21 September, 2015
WHAT YOU NEED TO KNOW
- The Australian Parliament has passed amendments to the International Arbitration Act 1974 which affect the drafting of arbitration agreements and the enforcement of awards.
- The changes are positive for arbitration in Australia and make Australia a more attractive seat to parties who value confidentiality.
- International arbitration proceedings in Australia will be confidential by default, unless parties to the arbitration agreement opt out.
- Australian courts will enforce international arbitral awards made in a country which is not a party to the New York Convention even if the party seeking enforcement is from a non-Convention country.
WHAT YOU NEED TO DO
- When drafting arbitration agreements, consider Australia as a seat for the arbitration to take advantage of the statutory confidentiality regime.
- You now need to opt out of the confidentiality regime if you do not want it to apply.
On 15 September 2015 the Australian Parliament passed the Civil Law and Justice (Omnibus Amendments) Bill 2015 which among other things amends the International Arbitration Act 1974 (Cth).
Confidentiality will apply unless you opt out
Arbitrations seated in Australia will be confidential by default, unless the parties to the arbitration agreement have opted out of the existing confidentiality provisions in the International Arbitration Act.
The new default position will apply to arbitration agreements entered into after the amendments receive royal assent and become law. It will align the confidentiality rules for international arbitrations seated in Australia with Australian domestic arbitral proceedings conducted under the State Commercial Arbitration Acts, where the rules already apply on an opt out basis.
Reasonable disclosure for the purposes of presenting a case, protecting a party's rights and enforcing an award is allowed.
The amendment will reverse the effect of the decision of the High Court of Australia in Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10, which had concluded that there was no implied term of confidentiality in an arbitration agreement.
Awards in non-convention countries will be enforceable
Currently, international arbitral awards made in a country which is not a contracting state under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention) are not enforceable by a party that is not domiciled or does not ordinarily reside in a Convention Country.
This restriction on enforcement will cease to apply once the amendments to the International Arbitration Act become law.
Most countries are already Convention Countries for the purpose of the New York Convention.
Resisting enforcement: lack of capacity
The International Arbitration Act currently provides that a party can seek to resist enforcement of an arbitral award on the grounds that it did not have legal capacity.
The amendments will clarify that a party can also resist enforcement of an award on the basis that any other party to the arbitration agreement did not have legal capacity.
These changes will bring the International Arbitration Act into line with the UNCITRAL Model Law and the laws governing Australian domestic arbitration.
Summary of key changes
- Amendments to the International Arbitration Act will bring Australia into line with international best practice and make Australia more attractive to parties wanting to preserve confidentiality.
- Australia's existing confidentiality rules will apply unless the parties opt out.
- International arbitral awards will be enforced wherever they are made.
For further information, please contact:
Georgia Quick, Partner, Ashurst
georgia.quick@ashurst.com
