Australian arbitration law

In Australia, the legislative framework is divided between the Commonwealth of Australia as the federal authority, and the six states and two federal territories with their own governments and legal systems. Purely domestic arbitrations are regulated by the Commercial Arbitration Act (CAA) in force in the state or territory where the arbitration takes place. Following amendments made in 1984 and 1993, the CAAs are uniform:
• section 4(1) CCA requires all the parties to the arbitration to make the referral in writing whether this is an arbitration clause in their original agreement or the submission of an existing dispute;
• the mechanics of appointing an arbitrator or umpire which can be complicated where it is a multiparty dispute — Australian laws do not require arbitrators to hold any professional qualifications; nationality and/or residence are also irrelevant;
• section 6 CAA expects a single arbitrator to sit unless the parties stipulate otherwise — section 7 CAA provides a default procedure that the parties shall jointly agree on an arbitrator; if they cannot agree, section 10 CCA gives the court the power to make an appointment;
• under section 14 CAA, the arbitrator has a general discretion on how to conduct proceedings subject to the principles of natural justice which not only require the arbitrator to appear impartial and independent, but also to allow each party a reasonable opportunity to be heard;
• section 47 CAA gives a court the same power to make interlocutory orders for arbitration proceedings as it does for conventional litigation — thus, the normal system for discovery, interrogatories, admission of expert witness testimony, etc. can all apply in arbitration;
• section 45(1) CAA allows any party to challenge an arbitrator if he or she appears to lack independence or is unsuitable for some reason — under section 51 CCA, arbitrators have a certain degree of immunity and will not be liable in negligence for any act or omission in their capacity as an arbitrator, but they will be liable for fraud and probably for breaches of any contract between them and their parties;
• section 22 CCA requires the arbitrator to determine the case by applying the current law unless the parties agree to different criteria in writing;
• the question of the awards that can be made and costs awarded; and
• the powers of the courts to review arbitral decisions. Under section 38(5)(b) CCA, the courts usually allow judicial review of an award if there appears to be a manifest error of law on the face of the award or where strong evidence exists that the arbitrator made an error of law and where the determination of that question may add substantially to the certainty of commercial law.

For international arbitrations, the International Arbitration Act 1974 incorporates the UNCITRAL Model Law on International Commercial Arbitration.

The status of arbitration clauses in commercial contracts
When negotiating their contract, wise parties often consider what should happen in the event of a dispute. It is therefore not uncommon to find clauses which specify that any dispute shall be settled by arbitration, setting the town or city for a hearing, and agreeing to what extent the arbitration will produce a binding award.

The relationship between such clauses and the right of parties to more generally seek relief before the courts was recently considered in Pan Australia Shipping Pty Ltd v The Ship ‘Comandate’ [2006] FCA 881. In brief, the parties freely negotiated a London arbitration clause but, when a dispute arose over the charter of the ship, the Australian courts were asked to authorise the arrest of the ship which was then in Australian waters. The conclusion was that, in emergency situations where action was required to protect the interests of the parties, the courts had the right to take jurisdiction for limited purposes. No contract can exclude the right of a court to consider a case. But, when exercising this right, courts have to resist shifting the balance of power between the parties. Their contract was freely entered into and represented a fair deal at that time. If the courts of one country are too quick to interfere, the original intention of mutual fairness and equality may be disturbed. Hence, wherever possible, arbitration clauses are respected regardless whether the dispute is domestic or international.

Confidentiality
In England, party autonomy prevails, and privacy and confidentiality will be assured throughout the arbitration process. But in Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10, the High Court of Australia held that confidentiality cannot be guaranteed because:
• no obligation of confidentiality attaches to witnesses; and
• when a court reviews an award this may involve some level of disclosure to the court that, in due course, may be published as part of the record of the court proceedings.

The recent case in the Victorian Supreme Court of Transfield Philippines Inc & Ors v Pacific Hydro Ltd & Ors [2006] VSC 175 confirms that parties who choose to arbitrate in Australia may not have the same degree of confidentiality as in England.

Although the Esso Case does not deny a broad level of confidentiality, the potential for disclosure of what may be sensitive information is disturbing. The Transfield Case deals with the question of whether documents produced under a sub poena issued by the Victorian Supreme Court pursuant to the CCA during discovery for arbitration proceedings in Singapore, can lose their confidential status. The answer seems to be that, in exceptional circumstances, a court may release someone from any express or implied undertaking not to disclose the documents outside the arbitration proceedings. Typically, the inherent jurisdiction of the court can be invoked to:
• ensure convenience in legal proceedings;
• prevent steps being taken that would render judicial proceedings ineffective;
• prevent abuse of process;
• act in aid of superior courts and in aid or control of inferior courts and tribunals.

Under the second heading Mareva or Anton Piller orders could be used to preserve some thing pending a final court decision so that the final court decision is not frustrated by the loss or destruction of that thing. Releasing a party from an obligation to keep certain documents confidential is unlikely to have the same effect particularly because, if the documents are “directly relevant” to a matter in dispute, they will be subject to discovery in any event. Nevertheless, the potential remains for an Australian court to exercise its inherent jurisdiction to release any party from their obligation of confidentiality. One hopes it is likely only to happen on very rare occasions, if at all.