 21 March 2017, the Australian Capital Territory (the “ACT”) passed the Commercial Arbitration Act 2017 (ACT) (the “Act”), which essentially adopts the UNCITRAL Model Law (inclusive of the 2006 amendments) (the “Model Law”). The Act means that all arbitrations seated in Australia will now be subject to the Model Law, as the same legislation has been adopted in all other States and Territories, as well as by the Federal Parliament. This development strengthens Australia’s position as an attractive seat for arbitration.
The Model Law was created by the United National Commission on International Trade Law (“UNCITRAL”). The Model Law is a template arbitration law that States can implement as part of their domestic arbitration regime. UNCITRAL developed the Model Law to facilitate the uniformity of arbitral laws internationally and promote international trade.
In 2010 Australia’s State and Territory Attorneys-General resolved to implement arbitration legislation based on the Model Law into all Australian jurisdictions. Such legislation was passed by the Federal Parliament in 2010 (which covers international arbitration) and by State and Territory Parliaments over the following four years. The only State or Territory not to implement the Model Law during this time was the ACT.
The recent adoption of the Model Law by the ACT means that, finally, the goal of a unified arbitration legislative framework is now complete. As a result of the unification of Australia’s arbitration laws, all arbitrations in Australia, whether domestic or international, will now be subject to the Model Law.
The Act closely reflects the Model Law. However, the ACT Government has added certain additional features beyond those that appear in the Model Law. Some of the more interesting additions include that:
(a) parties to an arbitration may seek guidance from the Supreme Court of the ACT regarding issues that arise in the arbitration (an example would be seeking assistance on preliminary points of law);
(b) parties may appeal arbitral awards on a point of law if the parties agree that there should be an appeal before the appeal timeframe ends, and the court grants leave;
(c) arbitral tribunals have the power to consolidate arbitral proceedings; and
(d) subpoenas can be obtained that require a person to attend arbitral proceedings or produce documents.
Although the Act is a significant improvement on the old arbitration legislation in the ACT, it still has certain gaps. Of particular note are the following:
(a) The Act provides that a party may seek judicial review on questions of jurisdiction if the arbitral tribunal finds that it has jurisdiction. However, no judicial review can be sought where there is a negative finding of jurisdiction by a tribunal.
(b) Many arbitral institutions have included in their rules provisions that allow an emergency arbitrator to render interim awards. However, the Act does not clearly provide for the enforcement of an emergency arbitrator’s award.
(c) Many jurisdictions internationally have introduced a default costs rule applicable when parties challenge an award or resist enforcement. The default rule usually provides that if a party challenges an award or resists enforcement and loses, then indemnity costs are awarded against them. No such provision exists in the Act, and as a consequence parties may be encouraged to resist enforcement or challenge awards if enforcement occurs in the ACT.
The complete harmonisation of Australia’s arbitral regime is a welcome development. All parties who have their arbitration seated in Australia can now be assured that their arbitration will be subject to law that is consistent with prevailing international standards. While there is room for further reform in the future, the Act contains some useful additions to the Model Law that should facilitate an effective arbitral regime.