International Arbitration Comparative Guide

• Published date: 02 July 2021
• Law Firm: Herbert Smith Freehills
• Author: Mr Guillermo Garcia-Perrote and Chad Catterwell

1 Legal framework

1.1 What is the relevant legislation on arbitration in your jurisdiction? Are there any significant limitations on the scope of the statutory regime - for example, does it govern oral arbitration agreements?

The International Arbitration Act 1974 (Cth) (IAA) governs international commercial arbitrations in Australia. Part II of the IAA sets out Australia's accession to, and implementation of, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (see IAA, Section 8). Part III of the IAA provides that the UNCITRAL Model Law on International Commercial Arbitration 1985 (with the amendments adopted in 2006) has the force of law in Australia (see IAA, Section 16(1)).

Under the IAA, an 'international arbitration' is an arbitration seated in Australia with at least one of the characteristics specified in Article 1(3) of the UNCITRAL Model Law, being:

1. the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different States; or
2. one of the following places is situated outside the State in which the parties have their places of business:
   
   1. the place of arbitration if determined in, or pursuant to, the arbitration agreement;
   2. any place where a substantial part of the obligations of the commercial relationship is to be performed or the place with which the subject-matter of the dispute is most closely connected; or
3. the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country.

For the purposes of defining those arbitration agreements to which the Model Law will apply, the IAA adopts the definition of 'arbitration agreement' set out in Option 1 of Article 7 of the Model Law. The practical effect of this choice is that only an agreement in writing is an arbitration agreement for the purposes of the IAA (see further discussion in question 3.1).

The enforcement of foreign arbitration agreements is dealt with in Part II of the IAA. For this purpose, the IAA adopts the definition of 'arbitration agreement' set out in Article II(1) of the New York Convention, which similarly provides that an arbitration agreement must be in writing.

1.2 Does this legislation differentiate between domestic arbitration and international arbitration? If so, how is each defined?

Yes. As explained in question 1.1, under the IAA, an 'international arbitration' is an arbitration seated in Australia with at least one of the characteristics specified in Article 1(3) of the UNCITRAL Model Law.

All Australian states and territories have adopted largely uniform legislation governing domestic commercial arbitrations which is in turn modelled, in many respects, on the Model Law. For example, Section 1 of the Commercial Arbitration Act 2010 (NSW) indicates that "This Act applies to domestic commercial arbitrations". Section 1(3) states that an arbitration is 'domestic' if:

1. the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in Australia, and
2. the parties have (whether in the arbitration agreement or in any other document in writing) agreed that any dispute that has arisen or may arise between them is to be settled by arbitration, and
3. it is not an arbitration to which the Model Law (as given effect by the International Arbitration Act 1974 of the Commonwealth) applies.

If the IAA applies to an arbitration, Australian state or territory arbitration laws will not apply (IAA, Section 21(2)). Under Section 21 of the IAA, parties cannot opt out of the Model Law, notwithstanding that the relevant arbitration agreement may specify that the procedural rules of an arbitral institution apply. This provision of the IAA was amended in 2010 by the International Arbitration Amendment Act 2010 (Cth), largely in response to Eisenwerk Hensel Bayreuth Dipl Ing Burkhardt GmbH v Australian Granites Ltd [2001] 1 Qd R 461 per Pincus JA (Thomas JA and Shepherdson J agreeing), in which the Queensland Court of Appeal held that an arbitration agreement which purported to adopt the Rules of Arbitration of the International Chamber of Commerce operated to exclude the application of the Model Law for the purposes of the arbitration.

The relevant state and territory legislation is set out below.

State/territory	Domestic arbitration legislation
Australian Capital Territory	Commercial Arbitration Act 2017 (ACT)
New South Wales	Commercial Arbitration Act 2010 (NSW)
Northern Territory	Commercial Arbitration (National Uniform Legislation) Act 2011 (NT)
Queensland	Commercial Arbitration Act 2013 (Qld)
South Australia	Commercial Arbitration Act 2011 (SA)
Tasmania	Commercial Arbitration Act 2011 (Tas)
Western Australia	Commercial Arbitration Act 2012 (WA)

1.3 Is the arbitration legislation in your jurisdiction based on the UNCITRAL Model Law on International Commercial Arbitration?

Yes (see discussion at question 1.1). The IAA also includes several opt-in and opt-out provisions that may apply to arbitrations in addition to the UNCITRAL Model Law provisions (see IAA, Section 22 for an exhaustive list). These additional provisions are as follows:

• Opt-out provision: Obtaining subpoenas (IAA, Section 23);
• Opt-out provision: Failure by a party to attend arbitral proceedings or to comply with orders of the tribunal and default of a party to the arbitration agreement more generally (IAA, Sections 23A and 23B);
• Opt-out provision: The disclosure of confidential information in relation to arbitral proceedings (IAA, Sections 23C-23G);
• Opt-out provision: The death of a party to an arbitration agreement (IAA, Section 23H);
• Opt-out provision: The tribunal's power to make orders relating to the analysis of evidence (IAA, Section 23J);
• Opt-out provision: The tribunal's power to order security for costs (IAA, Section 23K) and costs generally (IAA, Section 27);
• Opt-in provision: The consolidation of arbitral proceedings (IAA, Section 24); and
• Opt-out provision: The calculation and payment of interest on awards (IAA, Sections 25-26).

1.4 Are all provisions of the legislation in your jurisdiction mandatory?

No, not all provisions are mandatory. Pursuant to Article 19 of the UNCITRAL Model Law (and subject to the parties' agreement), arbitral tribunals are empowered to conduct proceedings in such a manner as they consider appropriate. However, there are several mandatory provisions in both the IAA and the Model Law:

• Section 7 of the IAA: This requires the Australian courts to stay any proceedings and refer them to arbitration on an application by a party to a relevant arbitration agreement, subject to specific requirements (see Section 7(1) of the IAA, which outlines certain threshold requirements in relation to an arbitration agreement to enliven the court's power to stay proceedings pursuant to Section 7(2). See also Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd (2013) 298 ALR 666, 681 at [43] per Martin CJ, with Buss JA agreeing, and the authorities cited therein);
• Section 8 of the IAA: This requires Australian courts to recognise foreign arbitral awards as though they were orders of state or territory courts or the Federal Court of Australia, subject to the exceptions outlined in question 14 (IAA, Sections 8(2), (3)) (see also IAA, Sections 8(5), (7) for the circumstances in which Australian courts may not enforce foreign arbitral awards);
• Article 18 of the Model Law: This provides that parties are to be treated equally and be given a full opportunity to present their case;
• Article 24(2) of the Model Law: This provides that parties are to be given sufficient advance notice of any hearing and of any meeting of the tribunal for the purposes of the inspection of goods, other property or documents; and
• Article 35 of the Model Law: This requires Australian courts to recognise and enforce foreign arbitral awards.

In addition to the statutory mandatory requirements, Australian courts require that arbitral proceedings meet the requirements of natural justice (Castel Electronics Pty Ltd v TCL Air Conditioner (Zhongshan) Co Ltd (No 2) [2012] FCA 1214 per Murphy J at [29]-[32], citing IMC Aviation Solutions Pty Ltd v Altain Khuder (2011) 38 VR 303, 313 at [35] and 314 at [37] per Warren CJ and 342 at [129] per Hansen and Kyrou JJ). Indeed, Section 19(b) of the IAA provides that a foreign award will be contrary to Australian public policy if the rules of natural justice have been contravened in connection with the making of the award. As an exception to the general mandatory provision in Section 8 of the IAA, Australian courts are not required to enforce an award that would be contrary to Australian public policy (IAA, Section 8(7)(b)).

1.5 Are there any current plans to amend the arbitration legislation in your jurisdiction?

As of January 2021, there are no proposed Senate or House Bills that propose amendments to the IAA. The last amendment to the IAA was the Civil Law and Justice Legislation Amendment Act 2018 (Cth) which incorporated the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration into Australian law. The amendments took effect on 26 October 2018.

1.6 Is your jurisdiction a signatory to the New York Convention? If so, have any reservations been made?

Australia has been party to the New York Convention since 24 June 1975 and has made no reservations. Part II of the IAA sets out Australia's accession to, and implementation of, the New York Convention (IAA, Section 8).

1.7 Is your jurisdiction a signatory to any other treaties relevant to arbitration?

Australia is also a party to:

• the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (IAA, Part IV); and
• the United Nations Convention on Transparency in Treaty-based Investor State Arbitration (the Mauritius Convention). Australia ratified the Mauritius Convention...