Australia Looking Back at Key Themes from 2021

Foreword by Georgia Quick - Partner, Ashurst and President, ACICA

2021 has been another incredibly interesting year to be an Australian arbitration practitioner. I have had the pleasure of continuing in my role as head of Ashurst's Australian arbitration practice throughout the year and in June I was privileged to be elected as the President of the Australian Centre for International Arbitration (ACICA). My fellow arbitration partner Bill Smith sits as the Chair of the ACICA Practice & Procedure Board. Adding to our established team of arbitration partners and practitioners, we were also recently joined by Matthew Blycha as a partner in our Perth office.

Our team have worked on a number of significant arbitrations, initiatives and events this year, and seen first-hand how Australia's leading arbitration practitioners and institution have grappled with the challenges of the global pandemic. Despite these challenges, it is clear that the practice of arbitration in Australia – and the Australian arbitration community more broadly – are thriving. Indeed, in many ways, the challenges presented by the global pandemic have presented opportunities for innovation, and in a world less physically connected, Australian arbitration practitioners have probably never felt more connected to each other and their colleagues overseas.

I would encourage anyone interested in arbitration in Australia to read the 2020 Australian Arbitration Report published by ACICA earlier this year with the support of FTI Consulting, the WA Arbitration Initiative, Francis Burt Chambers and the Australian Bar Association. In that report, readers will note that Australia has become a more appealing global arbitration destination for international arbitration in the post-pandemic world, as corporations, arbitral institutions and the legal profession have made the transition to virtual hearings and platforms. Australia has responded to these changes with recent legal developments and amendments to arbitral institution rules aimed at modernising the arbitration process and producing enforceable outcomes. Coupled with a stable economic and political environment, a high quality judiciary and legal profession and good institutional support, Australia has become a world class arbitration centre.

I would also like to take this opportunity to congratulate everyone who recently participated in events for another successful Australian Arbitration Week, particularly those from Ashurst, including Rob Palmer, partner from our Singapore office (and many other organisations) who spoke at the ACICA/Chartered Institute of Arbitrators Australia International Arbitration Conference and the many other successful events during the week.

In this update, the Global Arbitration Group at Ashurst look back at some of the key themes in arbitration in Australia arising in this exciting and challenging year. They provide a snapshot of the "state of the nation" which provides clues as to what developments may come next year and the year after that. I have every confidence that arbitration in Australia will continue to thrive in the years ahead and that a number of the developments outlined below will ensure that Australia remains at the forefront of arbitration practice around the world.

Australia as an Arbitration Destination

Key theme

In March 2021, ACICA released its Australian Arbitration Report (a copy of which can be downloaded here).

One of the themes of the ACICA Report is the opportunity afforded to Australia as a global arbitration destination by major cultural shifts taking place as a consequence of the COVID-19 pandemic. Specifically, the major consequence of the COVID-19 pandemic has been a broad based normalisation of remote and video conferencing together with a proliferation of both general and specialised communications platforms that can be used for the conduct of online hearings.

On top of this, major arbitral institutions, including ACICA (as discussed below), have instituted guidelines for virtual conferences and hearings, and there is a growing expectation within the global arbitration community that many hearings in international arbitration proceedings will continue to take place online. This is particularly so for preliminary hearings, interim measures applications and other applications for interlocutory relief.

The consequence of this for Australia as an international arbitration seat is that the "tyranny of distance" has become a less potent factor than it was only a short while ago. The convenience offered by rival locations such as Singapore and Hong Kong is anticipated to be less of a lure to commercial parties in determining the seat of their arbitration. Instead, the obvious strengths of Australia as an arbitration destination have the opportunity to come to the fore.

In particular, Australia has enviable structural benefits in that it:

• is a safe and stable liberal democracy;
• is an English-speaking, common law jurisdiction, sharing in the Anglo-American legal tradition;
• has strong respect for the rule of law;
• boasts a high quality and independent judiciary and strong legal counsel; and
• contains world class cities with excellent hotels, restaurants, transport infrastructure and cultural offerings, which make it an attractive location for in-person hearings.

Ashurst observations

On top of the structural benefits identified by ACICA in its report, Australia as a political and legal jurisdiction is highly supportive of arbitration as a dispute resolution procedure. It is a Model Law country and has enacted a statutory framework that facilitates the clear and predictable enforcement of arbitral awards. This is coupled with a judiciary that also supports the international arbitral framework.

Our own experience also points to further, less readily quantifiable benefits available to parties choosing Australia as their arbitral seat. In particular, in recent years reforms to the Australian court processes have resulted in a much faster recognition and enforcement process than is available in other competing jurisdictions.

Furthermore, the Australian legal profession offers proven, long established excellence and expertise in arbitrations involving the oil and gas, construction, infrastructure and (more recently) renewable energy sectors. Each of which are regular and heavy "users" of arbitration.

To contribute to the growth of Australia as an international arbitration destination, Australian-based legal practitioners should be encouraging their clients to embrace arbitration on a broader scale and the clear benefits of choosing an Australian seat should be borne in mind in drawing up arbitration agreements.

This is equally true for established "arbitration-friendly" industries as for companies doing business in areas in which arbitration is not so commonly used (such as financial services, climate change, telecommunications and mergers and acquisitions).

Amendments to the ACICA Rules

Key theme

In April 2021, ACICA published its revised and updated ACICA Arbitration Rules 2021, which contained substantive amendments aimed at modernising its arbitration processes and facilitating the adoption of technology and virtual communications platforms.

Unless the arbitration agreement provides otherwise, the updated rules automatically apply in place of the previous 2016 version.

Ashurst observations

The rule amendments include three key innovations amongst a number of administrative changes and clarifications. 

Virtual hearings, paperless filing and electronic execution

ACICA has made the following changes aimed at improving efficiency:

• The arbitral tribunal is granted full authority to determine the conduct of hearings, including virtually by video-conference or in any hybrid form of in-person and electronic attendance. Virtual hearings are deemed to be held at the seat of the arbitration.
• Key notices and documents are to be served electronically, either by email or through ACICA's online portal.
• Arbitral awards may be signed and transmitted electronically, with any inconsistency between paper and electronic copies being resolved in favour of the electronic copy.
  

Consolidation of multi-party and multi-contract arbitrations

The new rules empower ACICA to consolidate multiple arbitrations where:

• the parties agree to consolidation; and

• the claims are either:
  • made under the same arbitration agreement; or
  • share common questions of fact and law, relate to the same transaction and the relevant arbitration agreements are determined by ACICA to be compatible. 

Separately, ACICA has made it more straightforward to commence a single arbitration relating to multiple claims across several contracts by way of a composite Notice of Action that includes an application to ACICA that identifies:

• the common issues for consideration; and
• each relevant contract and arbitration agreement.

More effective case management

The new rules aim to speed up the arbitral timetable and empower the tribunal to more proactively manage cases.

The new rules oblige the tribunal to:

• raise at the earliest practical time the possibility of the parties' using alternative dispute resolution methods, which must include discussing with the parties whether engaging in mediation may assist the settlement of the dispute;
• render its final award within the earlier of:
  • 9 months of receiving the file from ACICA; or 
  • 3 months from the close of proceedings, 
    (subject to extension by ACICA at the reasoned request of the tribunal).

Furthermore, the tribunal is granted an express power to make awards granting early dismissal or strike out of any claim, defence or counter-claim.

The revised ACICA rules align with recent developments in international best practice and are consistent with the rules and procedure of major international arbitral institutions.

Practices surrounding virtual hearings and electronic communications adopted during the COVID-19 pandemic have been formalised by international institutions to permit electronic filing, execution and hybrid hearings or conferences. The rules of the LCIA, AIAC, ICDR and ICC have all permitted virtual hearings and virtual arbitration proceedings, with many arbitral institutions also permitting electronic execution and filing (LCIA, AIAC and ICDR).

Multi-party and multi-contract consolidations are also consistent with other international arbitral institutions, with the relevant authority being satisfied that the arbitration agreements are compatible (ICC and SIAC Arbitration Rules) and contain a common question of law of fact (HKIAC, AIAC, LCIA Arbitration Rules).

Effective case management and early dismissal of claims have also become an increasing focus for international institutions. Arbitrations are to be conducted according to key principles such as being cost and time effective and to "ensure effective case management" (ICC rules, Article 22.2). Some institutions have also implemented timeframes to issue final awards no later than 3 months after the last submission from the parties (LCIA rules, Article 15.10).