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The Australian Centre for International Commercial Arbitration (ACICA) has recently released new Arbitration Rules and a model arbitration clause that can be inserted into commercial contracts for either local or international projects.
The model clause
The model clause, which reflects the Australian law of dispute resolution clauses, is a simple way of ensuring that disputes can be arbitrated in a binding, effective fashion. The clause reads:
Any dispute, controversy or claim arising out of, relating to or in connection with this contract, including any question regarding its existence, validity or termination, shall be resolved by arbitration in accordance with the ACICA Arbitration Rules. The seat of arbitration shall be Sydney, Australia [or choose another city]. The language of the arbitration shall be English [or choose another language]. The number of arbitrators shall be one [or three, or delete this sentence and rely on Article 8 of the ACICA arbitration Rules, which authorises ACICA to determine the number of arbitrators].
Advantages of the ACICA Rules
The ACICA Arbitration Rules are based on the UNCITRAL Arbitration Rules. However, the ACICA Rules are revised and updated to provide a more modern, efficient and flexible framework for the resolution of commercial disputes. They deal with the composition of arbitral tribunals, the admission of evidence, the remuneration of arbitrators and all the other aspects of the arbitration process.
- Unlike other arbitration rules, the ACICA rules partially adopt the International Bar Association’s (IBA) rules of evidence, in that the arbitrators must be guided by the IBA rules, but are free to make directions on evidence that suit the needs of each case.
- Under the UNCITRAL rules, unless the parties have stipulated that only one arbitrator should be appointed to hear a matter, a full tribunal of three will automatically be appointed. This has obvious adverse cost consequences. In contrast, ACICA has a discretion to appoint a single arbitrator if the parties cannot agree.
- Under the UNCITRAL rules, if the parties are unable to agree on a body of law by which their dispute will be determined, the tribunal must apply complex conflict of law principles that can lead to unpredictable and unsatisfactory outcomes. The ACICA rules allow the tribunal to determine the applicable law without having to consider cumbersome conflicts theories.
Article 2.1 of the ACICA Rules is an example of the flexibility of ACICA arbitration. It provides that the parties may agree in writing to modify the Rules in any way they see fit, provided that the parties are treated fairly. If the parties cannot agree how an arbitration should be conducted, Article 17.1 allows the arbitrator to deal with their dispute in whatever way it considers appropriate.
An important benefit to ACICA arbitration is the depth of experience available in the selection of arbitrators for a particular dispute. ACICA has recently established an Asia Pacific Regional Arbitration Group. The group is an affiliation of 23 leading arbitration centres and organisations in the Asia Pacific region. Arbitrators can be drawn from any of the group’s participating centres, providing significant flexibility in the appointment of arbitral panels.
ACICA has also been concerned to strengthen the confidentiality regime prevailing in Australia, where the High Court’s decision in Esso Australia Resources v Plowman (1995) 183 CLR 10 has established that, unless the parties agree otherwise, arbitration is private but not confidential. This can lead to difficulties if one party is concerned about another party’s intention to disclose the results of an arbitration. To this end, Article 18 of the ACICA Rules provides for confidentiality in all but certain limited circumstances.
International arbitrations lead to awards that are often easier to enforce than court judgments. The New York Convention on the Recognition and Enforcement of Arbitration Awards 1958 applies in 135 countries and ensures that international arbitral awards under the ACICA Rules will be enforceable in most countries.
ACICA is a non-profit organisation which facilitates and promotes international arbitration in Australia. Mallesons is a corporate member of ACICA. This means the firm is committed to the promotion and development of ACICA as a leading international arbitration service-provider throughout Asia Pacific and participates in the direction of ACICA at board level.