Please note: This is an extract from Hansard only. Hansard extracts are reproduced with permission from the Parliament of Western Australia.
COMMERCIAL ARBITRATION BILL 2011
Second Reading
MR C.C. PORTER (Bateman — Attorney General)
[12.13 pm]: I move —That the bill be now read a second time.
The Commercial Arbitration Bill 2011 will repeal the Commercial Arbitration Act 1985 and provide a new
procedural framework for the conduct of domestic commercial arbitrations. The bill facilitates the use of
arbitration agreements to manage domestic commercial disputes, and will ensure that arbitration provides a costeffective
and efficient alternative to litigation in Australia. The current act is part of a uniform domestic
arbitration legislation scheme that applies in all Australian states and territories. This uniform legislation has not
kept pace with changes in international best practice, and still reflects the old English arbitration acts. At the
May 2010 meeting of the Standing Committee of Attorneys-General, ministers agreed to update the uniform
legislation. This updated law would be based on the United Nations Commission on International Trade Law
Model Law on International Commercial Arbitration. The UNCITRAL model law reflects the accepted world
standard for arbitrating commercial disputes. New South Wales took the lead in developing this model bill, and
was the first jurisdiction to introduce legislation based on the model bill to provide business with up-to-date
domestic arbitration laws. The reform of domestic arbitration legislation is particularly timely when one has
regard to developments in international arbitration. The regularity and certainty that is conducive to efficient
commerce is fostered by uniform national laws that reflect accepted international practice. In addition, the ability
of Australian courts to deal with international arbitration is based on their experience with domestic arbitration.
Notably, the jurisdictions with which Australia competes for international arbitration works do not have different
national and international arbitration laws, and nor should we. I also note that the commonwealth government
has enacted the International Arbitration Amendment Act 2010 to amend the International Arbitration Act 1974,
to increase effectiveness, efficiency and affordability in international commercial arbitration. In addition to these
legislative changes, the first dedicated international dispute resolution centre in the Sydney CBD has been
opened. All this will help ensure that Sydney and Australia capitalise on the booming market in commercial
dispute resolution, ensuring that business and the legal system are operating in essentially one commercial
arbitration environment, whether domestically or internationally.
At the April 2009 meeting of the Standing Committee of Attorneys-General, it was agreed that the UNCITRAL
model law would form the basis for the reform of domestic arbitration legislation. It was also agreed that
additional provisions, consistent with the UNCITRAL law and necessary for domestic dispute management,
would be appropriate. There are a number of good reasons for adopting the UNCITRAL model law as the basis
for the domestic law. First, the UNCITRAL model law has legitimacy and familiarity worldwide. It has provided
an effective framework for the conduct of international arbitrations in many jurisdictions, including Australia,
for more than 24 years. It provides a well-understood procedural framework for dealing with issues such as the
appointment of arbitrators, the jurisdiction of arbitrators, the conduct of arbitral proceedings and the makings of
awards, and therefore is easily adapted to the conduct of domestic arbitrations. Indeed, jurisdictions such as New
Zealand and Singapore have based their own domestic arbitration legislation on the UNCITRAL model law, and
it has proven appropriate.
Second, basing domestic commercial arbitration legislation on the UNCITRAL model law creates national
consistency in the regulation and conduct of international and domestic commercial arbitration. The
commonwealth International Arbitration Act 1974 gives effect to the model law in relation to international
arbitrations. Many businesses, including legal ones, operate domestically and internationally, and one set of
procedures for managing commercial disputes make sense. Third, practitioners and courts will be able to draw
on case law and practice in the commonwealth and overseas to inform the interpretation and application of its
provisions.
Following the ministers’ agreement at the April 2009 standing committee meeting on the UNCITRAL law as the
way forward, a draft model commercial arbitration bill was drafted by New South Wales. The draft bill was sent
out for targeted consultation with stakeholders. Feedback was sought, in particular, on the appropriateness,
adequacy and desirability of additions and amendments to the UNCITRAL model law, tailored to domestic
dispute management and related matters. Seventeen initial submissions were received. These were carefully
considered and have informed the bill before the house today. The government takes this opportunity to thank all
those who contributed to the development of the bill.
The bill is based upon the text and spirit of the UNCITRAL model law. This delivers consistency with the
commonwealth’s international arbitration law and the legitimacy and familiarity of internationally accepted
practice. However, the UNCITRAL model law does not provide a complete solution to the regulation of
domestic commercial arbitration. The bill, therefore, supplements the model law to provide appropriately for
domestic dispute management. At the April 2009 standing committee meeting, ministers agreed on two
principles to guide the drafting of the uniform legislation. They were that the bill should give effect to the
overriding purpose of commercial arbitration—namely, to provide a quicker, cheaper and less formal method of
finally resolving disputes than litigation—and that the bill should deliver a nationally harmonised system for
international and domestic arbitration, noting the commonwealth’s review of the International Arbitration Act
1974. The purpose of the law, also agreed to by ministers, is found in clause 1C in part 1A of the bill—the
paramount object provision—to facilitate the fair and final resolution of commercial disputes by impartial
arbitral tribunals without unnecessary delay or expense. Stakeholders advocated for and endorsed the inclusion
of a paramount object clause, noting the absence of such a provision as a weakness in the present uniform
commercial arbitration acts.
I turn now to some of the details of the commercial arbitration framework established by the provisions of the
bill. Part 1 of the bill applies the bill to domestic commercial arbitration and clarifies that it is not a domestic
arbitration if it is an international arbitration for the purposes of the commonwealth act. Part 2 of the bill defines
an arbitration agreement and requires a court before which an action is brought to refer that matter to arbitration
if it is the subject of an arbitration agreement and a party so requests. Part 3 deals with the composition of
arbitral tribunals and provides flexibility and autonomy to parties in selecting the arbitrator or arbitral tribunal to
decide their dispute. It enables parties to agree on not only the number of arbitrators, but also the process by
which they will be selected and how they may be challenged. It also provides a default position should the
parties not be able to reach agreement. Clause 12 sets out the grounds on which the appointment of an arbitrator
may be challenged and obliges proposed arbitrators to disclose any circumstances likely to give rise to justifiable
doubts as to their impartiality or independence.
The jurisdiction of arbitral tribunals is dealt with in part 4, which makes it clear that an arbitral tribunal is
competent to determine whether it has jurisdiction in a dispute, but also enables a party to seek a ruling on the
matter from the court when a tribunal determines that it has jurisdiction. Interim measures are dealt with in
part 4A of the bill. It provides the power to arbitral tribunals to grant interim measures for purposes such as
maintenance of the status quo and the preservation of assets and evidence. The bill also contains the power to
grant enumerated interim and procedural orders in addition to those contained in the UNCITRAL model law.
Arbitral tribunals are granted the flexibility, unless the parties otherwise agree, to conduct an arbitration on a
“stop-clock” basis in which the time allocated to each party in the hearing is recorded progressively and strictly
enforced. This can enable arbitral tribunals to conduct arbitrations in a manner that is proportionate to the
amount of money involved and the complexity of the issues in the matter. Similarly, clause 33B, contained in
part 6 of the bill, enables an arbitral tribunal to limit the costs of arbitration, or any part of the arbitral
proceedings, to a specified amount unless otherwise agreed by the parties. This gives arbitral tribunals the
flexibility to cap costs on the basis of proportionality—another mechanism to ensure that arbitrations can be
conducted in a manner proportionate to the money and complexity of the issues involved.
Part 4A also provides for the recognition and enforcement of interim measures issued under a law of Western
Australia or of another state or territory in certain circumstances. The grounds for refusing recognition or
enforcement of an interim measure are also contained in part 4A. The conduct of arbitral proceedings are dealt
with in part 5 of the bill, which provides that parties must be given a fair hearing and that they are free to agree
on the procedure to be followed by an arbitral tribunal or, in the absence of agreement, for the arbitral tribunal to
conduct the arbitration as it considers appropriate. This ensures that parties and arbitral tribunals are granted
flexibility to adapt the conduct of the proceedings to the particular dispute before them.
Part 5 includes some provisions additional to those in the model law to ensure that arbitrations can be conducted
efficiently and cost-effectively. Clause 24B imposes a duty on parties to do all things necessary for the proper
and expeditious conduct of arbitral proceedings. Clause 25 provides the powers of an arbitral tribunal in the
event of the default of one of the parties. Additional powers to those contained in the UNCITRAL model law are
provided in clause 25 to ensure that arbitral tribunals have sufficient powers to deal with delay by parties or
failure to comply with a direction of the tribunal.
Clause 27A enables parties, with the consent of the arbitral tribunal, to make an application to the court to issue a
subpoena requiring a person to attend arbitral proceedings or to produce documents. Clause 27D provides that an
arbitrator can act as a mediator, conciliator or other non-arbitral intermediary, if the parties so agree, to provide
further flexibility for parties to agree on how their disputes are to be determined. If, however, a mediation or
conciliation is not successful, an arbitrator is prevented from resuming as an arbitrator without the written
consent of all parties.
Part 5 also provides an optional confidentiality regime. Confidentiality is viewed as one of the key benefits of
arbitration for parties dealing with sensitive commercial topics. These provisions are drafted consistently with
those of the commonwealth act and provide a default position if an alternative confidentiality regime is not
agreed upon by the parties. As parties often assume that arbitration is both private and confidential, the
provisions apply on an opt-out basis to cover situations in which an arbitration agreement does not cover
confidentiality. Part 6 of the bill covers the making of awards and the termination of proceedings.
The UNCITRAL model law has been supplemented by additional provisions to deal with the issue of costs and
the awarding of interest. As stakeholders overwhelmingly suggested that harmonised treatment of costs and
interests across international and domestic legislation was desirable, these are dealt with consistently with the
commonwealth act. Recourse against an award is dealt with in part 7 of the bill, which outlines the
circumstances in which an application can be made for the setting aside of an award or grounds upon which
parties can appeal an award, if parties have agreed to allow appeals under the optional provision. Recognition
and enforcement of arbitral awards is dealt with in part 8 of the bill, which allows for the recognition of awards
irrespective of the state or territory in which they were made and which outlines the grounds on which
enforcement can be refused.
The Commercial Arbitration Bill 2011 will ensure that Western Australian domestic arbitration laws reflect
accepted international practice for resolving commercial disputes, and it will provide businesses with a costeffective
and efficient alternative to litigation.
I commend the bill to the house.
Debate adjourned, on motion by Mr M. McGowan.