In October 2015, important amendments were made to the International Arbitration Act. These changes bring Commonwealth arbitration laws further into line with both international arbitration norms and conventions, as well as domestic arbitration laws.
- In October 2015, important amendments were made to the International Arbitration Act 1974 (Cth) (IAA).
- The amendments affect provisions in the IAA relating to the enforcement of foreign arbitral awards and the confidentiality of arbitral proceedings.
- The changes bring the Commonwealth arbitration law further into line with both international arbitration norms and conventions, as well as domestic arbitration laws.
On 13 October 2015, the Civil Law and Justice (Omnibus Amendments) Act 2015 (Cth) (Act) came into force. As its name suggests, this omnibus Act effects a series of changes to Australian civil justice legislation. Importantly, the Act amends parts of the International Arbitration Act 1974 (Cth) (IAA) relating to the enforcement of foreign arbitral awards and the confidentiality of arbitral proceedings.
While, on face value, the amendments appear relatively minor, they are a significant reform to Australian international arbitration law. They are a product of the continuing shift towards making Australia a more ‘pro-arbitration’ jurisdiction. The amendments make the IAA more consistent with the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), the UNCITRAL Model Law and international arbitration norms. Further, they ensure consistency with the existing state domestic arbitration laws.
Enforcement of foreign arbitral awards made in non-Convention countries
Prior to the Act, under the IAA a foreign arbitral award could only be enforced in Australia if the award was made in a state that was a party to the New York Convention. While there are currently more than 150 state parties to the New York Convention, there are around 40 states that are not parties, including a large number of African nations, Timor-Leste, Papua New Guinea and Taiwan. Before the amendments, arbitral awards made in these ‘non-Convention’ states could not be enforced in Australia. This was inconsistent with the text of the New York Convention, which places no such limitation on enforcement of arbitral awards. The Act removes this limitation, meaning that arbitral awards can now be enforced in Australia, regardless of where they were made.
Although it is uncommon to see arbitration agreements designating a ‘non-Convention’ state as the seat of an arbitration, it is not unheard of. This change will be of significant interest to Australian entities with operations, partners or counterparties in these jurisdictions.
Resisting enforcement based on legal incapacity
The IAA allows a party to an arbitration agreement to apply to a court to resist enforcement of an arbitral award where that party was under some incapacity at the time it entered into the arbitration agreement. However, prior to the amendments, a party could not resist enforcement of an award due to the incapacity of another party to the arbitration agreement. The Act amends the IAA so that a party will be able to resist enforcement of an award where any party to the arbitration agreement lacked contractual capacity at the time the arbitration agreement was made.
In practice, this basis for resisting enforcement is rarely relied upon: there are no reported Australian cases in which this provision has been substantively considered. Nevertheless, the change will abolish what was a relatively unprincipled distinction and, again, ensure uniformity with the New York Convention and state domestic arbitration laws.
For many commercial enterprises, the confidentiality of arbitration is one of its most appealing features. Despite this, the provisions in the IAA relating to confidentiality formerly operated on an ‘opt in’ basis. In other words, the default position was that international arbitrations seated in Australia were not confidential unless the parties agreed that they should be so. The Act reverses this position, meaning that international arbitrations seated in Australia will now be confidential unless the parties agree otherwise. The usual carve-outs remain; allowing reasonable disclosure to enable a party to protect its legal rights or enforce an arbitral award.
This is a sensible change, which makes Australia a far more attractive jurisdiction in which to arbitrate.
This article was written by Elizabeth Macknay, Partner, and Christopher Hicks, Solicitor, Perth.
The contents of this publication are for reference purposes only and may not be current as at the date of accessing this publication. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
© Herbert Smith Freehills 2020