What is International Commercial Arbitration?
Arbitration is a formal dispute resolution process in which two or more parties refer their dispute to an independent third person (the arbitrator) or a panel of arbitrators for determination. International arbitration is an increasingly popular means of alternative dispute resolution for cross-border commercial transactions. The primary advantage of international arbitration over court litigation is enforceability: an international arbitration award is enforceable in most countries in the world. Other advantages of international arbitration include the ability to select a neutral forum to resolve disputes, that arbitration awards are final and not ordinarily subject to appeal, the ability to choose flexible procedures for the arbitration, and confidentiality.
Once a dispute between parties is settled, the winning party needs to collect the award or judgment. Unless the assets of the losing party are located in the country where the court judgment was rendered, the winning party needs to obtain a court judgment in the jurisdiction where the other party resides or where its assets are located. Unless there is a treaty on recognition of court judgments between the country where the judgment is rendered and the country where the winning party seeks to collect, the winning party will be unable to use the court judgment to collect. Countries which have adopted the New York Convention have agreed to recognize and enforce international arbitration awards. As of 1 December 2012, there are 148 State parties which have adopted the New York Convention: 146 of the 193 United Nations Member States, the Cook Islands (a New Zealand dependent territory), and the Holy See have adopted the New York Convention. 49 U.N. Member States have not yet adopted the New York Convention. A number of British dependent territories have not yet had the Convention extended to them by Order in Council.
International arbitration is becoming the method of choice for resolving cross-border disputes, as increasingly global companies find themselves subject to a myriad of regulations and legal systems. As cross-border trade continues to grow within the Australasia and Pan Pacific, there is a rise in the number of arbitrations involving Australian parties and a trend towards conducting arbitrations in Hong Kong, and Singapore.
Summary of provisions
Under the Convention, an arbitration award issued in any other state can generally be freely enforced in any other contracting state (save that some contracting states may elect to enforce only awards from other contracting states – the "reciprocity" reservation), only subject to certain, limited defenses.
Parties to the New York Convention
As of April 2013, 146 of the 193 United Nations Member States have adopted the New York Convention. Besides 144 Member states of the United Nations, the Convention has also been ratified by Holy See and the Cook Islands. About fifty of the U.N. Member States have not adopted the Convention. In addition, Taiwan has not adopted the Convention and a number of British Overseas Territories have not had the Convention extended to them by Order in Council. British Overseas Territories to which the New York Convention has not yet been extended by Order in Council are: Anguilla, British Virgin Islands, Falkland Islands, Turks and Caicos Islands, Montserrat, Saint Helena (including Ascension and Tristan da Cunha). The British Virgin Islands have implemented the New York Convention into domestic law (Arbitration Ordinance 1976), although Britain has never issued an Order in Council legally extending the New York Convention to the British Virgin Islands.
Jennifer also conducts domestic arbitrations in Australia.
Which legislation applies to an arbitration?
The Commonwealth of Australia is a union of six states (Victoria, New South Wales, Western Australia, South Australia, Queensland Tasmania) and various territories. This means that arbitration in Australia is a dualist system with a Federal statute, the International Arbitration Act (1974) (Cwth) governing international arbitration (and the enforcement of foreign awards) and a separate set of state laws governing non-international arbitration in each state. In New South Wales the Commercial Arbitration Act (2010) governs domestic arbitrations.
When should arbitration be considered?
Arbitration should be selected as the preferred process for dispute resolution when parties require defined procedures that are a subset of those available in court but without the delays, public access or formality. Arbitration also enables the dispute to be adjudicated upon by a tribunal familiar with the professional or technical background of the matters in dispute.
When using arbitration as the process for resolving a dispute, parties are able to select an arbitrator with particular expertise and commercial experience in the subject matter of the dispute. The nominee arbitrator will then typically call a preliminary conference with the parties to agree procedural guidelines for that arbitration. This process thus provides a customised, specialist tribunal which can facilitate an efficient, effective and acceptable outcome.
The selection of arbitration as a dispute resolution procedure is a question which parties (and their legal representatives) should address at the time of entering into commercial contracts, so that an appropriate agreement can be included in the terms of the contract (an “arbitration clause”). Alternatively, an agreement to submit disputes to arbitration can be made by the parties after a dispute has arisen.
Jennifer advises on all aspects of arbitration from the drafting of an arbitration clause or agreement, through the procedure to be followed and the laws to be applied to the substantive and procedural aspects and to the recognition and enforcement of awards.
Jennifer is available to act as counsel for a party to an arbitration or as an arbitrator.
L21/133 Castlereagh Street, Sydney 2000
t: +61 2 8076 6016
m: 0428 926 387
t: +61 2 8076 6016