Michael Keenan (Stirling, Liberal Party, Shadow Minister for Justice and Customs) Share this | Hansard source

I rise to speak on the International Arbitration Amendment Bill 2009. Arbitration is the primary means by which parties to transnational commercial agreements resolve disputes without having to resort to national courts. They have the advantage of avoiding the complex choice of law and enforcement issues that can arise in national courts. They also typically provide for a process that is specifically formulated to the parties’ requirements and is therefore more likely to preserve the relationship between them. The principal act, the International Arbitration Act 1974, implements Australia’s commitments under the New York Convention of 1958 and the Washington Convention of 1965 and gives the force of law to the UN model law on international commercial arbitration. However, problems have gradually arisen in the interpretation and application of the act over the years, particularly as to the application of competing state legislation and the means by which arbitral awards can be challenged.

The amendments effect an agreement with the states for a uniform arbitration legislation scheme based on the UN model law on international commercial arbitration, provide for limitations on court intervention and give clearer guidance on the interpretation of the model law. Miscellaneous amendments will supplement the operation of the model law as it relates to interim measures, disclosure of information, interests and costs.

The International Arbitration Act 1974 implements Australia’s obligations to enforce and recognise foreign arbitration agreements and arbitral awards under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which was completed in New York in 1958. The act also gives the force of law to the United Nations Commission on International Trade Law Model Law on International Commercial Arbitration as the primary arbitral law that governs the conduct of international arbitrations taking place in Australia. Finally, the act also implements Australia’s obligations under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which was completed in Washington in 1965.

The amendments to the act contained in the bill can be divided into four separate categories: amendments to the application of the act and the model law; amendments concerning the interpretation of the act; amendments to provide additional option provisions to assist the parties to a dispute; and miscellaneous amendments to improve the operation of the act. In 2006 the United Nations Commission on International Trade Law Model Law adopted the first set of amendments to the model law since it was originally adopted in 1985. With one exception relating to ex parte orders, the bill will apply these amendments to international commercial arbitration in Australia.

Section 21 of the act allows the parties to an arbitration agreement to resolve their dispute under an arbitral law other than the model law, as given the force of law by the act. For example, the parties could choose to resolve their dispute under state or territory legislation. This creates significant legal difficulties and confusion concerning the interaction of the different laws. The bill repeals section 21, removing the ability of the parties to an arbitration agreement to nominate an alternative arbitral law. The bill also amends the act to expressly provide that the model law covers the field with respect to international commercial arbitration. In doing so, the bill retains jurisdiction for state and territory supreme courts and confers jurisdiction on the Federal Court of Australia.

The bill includes new provisions which are intended to confine the circumstances in which the courts can set aside an award made under the model law or refuse to enforce foreign awards under the New York convention and the model law. The bill amends the act to provide guidance to the courts when exercising powers and functions under the act or the model law, exercising powers or functions under an arbitration agreement or award, interpreting the act or the model law, or interpreting an arbitration agreement or award. For example, the bill requires a court to have regard to the objects of the act and to the fact that arbitration is an efficient, impartial, enforceable and timely method of dispute resolution. The bill inserts an objects clause into the act which emphasises the importance of international arbitration in facilitating international trade and commerce and is intended to guide the interpretation of the act.

In addition to giving force to the model law as the primary arbitral law governing the conduct of international commercial arbitration in Australia, the act also provides a range of provisions that the parties to an arbitration agreement may adopt on an opt-in basis and which are intended to help them resolve any disputes between them fairly and efficiently. These provisions address issues such as the consolidation of arbitral proceedings and the awarding of interests and costs.

The bill includes a number of additional optional provisions that will be made available to the parties to an arbitration agreement. These provisions cover issues such as the availability of subpoenas and court orders to support an arbitration, the disclosure of confidential information and the death of a party.

This is the second amendment that has been made to the international arbitration regime—the first being the Federal Justice System Amendment (Efficiency Measures) Act (No. 1) 2008. Both pieces of legislation seek to increase the attractiveness of Australia as a venue for international commercial arbitration. This is a high-value service in which Australia should enjoy a competitive advantage. Any initiative that seeks to enhance that advantage is welcomed by the opposition. Therefore, we support the passage of this legislation.

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