6 February, 2018
Important court decisions of 2017
There were several significant rulings by Australian courts regarding international arbitrations and their conduct in 2017, including the following:
The Full Federal Court of Australia in Hancock Prospecting Pty Ltd v Rinehart [2017] FCAFC 170 confirmed that arbitration agreements are to be interpreted liberally on the presumption that parties choosing arbitration intend for all of their disputes to be dealt with in that way.
The Federal Court in Samsung C & T Corporation, Re Samsung C & T Corporation [2017] FCA 1169 found that the Federal Court does not have jurisdiction under the International Arbitration Act 1974 (Cth) (Act) to grant leave to issue subpoenas for foreign-seated arbitrations. However, the Court observed that documents from third parties based in Australia could be otherwise obtained under the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters. For further information, see our Arbitration Alert dated 23 October 2017.
In Re Infinite Plus Pty Ltd [2017] NSWSC 470, the New South Wales Supreme Court ordered that court proceedings between shareholders be stayed in favour of arbitration pursuant to s 7(2) of the Act. The decision demonstrates that Australian courts will stay court proceedings where there is a valid arbitration agreement, even where the dispute is in relation to rights conferred under statue and potentially even where a third party who is not bound by an arbitration agreement is a party to the stayed proceedings.
In Hui v Esposito Holdings Pty Ltd [2017] FCA 648, the Federal Court demonstrated that courts are prepared to set aside arbitral awards where a party has been deprived of a reasonable opportunity to present its case and denied a realistic possibility of a successful outcome. This is the case even though Article 34 of the UNCITRAL Model Law significantly limits the circumstances in which a court may set aside an arbitral award. For further information, see our Arbitration Alert dated 4 September 2017.
In Trina Solar (US), Inc v Jasmin Solar Pty Ltd [2017] FCAFC 6 the Full Federal Court provided guidance as to the applicable choice of law in determining whether a party is a party to an arbitration agreement. In short, the law of the forum is to be applied in determining the question of whether an arbitration agreement was reached and whether a party is a party to that agreement, while the governing law of the arbitration agreement is applied to determine questions of validity, performance and breach.
New arbitration legislation and rules
There were also a number of notable amendments to arbitration legislation and rules during 2017, including:
On 1 January 2017, the Australian Centre for International Commercial Arbitration published a new Guideline on the Use of Tribunal Secretaries in ACICA administered arbitrations. The Guidelines have provided some much needed clarity in relation to the appointment and removal of tribunal secretaries, their duties and their remuneration.
On 1 March 2017, the new International Chamber of Commerce Arbitration Rules 2017 came into force. The Rules introduced the ICC's new expedited procedure rules, which will automatically apply where the amount in dispute is US$2 million or less. In adopting the new rules, the ICC has recognised the increasing demand for simplified "fast-track" procedures for lower value claims.
For further information, see our International Arbitration Update dated 25 April 2017.
On 22 March 2017, the Commonwealth Government introduced the Civil Law and Justice Legislation Amendment Bill into the Senate. The Bill remains before the Senate. If passed, the Bill will amend the International Arbitration Act 1974 (Cth) to:
- specify the meaning of "competent court" for the purpose of the Model Law;
- clarify procedural requirements for the enforcement of an arbitral award, so that an award creditor is only required to produce the award and the arbitration agreement for enforcement;
- modernise the provisions governing an arbitrators’ powers to award costs; and
- clarify the application of certain confidentiality provisions.
On 1 July 2017, the Commercial Arbitration Act 2017 (ACT) commenced in the Australian Capital Territory. All Australian States and Territories have now adopted the UNCITRAL Model Law on International Commercial Arbitration for domestic commercial arbitration.
For further information, see our Arbitration Update dated 24 July 2017.
Investment arbitration awards were enforced in Australia for the first time
In Lahoud v The Democratic Republic of Congo [2017] FCA 982 the Federal Court of Australia for the first time recognised and enforced an investment arbitration award.
On 7 February 2014, an ICSID arbitral tribunal handed down an award in favour of Mr and Mrs Lahoud. The tribunal found that the Democratic Republic of Congo had breached its fair and equitable treatment and expropriation obligations under the New Investment Code.
On 29 March 2016, a separate ICSID arbitral tribunal handed down a decision refusing the Democratic Republic of Congo's application to annul the initial award.
The applicants sought leave to have the award and the decision recognised and enforced in accordance with the International Arbitration Act 1974 (Cth). Section 35 of the Act provides that the Federal Court of Australia has jurisdiction to recognise and enforce an ICSID award "as if the award were a judgment or order of that court".
Justice Gleeson was satisfied that the Court had jurisdiction to recognise and enforce both the award and the decision. In coming to that conclusion, her Honour reasoned that the decision refusing to annul the initial award was itself an "award" that was capable of being recognised and enforced.
Her Honour also confirmed that the Democratic Republic of Congo could not rely upon foreign state immunity to argue that the award and decision should not be recognised and enforced. Foreign states have a general immunity from the jurisdiction of the courts of Australia: s 9, Foreign States Immunities Act 1985(Cth). Her Honour found that foreign state immunity was irrelevant in the circumstances, particularly because the Democratic Republic of Congo had submitted to the jurisdiction of the ICSID tribunals.
The decision provides clear guidance on the application of the Washington Convention in Australia and demonstrates that Australia is a pro-arbitration jurisdiction in line with the objects of the Act.
For further information, see our Arbitration Alert dated 15 November 2017.
Australia entered into the Mauritius Convention and two bilateral investment treaties with investor-state dispute settlement provisions
Mauritius Convention
In July 2017, Australia became a signatory to the Mauritius Convention on Transparency in Treaty-Based Investor-State Arbitration, which extends the application of the UNCITRAL Transparency Rules to treaties concluded prior to 1 April 2014. The Transparency Rules include requirements that notices of arbitration, statements of claim and final awards be made publicly available. If ratified, the Mauritius Convention should ensure that Australian citizens have greater insights into the investor-state arbitral process and they will also be afforded the opportunity to be directly involved in an arbitration by making submissions as an affected or interested third party.
Peru-Australia Free Trade Agreement
The Peru-Australia Free Trade Agreement is expected to enter into force before mid-2018 and contains investor-state dispute settlement (ISDS) provisions, including an enhanced arbitral process. It also contains express provisions reserving the Australian Government's right to regulate in the public interest. The provisions also include safeguards for social services and cultural heritage, and preserve the authority of the Foreign Investment Review Board.
Singapore-Australia Free Trade Agreement
On 19 October 2017, Australia ratified a major revision to the Singapore-Australia Free Trade Agreement, which includes significant amendments to ISDS provisions that permit government regulation in the public interest, and makes clear that non-discriminatory action to protect public welfare does not constitute expropriation (provisions directed at the tobacco industry).
For further information, please contact:
Jeremy Chenoweth, Partner, Ashurst
jeremy.chenoweth@ashurst.com
