Craig Thomson (Dobell, Australian Labor Party) Share this | Hansard source

I rise to support the International Arbitration Amendment Bill 2009. The bill amends the International Arbitration Act 1974 to clarify the application of the act and the United Nations Commission on International Trade Law’s Model Law on International Commercial Arbitration to provide greater certainty concerning the interpretation of the act and the model law to provide additional optional provisions to assist the parties to a dispute and make other miscellaneous amendments to improve the operation of the act.

The proposed government amendments make a number of minor amendments to improve the operational provisions in the bill. In addition, they set out a new scheme for the application of optional provisions contained in the act and the bill, insert a new provision modifying the requirements in the model law such that parties be given a full opportunity to present their case to facilitate faster proceedings and add additional measures concerning matters such as evidence and security for costs. The government amendments were developed in response to issues raised by practitioners after the bill was developed.

This bill is about the facilitating international trade and commerce by providing a more effective regime for the conduct of international commercial arbitrations in Australia. Our trade is a vital part of our economy. The Australian government continues to support trade liberalisation unequivocally and resist protectionism. We are committed to helping developing countries gain access to international economic opportunities. One of the more recent major developments in trade in Australia was in January this year, when Australia welcomed the commencement of our largest free-trade agreement, the ASEAN free-trade agreement. The historic agreement spans 12 economies with over 600 million people and a combined GDP of $3.1 trillion. The agreement opens up significant opportunities for Australian business in one of the fastest-growing regions in the world. There is great potential for Australian exporters to enter new markets with Asia leading the global recovery and six out of 10 Asian markets expected to grow at rates at least double the OECD forecasted average in 2010.

Australia sees this agreement as an important building block towards deepening this country’s economic integration with the dynamic Asian region. The agreement covers over 70 per cent of Australia’s trade with Asian countries with which we do not have bilateral free-trade agreements. The agreement includes the elimination of tariffs on exports such as cheese, fresh grapes, wheat and sheep meat. It also dramatically expands the subject areas that Australian education providers can deliver in Vietnam. By 2020 the deal, which is Australia’s first multi-country free-trade agreement and the most comprehensive free-trade agreement ever concluded by ASEAN, will eliminate tariffs on 96 per cent of our current exports to ASEAN countries. ASEAN accounted for 15 per cent of Australia’s trade, valued at $83 billion, in 2008-09. This is as large as Australia’s trade with China, Australia’s largest trading partner. Forty-two per cent of our total exporter base, or around 18,500 Australian exporters, trade with ASEAN. That is just one picture of how important Australia’s trade is, especially our growing trade prospects with our own region. No doubt our business community will be doing its best to take full advantage of the many benefits that this far-reaching agreement with ASEAN has to offer.

Of course, the global financial crisis hit global trade right around the world. With the global financial crisis we saw the biggest downturn in the global economy since the Great Depression. The Rudd government’s intervention with the stimulus package helped to save jobs during this period. If we have a look at the effects of the recessions in the 1980s and 1990s, hundreds of thousands of Australian jobs were lost and it took years and years for those jobs to return. On the Central Coast the economy would have been devastated by the global financial crisis but for the fact of the stimulus package, which helped to support jobs in retail, manufacturing and construction in particular. In previous recessions the Central Coast was hit the hardest of the many regions in Australia. The member for Shortland, who was just here, shares part of the beautiful Central Coast with me. Unemployment in the 1990s peaked at around 15 per cent on the Central Coast. Without the stimulus package, unemployment was going to grow significantly on the Central Coast. As it is, our unemployment has peaked at 6.3 per cent. If in this current downturn due to the global financial crisis there had not been the government’s stimulus package, if there had not been the intervention, and unemployment rates reached 15 per cent as they did in the 1990s, that would have seen an additional 11,100 people on the Central Coast without a job. So that is the effect that the stimulus package had. It is in the context of trade that I raise that particular issue.

The bill facilitates international trade and commerce by providing a more effective regime for the conduct of international commercial arbitrations in Australia and the recognition and enforcement of foreign arbitration agreements and awards. The proposed government amendments to the bill have been developed following comments received from stakeholders—namely, arbitration practitioners—after the development of the bill. The government amendments can be divided into two categories: those directed at improving the operation of existing provisions in the bill and provisions that supplement the provisions of the bill. The key amendments to the existing measures in the bill will: simplify the arrangements for enforcement of foreign awards in Australia and make it clear that a court can only refuse to enforce an award on one of the grounds set out in the act; and amend the application of the optional provisions in a part of the act to specify that certain critical provisions apply by default, including those relating to costs and interest. The remaining provisions apply only if expressly adopted by the parties. This part of the act, as amended by the bill, supplements the model law with provisions addressing matters such as interest, costs, confidentiality and assistance from courts. It also removes an unnecessary duplication between the two proposed sections concerning court assistance.

In addition, the bill will provide that the parties to arbitration are entitled to a reasonable opportunity to present their case to a tribunal rather than a full opportunity as required by the model law. This measure is intended to give arbitral tribunals greater flexibility in managing particular matters before them. It inserts provisions into the act to provide arbitral tribunals with greater powers concerning evidence and security for costs. These provisions would apply unless the parties to the dispute agree otherwise. It modernises the drafting of the immunity provision in section 28 of the act and extends it to entities that appoint arbitrators to tribunals. It inserts a severability clause to provide guidance to the courts on the constitutional basis for the act and inserts a regulation-making power into the act. These amendments will help to ensure that the overall package of reforms contained in the bill achieves its desired outcome: a faster and fairer system for international arbitration that makes Australia an attractive venue for the resolution of disputes.

Over time, international arbitration has developed as a practical, efficient and well-established method of settling commercial disputes without resorting to national courts. Arbitration is typically faster, less formal and more tailored to the particular dispute than court proceedings whilst retaining the benefits of impartial adjudication. Arbitral awards are also more readily enforceable around the world than are judgments of national courts. Finally, arbitration is a method of dispute resolution that is chosen and controlled by the parties. This helps the parties to preserve their commercial relationship and resolve their dispute in a manner that suits their needs.

There are two pillars that underpin the modern system of international commercial arbitration. The first is the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York on 10 June 1958 and commonly referred to as the New York convention. The convention provides crucial support to international trade by ensuring that arbitral agreements and awards are enforceable between the 144 contracting states. This means that commercial parties can turn to arbitration in full confidence that the award made by the arbitral tribunal will be enforceable throughout the world.

The second pillar is the United Nations Commission on International Trade Law’s Model Law on International Commercial Arbitration. The model law was developed by the commission as a basis on which countries may choose to draft their own legislation governing international arbitration. The model law was developed to address the wide divergence of approaches taken to international arbitration throughout the world and to provide a modern and easily adapted alternative to outdated national regimes. As the explanatory note to the model law prepared by the United Nations Commission on International Trade Law states:

Since its adoption by UNCITRAL, the Model Law has come to represent the accepted international legislative standard for a modern arbitration law …

On 21 November 2008 the Attorney-General announced a review of the International Arbitration Act and released a discussion paper to stimulate debate about the future of the act. The product of the review’s work were reform measures developed following careful consideration of the more than 30 submissions made to the review as well as academic literature, court decisions and approaches taken overseas. The reforms contained in the International Arbitration Amendment Bill 2009 will ensure the act remains at the forefront of international arbitration practice. The reform provides parties with a wider set of tools to help them resolve their disputes.

Once amended, the act will provide a clear distinction between the application of Commonwealth legislation and state and territory legislation. The bill will also clarify the circumstances in which the courts can refuse to recognise and enforce foreign awards. One concern expressed in submissions to the review was parties were finding increasingly novel ways to challenge awards and delay the arbitral process. These provisions are intended to emphasise the importance of speed, fairness and cost effectiveness in international arbitration while clearly defining and limiting the roles of courts in international arbitration without compromising the important protective function they exercise.

Thirdly, the bill will implement a number of amendments to the model law adopted by the United Nations Commission on International Trade Law in 2006. These amendments concern interpretation of the model law, the introduction of a more sophisticated regime for making and enforcing interim measures, and minor changes to authentication and translation requirements.

Further, the bill will introduce additional provisions to supplement the operation of the model law. At present, the act includes a range of optional provisions that parties can use to help resolve their disputes. These provisions address issues such as the consolidation of arbitral procedures, interests and costs. The bill will add a number of new tools to this set of optional provisions. The parties will be able to select new provisions that allow them to obtain subpoenas and other court orders to assist with the arbitration. The bill will enable the parties to select new provisions dealing with the disclosure of confidential information. Other opt-in provisions address the death of a party in an arbitration agreement and revise the provisions concerning interest on debt under an award.

Finally, the bill includes a range of other measures directed at improving the general operation of the act, including providing a more expansive definition of what constitutes an agreement in writing for the purposes of the New York convention. The former UN Secretary-General, Kofi Annan, once said:

… international trade thrives on the rule of law: without it parties are often reluctant to enter into cross-border commercial transactions or make international investments.

Arbitration is an essential tool for doing business across borders. The bill will not only assist Australian businesses in resolving their disputes but also ensure Australia is an attractive venue for parties from around the world to resolve their disputes. I commend the bill to the House.

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